Our Optimistic Future
Velodrome is a decentralized exchange that combines the best of Curve, Convex, and Univ2 into a cohesive AMM designed to serve as Optimism’s premiere ecosystem-native liquidity layer and growth engine. Despite launching in the depths of the bear, Velodrome has attracted many of the best names in DeFi to Optimism, developing a thriving ecosystemthat now supports over 30 protocols, $2.5B cumulative trading volume, and 2.5M cumulative transactions. That is why Optimism has chosen to support fast-moving Velodrome flywheel with an additional 4M OP token grant.
The Tour de OP
After the next epoch flip on November 24th, 2022, Velodrome will kickstart the Tour de OP, a six to eight month OP incentive program focused on incentivizing protocols and veVELO lockers through three mechanisms:
- Bribe Matching
- Lock Bonus
- Vote Boosting
Bribe Matching
To reduce the costs of supporting liquidity and extending our partners’ runways, Velodrome will match partner bribes at the following rates:
- Public Goods (30%): Pairs that benefit the ecosystem as a whole, such as sETH-WETH.
- Established Projects (20%): Pairs of established projects building in the ecosystem.
- Emergent Projects (10%): Pairs of new and emergent projects building in the ecosystem.
For example, Velodrome will add $0.30 in $OP per $1 bribe for the sETH-WETH pair. Since a $1 bribe typically attracts $1.2-$2 in VELO emissions, sETH-WETH would receive a total $1.6-$2.7 in VELO per $1 initial bribe, a 30%-60% discount on attracting critical ecosystem liquidity.
Note: If bribing a $VELO pair, you receive an additional 10% bribe boost.
Lock Bonus
Each week, Velodrome will distribute a pool of 50,000 $OP to all wallets locking 10,000 veVELO or more. Typically, this results in lockers getting an average 20–25% of their total lock value back in the form of an $OP airdrop.
To top it off, our partners will be eligible for an extra 10% lock bonus, as well as higher Bribe Matching rewards if they hit the following veVELO milestones on a weekly basis:
These incentives are designed to encourage protocols to focus not just on short-term bribing activity but on create sustainable liquidity incentive strategies through $veVELO, taking a long-term stake in the Optimism ecosystem.
Combined, these incentives could result in partners receiving up to a 100% bribe match on top of their lock bonus!
Protocol Owned Liquidity Bonus
Protocols that add protocol owned liquidity to Velodrome qualify for additional boosts on their bribes:
- 10% Bribe Boost: $100,000 (volatile) or $250,000 (stable)
- 20% Bribe Boost: $200,000 (volatile) or $500,000 (stable)
This allows protocols to grow their voting power and boost their bribes at no additional cost.
Vote Boosting
Finally, Velodrome will continue to use veVELO voting power to maintain liquidity on key ecosystem pairs and boost those protocols engaging most deeply in our flywheel.
Every protocol that locks at least 2M $veVELO will qualify for a 2M $veVELO voting boost to the pool of their choice for two weeks — essentially doubling their rewards.
Likewise, every bribe over $4,000 will qualify for a 1–2M voting boost from the Velodrome Team for the epoch on which it is deposited.
Hypothetical Scenario
To make this a bit more tangible, a hypothetical protocol locking 500,000 $veVELO each week could potentially earn:
- 20% $OP Lock Bonus (variable based on total locked)
- 10% $OP Lock Bonus Boost (flat rate)
- 35% $OP Bribe Match (variable depending on pair type)
- 50% $OP Bribe Match Boost
In short, a 35% lock bonus in $OP and an 85% match of their weekly bribes. Their resulting veVELO position will allow them to support their pool indefinitely and earn rewards.
Check out the total potential cost savings in depth here.
Velodrome will continue to closely monitor and refine these programs over the coming months, adjusting if needed to ensure their desired effect. Any changes will be communicated publicly.
Optimism Flywheel <> Velodrome Flywheel
By strengthening protocol incentives through bribe matching and locking rewards, our program aims to attract more protocols onto the Optimism ecosystem in a period of enormous opportunity for growth. The future lives in L2s, and Optimism has proven to be one of the best environments to build on.
As we onboard more projects, we expect economic activity to thrive on Optimism and value to flow back to veVELO holders in the form of higher fees and bribes.
We hope you’re as excited as us for the next leg of the DeFi races!
P.S. Tune in next week for details on Velodrome “Night Ride”, Velodrome “Relay”, and everything to expect from Velodrome 2.0. 🚴♀️💨✨
