Velodrome Relay

A new way for protocols to maximize their liquidity strategies.

Velodrome combines a powerful incentive engine, vote-lock governance model, and friendly user experience to offer a simple platform for protocols to build and maintain liquidity on-chain.

Projects on Optimism can leverage veVELO votes to direct VELO emissions and attract liquidity for their pools. Since voters receive 100% of the fees and incentives on Velodrome, protocols with a veVELO NFT (veNFT) can actively build liquidity while simultaneously earning rewards.

Managing a veVELO NFT, however, can be time-consuming for teams requiring multisig signers to execute transactions related to locking VELO, voting, and claiming rewards each week.

Velodrome Relay will transform the protocol and user experience by automating the process of managing veNFTs. With Relay, protocols will be able to create personalized voting strategies, select how rewards should be managed, and let the Relay vaults do the work for them.

How Relay Works

Velodrome Relay is designed with two primary audiences in mind:

Protocols seeking liquidity can automatically direct emissions to their preferred pairs and compound any earned rewards into additional veVELO voting power.

Users seeking rewards can allow Relay to vote optimally to maximize rewards and sometimes convert into veVELO.

In Relay V1 protocols will control Relay auto-compounder vaults, for which they’ll create personalized strategies for voting. Once a strategy is created, protocols can delegate their veNFTs to the vaults and let Relay do the voting and compounding of rewards for them. Protocols may choose, for example, to vote exclusively for their own liquidity pools or split voting across different pairs. This will make it easy for them to grow their veNFT positions passively while continuing to support their pairs.

All veVELO holders will be able to use the vaults created by protocols. In its next release, Relay will also enable vaults that will vote optimally to maximize the value of rewards each epoch, ensuring that veVELO holders always get the most out of their votes.

Core Features

• Protocols will be “given” a Relay auto-compounder vault that they can control. This means they can control how the managed veNFT votes.
• When depositing into a Relay auto-compounder vault, the veNFT positions are merged and converted into a single managed veNFT. Any user may deposit into these vaults.
• Managed veNFTs are in a permanently locked state, which maximizes voting power and thus rewards and rebases. A veNFT withdrawn from a managed veNFT will have its lock time set to the maximum.
• Rebases will be automatically collected and distributed to depositors.
• Rewards will be automatically collected and compounded into the veNFT position, with the amounts distributed proportionally between depositors.
• The auto-compounder is fee free in the ordinary case, as Velodrome will run keepers that will do the auto-compounding (cost should be minimal).
• In the event our keepers are down, the keeper functions are openly available for permissionless calls on the last day prior to the epoch flip. The maximum allowed slippage for the swap call is 5%.

Other Details

• In Relay V1, voting follows strategies defined by the owners of the Relay auto-compounder vaults. A version with auto-max reward voting and compounding will follow following the release of Slipstream.
• Relay V1 will only support V2 pools for compounding; support for Velodrome Slipstream pools will follow after its launch.
• The auto-compounder factory has a list of all tokens that Relay will programmatically compound into more votepower. These tokens have been chosen because of of their relatively deep liquidity.
• All other tokens — may be swept on first day of every epoch by auto-compounder owners, by keepers after day 1, and any user last day.

Future Roadmap

• The product can be tweaked to provide alternate options for autocompounding (e.g., to USDC or to WETH)
• Can decentralize creation of autocompounders (e.g. check some on chain metric for activity / bribe and create an auto-compounder for them). Will still require monitoring afterwards.

Velodrome Relay will be released in the coming weeks and represents another significant step in Velodrome’s ongoing mission to offer user-centric solutions and provide the best platform for protocols to build liquidity in DeFi. By automating the management of veNFTs, Relay simplifies the process for protocols and users looking to maximize the benefits of their veVELO holdings, contributing to the continued growth and development of Velodrome’s ecosystem.