Velodrome
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A revolutionary new AMM based on Solidly launched on Optimism. Velodrome Finance, at its core, is a solution for protocols on Optimism to properly incentivize liquidity for their own use cases. Building on top of the groundwork laid out by Solidly, our team has addressed that first iteration's core issues to realize its full potential.
Who is behind this project
- The team behind Velodrome Finance previously launched veDAO, an initiative incubated by Information Token. veDAO's founding mandate was to engage with the Solidly ecosystem, a protocol launched on the Fantom network by Andre Cronje, while driving long-term value to the veDAO community.
- The veDAO team has since developed deep subject matter expertise on both Solidly, the veNFT primitive, and the ve(3,3) mechanism, becoming the go-to resource for protocols and chains seeking support around these topics.
- By the numbers, veDAO, managed to attract $2.6B in TVL (total value locked) in the early days, securing ~10% of Solidly voting power and ~$1.1M USDC in treasury assets.
Introducing Velodrome
- Velodrome addresses these issues and presents an attractive alternative by addressing the core issues in Solidly and adding its own improvements. To recall, the key innovation of Solidly was to align protocol emissions with fees generated, not simply liquidity. To do this, it would allow protocols and other large stakeholders to become veNFT "voters", using their locked voting power to direct future emissions and collecting fees (termed bribes in Solidly) from the pools they voted for.
- Velodrome has made several improvements to the Solidly codebase, all of which were thoughtfully chosen to ensure that the protocol would carry out the original intended mechanism of allowing voters to fairly compensate LPs for impermanent loss.
ve(3,3) Mechanics
Velodrome Finance mechanics reflect a combination of two DeFi concepts:
- Vote-Escrow — first introduced by Curve to strengthen incentives for long-term token holders
- Staking/Rebasing/Bonding or (3,3) game theory — designed by Olympus DAO
Combined, the ve(3,3) mechanism rewards behaviors correlated with Velodrome's success, such as liquidity provision and long-term token holding. Liquidity providers receive $VELO emissions, and $veVELO holders receive protocol fees, bribes, rebases, and governance power.
Fees
- On Velodrome Finance the trading fees are kept in the originally traded tokens (if you trade $USDC and $VELO the fees will be kept in the same tokens).
- The trading fees for both liquidity pool types are 0.02%, and can be adjusted for up to 0.05%.
- The Variable and Stable liquidity pools can be assigned different trading fees on Velodrome Finance.