Samurai Starter — a ve(3,3) DEX Explainer

Time to kickstart the Samurai Starter ve(3,3) flywheel

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Samurai Starter

5 min readDec 6, 2023

Those who have been following closely for the better part of a year know that we have become BIG proponents of ve(3,3) DEXs (aka Solidly forks) such as Velodrome Finance on Optimism and the more recent arrival, Aerodrome Finance on Base blockchain.

Samurai Starter v2 — with its SamNFT mint and $SAM token — is just around the corner and we have exciting plans to leverage the benefits of ve(3,3) DEXs to incentivize SAM-WETH liquidity for our community’s and our token’s benefit.

If you are unfamiliar with mechanics of ve(3,3) protocols and the fantastic benefits you can glean from them, this article is for you.

What is ve(3,3)?

Introduced by Yearn Finance founder and Fantom Foundation director, Andre Cronje in January 2022, ve(3,3) combines vested vote escrow (“veNomics”) popularized by Curve Finance with the Nash Equilibrium for token emissions (“3,3”) made famous by Olympus DAO. Cronje pioneered the ve(3,3) model with his much-hyped Solidly DEX. Since Solidly’s launch, there have been a slew of forks of the protocol that aim to further Cronje’s vision while improving on some of its limitations.

Today, there are ve(3,3) DEXs on pretty much every blockchain, oftentimes with multiple competitors vying for precious TVL (total valued locked) and market share. Each of these DEXs has its own benefits and drawbacks, but the one that has stood out from the pack (and has had the most forks of it) is Velodrome Finance on Optimism. The team from Velodrome recently launched a sister DEX on Base Blockchain named Aerodrome Finance.

This is how Aerodrome describes itself…

Aerodrome Finance is a next-generation AMM designed to serve as Base’s central liquidity hub, combining a powerful liquidity incentive engine, vote-lock governance model, and friendly user experience. Aerodrome inherits the latest features from Velodrome V2. Aerodrome NFTs vote to distribute token emissions and receive incentives and fees generated by the protocol.

What does that all mean for you? Let’s break it down…

How does ve(3,3) work?

In the interest of simplicity, let us describe the ve(3,3) components and processes while trying to avoid technical jargon as much as possible:

Native DEX Token:

The native token of ve(3,3) DEXs — such as $AERO on Aerodrome — has two integral purposes that make the ve(3,3) model function:

Liquidity providers receive native DEX token incentives (emissions) for providing liquidity on the DEX.
Native DEX token lockers receive voting power which allows them to direct native DEX token incentives (emissions) to the liquidity pairs of their choice. The voting power is determined by the number of native DEX tokens locked and the length of the lock (one week, one month, one year, four years). The more tokens locked, the longer period of time locked, the more voting power obtained.

veNFT:

A ve(NFT) — such as veAERO — represents a native DEX token locker’s locked position. The ve(NFT) indicates the amount of native DEX tokens locked and the length of time of the lock. This is the digital representation of your voting power. ve(NFT)s are also tradable just like any other token or NFT.

Bribes:

ve(NFT) holders are incentivized to vote for particular liquidity pairs through bribes. Protocols listed on ve(3,3) DEXs aim to garner a larger percentage of the weekly vote by ‘bribing’ voters to vote for their liquidity pair (such as SAM/WETH). The bribes can be in the form of any token such as the project’s native token, stablecoins, ETH etc. With higher bribing APR, voters will be incentivized to allocate more of their vote to the pair for the week.

Epoch:

The voting period, termed an “epoch”, lasts one week. At the end of an epoch (Thursday 00:00 UTC), the ratio of native DEX token incentives allocated to each liquidity pool for the following week’s emissions is determined based on the percentage of the total vote received.

Make sense? Yes? Good.. so what does this mean for us…

$SAM on Aerodrome

The majority of the proceeds from the SamNFT public mint will be used to kickstart our Aerodrome liquidity flywheel. What does that entail? Here are the basics, but please keep in mind that this strategy and percentages are subject to change upon completion of the SamNFT mint. At the very least, 70% of funds raised will go towards supporting this Aerodrome endeavor.

We will create a SAM-WETH pair on Aerodrome, however, we are also considering a couple of other options including a SAM-AERO pair or SAM-opxAERO pair (if possible). 10%-20% of funds raised through SamNFT will be used to provide initial liquidity.
60%-70% of all funds raised through the SamNFT public mint will be used to max lock $AERO into ve(AERO) (max lock = 4 years). This will provide us with significant voting power which will 100% be used to vote for SAM-WETH weekly.
Currently, about 7.69% of the $SAM total supply is earmarked to bribe ve(AERO) holders to vote for the SAM-WETH pair. These tokens are deployed as bribes over a period of two years to incentivize voting and increase SAM LP APR.
100% of all $SAM tokens clawed back through early vesting claim penalties are added to the $SAM bribe pool to continue to incentivize liquidity over the long-term.
$SAM cashback rewards are purchased directly from this liquidity pool and distributed to launchpad participants.

How does this look for each stakeholder? Let’s review:

$SAM Holders:

Provide SAM/WETH LP on Aerodrome to receive $AERO rewards with juicy APR.

Samurai Starter:

Max locks a sizeable amount of $AERO to obtain significant voting power to direct native DEX token emissions to the SAM/WETH pair.

Locks 100% of the $AERO it receives weekly for protocol owned liquidity thereby continually growing its voting power.

Uses $SAM to bribe ve(AERO) lockers weekly to vote for SAM/WETH thereby incentivizing additional liquidity.

ve(AERO) Lockers:

Receive $SAM bribes weekly for voting for SAM/WETH LP to receive $AERO emissions.

That is the nuts and bolts of it. We are not going to speculate on what kind of APR we will be able to achieve, but if we mint out SamNFT, we will be in a solid position to have strong liquidity with high rewards over the long haul.

So, when the time comes, go mint those SamNFTs! You will support our ve(3,3) venture, get early access to $SAM and all the benefits that comes with providing liquidity on a ve(3,3) DEX, have lifetime launchpad access at the highest tier, and be entitled to $SAM cashback rewards for participating on our launchpad… AND you get an airdrop of an upcoming SportFi ecosystem token in 2024.