Introduction
veDAO launched with the sole purpose of giving ordinary people an opportunity to own and control a portion of Solidly.
In the course of this work, the veDAO team has developed deep subject matter expertise on both Solidly and ve(3,3), learning what is and isn’t working for Solidly and its broader ecosystem. This expertise has resulted in the veDAO team becoming the go-to resource for protocols and chains seeking to develop their own ve(3,3) platforms.
Since receiving the overwhelming endorsement of our members to expand veDAO’s mandate, we’ve been working with key partners to find valuable opportunities for the DAO through the application of our unique knowledge and skillset.
Which brings us to the exciting subject of today’s announcement: our plan to partner with Optimism to evolve Solidly and bring its next-generation capabilities to Optimism.
Solidly — The Vision
We believe that Solidly represents a revolutionary idea as an AMM serving as a public good for a blockchain ecosystem by bringing together some of the most effective mechanism designs in DeFi:
- A base-layer AMM targeted at ecosystem protocols, earning their buyin by distributing initial ownership of the voting power as veNFTs
- Incentivizing trading fees rather than passive liquidity (a la Curve) by giving fees to the voters of a pool, thus directing liquidity to where it is most needed and creating a virtuous cycle for the ecosystem
- ve(3,3) mechanics that reward early lockers as well as collective locking (3,3)
Solidly — Hurdles
Despite Solidly being a marquee DeFi narrative for months, it has become clear that its implementation has been less than ideal:
- Emissions started high and rapidly declined after launch, not allowing enough time for ve(3,3) incentives to sustain ecosystem growth or cooperation
- Key design elements of the protocol, such as bribes and token whitelisting, were ineffective at mitigating -EV value extraction
- UI design and difficulty of integration with Convex layers (0xDAO and Solidex) made proper use of the protocol challenging (e.g., bribes, voting, position updates), which delivered an uneven, sometimes confusing experience to everyday users
- Renunciation and immutable codebase prevented the addressing of key contract issues revealed during the launch
- Lack of documentation or public-facing presence effectively delegated community support functions to partner protocols
- Lack of leadership left users and partners unguided and without a central community
Solidly v2.0
We believe that with a few key adjustments, an new protocol based on Andre’s vision can become the next-gen base layer for ecosystem liquidity management.
- Upgraded Mechanics: Improve the protocol’s mechanism design to better align incentives for voters and LPs
- Smoothed Emission Schedule: Tweak the emissions to more closely align to the original Solidly documentation and drive protocol sustainability
- Improved Initial Distribution: Adapt the distribution mechanism to be more oriented towards a “fair launch”
- Improved Voting: Ensure protocols are incentivized to maintain voting power and voters are incentivized to vote for the pools that generate the most fees
- Fixed Bribes: Fix the broken bribe layer that allows rewards to be streamed and votes to be changed at snapshot
- Controlled Whitelisting: Create safeguards to prevent the abuse of whitelists
- Improved UX: Fix known bugs and improve the overall experience
- Human Element: Empower a dedicated team and/or DAO to continuously support and improve protocol and community
Why Optimism
We believe that 2022 will be a year of explosive growth for Ethereum L2s and that Optimism are in a great position to capitalize on that.
Optimism have spent significant resources in improving their developer experience, and it shows. Their EVM equivalence upgrade makes porting over existing Ethereum smart contracts trivial. In addition, they have team members active in the Discord trenches ready to help should the need arise.
In addition to having strong technical and support capabilities, Optimism are values-aligned. They have the ambitious vision of fixing broken incentives within Ethereum research and development through Retroactive Public Goods Funding. We’re impressed by the tight coordination between the Optimism core team and the developer community at large, and we welcome the invaluable guidance and leadership we know they’ll provide. It’s been great working with them so far.
And they’ve been very welcoming to us, committing to support veDAO with financial and technical resources to enable the development of the new protocol.
What’s next?
veDAO’s mandate since inception has been to discover and execute on ways to outperform on Solidly. With this new partnership and protocol, we will ensure that veDAO is able to thrive for the long term without needing to rely solely on the success of Solidly and Fantom.
In the coming days and weeks, we’ll be sharing more details on how we’re thinking about how this new protocol will function and how veDAO and WeVE holders will benefit. It is incredibly important to us that DAO members feel a part of shaping this new protocol and future for veDAO. Keep an eye out for for additional posts on our Twitter and Medium, where we’ll share more thoughts on the following topics:
• Overview of Solidly — Successes and Failures
• Solidly 2.0 — Vision and Detailed Mechanics
• The Future of veDAO and Benefits to WeVE Holders
• Protocol Launch Details and Documentation
Once the details are finalized and vetted by the community, we plan to translate these plans into a series of VIPs for community approval. This is still “the people’s cooperative” after all, and you’ll have the final say. But we hope you are all as excited as we are to take Solidly into Ethereum and the future.
