Velodrome Finance
Velodrome Finance is an AMM and liquidity layer that aims to provide efficient and secure trading experiences for its users while providing opportunities for turnkey, sustainable, and capital-efficient liquidity for DAOs and protocols. It is based on Andre Cronje's Solidly and operates on the Optimism blockchain.
Categories:
DeFi
Updated:
2023-11-14
Tags:
AMM
DEX
Ticker:
$VELO
Token Strength.
Token Utility:
$VELO's utility: -Can be farmed/accrued as a reward for providing liquidity. -Can be used to govern over $VELO emissions. -Can be used to collect a pro-rata share of swap fees generated on the platform. -Can be used to provide liquidity. -Can be used on Overnight, dHedge, Tarot, Reaper Farm, OpenX, Beefy, and 1inch.
Demand Driver:
Demand Drivers: -Existence of the rebate/incentivization program called Tour de OP. -DAOs/protocols accumulating and locking $VELO to direct emissions to their liquidity pools. -Users locking $VELO tokens to capture bribes and trading fees. -An increase in adoption of Optimism mainnet. -An increase in trading volume on the protocol. -An increase in bribes from DAOs/protocols requiring liquidity on the platform.
Value Creation:
For DAOs/protocols, providing opportunities for turnkey, sustainable, and capital-efficient liquidity, and for traders, a secure and efficient trading experience with the best execution (lowest fees and price impact).
Value Capture:
Value accrual to token lockers: -Bribes from DAOs and protocols. -Swap fees from traders utilizing Velodrome's liquidity. Value accrual to the protocol: -None.
Business Model:
Revenue comes from: traders and DAOs/protocols requiring liquidity (bribing). Revenue is denominated in: any token with which bribes are placed and trades are made. Revenue goes to: $veVELO holders ($VELO lockers).
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Protocol Analysis.
| Problems & Solutions | Problem: liquidity in DeFi is frequently mercenary, even going so far as to border on cannibalistic; vote-escrowed tokenomics are often inefficient as they distribute rewards (emissions) globally based on bribes without factoring in fees; and traders often face high slippage and fees while trading in DEXs. Solution: Creating a bribe layer structured around the $VELO token, streaming swap fees back to token lockers who direct rewards (emissions), and charging low trading fees on the platform. |
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| Predecessors | Similar projects include Thena, Chronos, Equalizer, Ramses, Pearl, Velocore, Hermes, Equilibre, veSync, SolidLizard, Velocimeter, Solidly, SoliSnek, 3xcalibur, Sterling, Satin, Spartacus, Glacier, and Themis. |
Investment Take
... coming soon
Tokenomics Timeline.
2022-06-01
Launch
Launch of the Velodrome Protocol.
2023-06-15
V2
Launch of the second version of the Velodrome Protocol.
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Ecosystem Users.
| Name | Role | |
|---|---|---|
| $veVELO holders ($VELO lockers) | $VELO lockers direct emissions to liquidity pools based on bribes and fees from that pool. | |
| Arbitrageurs | These participants take advantage of price differences between Velodrome and other exchanges. They buy low on one platform and sell high on another, helping to keep prices consistent across different platforms. | |
| DAOs/protocols | DAOs/protocols place bribes on their token's pool(s). | |
| Liquidity Providers (LPs) | LPs deposit their tokens into the Velodrome liquidity pools. In return, they earn $VELO rewards (emissions). | |
| Traders | These are the users who utilize the liquidity on the platform to exchange one token for another and pay a fee for doing so. |
