The Promise of DeFi
They say an emergent technology must get distribution before incumbents get innovation. Decentralized finance offers previously unthinkable benefits such as self-custody asset management, cross-application composability, and inherently distributed stakeholder interest. The continuous experimentation we see in DeFi is impossible to replicate in a closed, corporate environment. But for DeFi to win, it must find a way to compete with centralized players and TradFi — and to do so, it must offer comparable accessibility, ease of use, and reliability.
Onboarding, user experience, and lack of trust are perhaps our most challenging barriers to adoption. Steps such as setting up a wallet, learning the intricacies of a protocol, and discerning between rugs and high-potential projects can be daunting tasks for inexperienced users. It is up to all of us to overcome these barriers if we want to welcome the next generation of users to our decentralized future.
Fast accessible Ethereum Layer 2s such as Optimism is where this future will be built. And as it’s only native liquidity layer, Velodrome is uniquely positioned to serve as the hub of this growth, reducing barriers for builders while allowing ordinary users to share in fruits of their labor.
That is why we’re excited to share some new details on what’s coming up next for Velodrome.
The Velodrome Vision
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. Velodrome’s ve(3,3) design blends vote-escrow, voter rewards (bribes), locked rebases, and constant emissions into a single dApp to create a robust flywheel previously only possible through several protocol layers.
Indeed, Velodrome has proven to be highly effective at attracting and rewarding early adopters, offering up to 300%+ rewards for LPs and 200%+ rewards for veVELO voters for months. Despite launching in the depths of the bear, Velodrome has attracted many of the best names in DeFi to Optimism, developing a thriving ecosystem that now supports over 30 protocols, $2.5B cumulative trading volume, and 2.5M cumulative transactions.
Partners leveraging Velodrome’s incentives can reduce the capital intensity of their liquidity programs by 25–40%. In other words, they can get more liquidity for less. By reducing costs ecosystem-wide, we are allowing protocols to extend their runways and support their sustainability through the bear market.
The Road Ahead
Over the next six months, Velodrome will be making major upgrades to its core technology to better position itself as not only Optimism’s top DEX, but one of the leading AMMs in all of DeFi. These features include a complete overhaul of the Velodrome user experience, an optimization of the underlying contracts, new automation features for both lockers and liquidity provides, and groundwork for major protocol upgrades in the near the future.
Combined with the incentives we’re offering in the Tour de OP, these upgrades will support the continued rapid growth of Optimism and DeFi more broadly.
Introducing Velodrome 2.0
Development has already been underway on Velodrome 2.0 for months and we’re excited to finally share more details on what folks can expect in Q1 2023.
Velodrome “Night Ride” UI
- Complete UI/UX overhaul
- Updated light / dark mode support
- New dashboard view of all positions
- Embedded user education / guidance
- Custom swap slippage toggles
- Improved, friendlier error messaging
- Improved wallet integrations
- Reduced errors / issues
- veNFT artwork + stats
- Delegate your veNFT voting power to Relay
- Relay optimizes voting for maximal rewards
- Relay auto-claims bribes, fees, rebases
- Relay compounds rewards into single asset
- Custom pair support (for UniV3 + Curve-style pair implementations)
- Named pair support (e.g., Balancer-style pairs)
- Votium-style voting upgrades
- Gasless transactions / meta transactions support
- LP delegation / voting support for tokens such as OP
- veNFTs tradable even while staked / voting
- veNFT splitting
- Native zapping support
- Improved contract APIs
- Complete overhaul of checkpoints, reducing DoS vectors
- Custom implementations replaced with OpenZeppelin contracts
- Removed obsolete functions, reducing attack vectors
- Added reentrancy locks for state-modifying functions
- Upgradable factories for pairs, gauge, and bribe contracts
- Massive streamlining/optimization of codebase (hundreds of lines of code removed)
- Full, independent protocol audit
Beyond just Velodrome 2.0, we have a number of other major upgrades that we expect to make to the protocol in 2023 including:
- Autocompounding LPs
- Concentrated liquidity, UniV3 style
- Multi-Pairs (metapools, etc.)
- Integrated veNFT Trading
- veNFT Lending and Borrowing
The Bottom Line
Velodrome will make it easier for protocols and users to get the most out of the platform, increase the diversity of applications on Optimism, and accelerate the ecosystem’s economic engine, building on our already impressive results:
- $6M+ cumulative emissions to LPs
- $4M+ cumulative in bribes and fees to veVELO lockers
- $10M+ value locked as veVELO (70% of supply) locked for ~3.5yrs on average
- Highly engaged community of 8,400+ Discord members, 44K Twitter followers
- A consistent top-three protocol by TVL, volume, transactions, and users
We’ll be sharing more details about Velodrome 2.0 in the weeks and months to come!
This is just the start of a long ride, racers.