[DRAFT] [GF: Phase 1 Proposal] Curve

I want to be clear: I think a fully deployed Curve would absolutely be good for both Optimism and Velodrome.

Velodrome’s success depends 100% on the success of the ecosystem, which is why we’re increasingly vocal in governance. I think it is clear now that some of the early proposals led to less than ideal outcomes and that is something we’re committed to doing our best to help avoid going forward.

Every new grant has an opportunity cost and dilutes those previously distributed, so we need to make sure the ROI is there as we continue to invest.

For me personally, subsidizing TVL and volume that will ship 50% of fees off chain may be a deal breaker given the existence of alternatives (not just Velodrome) that don’t require this kind of value extraction. Likewise for the requirement that projects will have to go to mainnet to engage in Curve governance to have a shot at having a gauge that might be eligible for the rewards.

If in the future these obstacles are removed, I’ll feel differently. I think the future is on L2 and Optimism users should be able to get the full Curve experience if we’re going to drop 1M in incentives on it.

That said, if these aren’t deal breakers for others here is something I think could make the proposal stronger.

Choose a single public good pool (like tri crypto) and vote to make it eligible for CRV emissions on Optimism. Then work with a collection of Curve stakeholders to commit to a certain amount of voting power that would be dedicated to this pool over the duration of the incentive program. Then request an equal proportion of OP incentives as a match or boost to those emissions.

This way, you are growing Curve on Optimism with OP incentives in a way that doesn’t gatekeep participation to those with mainnet presences. You are also functionally matching the incentives that Optimism governance is granting you, demonstrating a commitment to ecosystem investment.

Market nuked. Some coffee in the morning helps!

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This is a good suggestion, thanks. (I hear this may actually be in the works already). We will discuss with Curve team about launching and gauging a tricrypto on Optimism. Tricrypto is indeed an important one imo

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To be clear, we’re talking about 0.02% of volume being sent to layer 1 (not some random other chain). Assuming ~$1m volume per day, that amounts to $73,000 per year. I think it’s a bit hyperbolic to call that deal-breaker level “value extraction”.

Speculatively, traders could plausibly save that much on slippage alone.

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Not up to speed on this proposal but I saw this on the twitter feed. Pretty weird angle to take? Threatening to focus on a different L2 if they don’t get a grant?

I think it’s worth noting that the expected amount to be “extracted” to L1 is far less than the amount that Velodrome directly airdrops to veVELO lockers (~500,000 OP). These airdrops provide no direct value to the Optimism ecosystem and are essentially a subsidy to boost the price of VELO.

Indeed, the majority of OP funds requested by Velodrome directly benefit Velodrome development with no direct benefits to the Optimism ecosystem more broadly. For example, 600,000 OP are allocated to “protocols that integrate Velodrome’s liquidity layer” and another 600,000 are allocated to developing a “vote delegation and autocompounding feature that is directly built into Velodrome”.

By contrast, distributing OP tokens to LPs (as in this proposal) incentivizes liquidity on Optimism, a direct benefit to the ecosystem.

Given these details, it’s hard to avoid the conclusion that Velodrome is trying to push a double standard to “lock out” their perceived competitor.

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So just so you know - we withdrew this grant request from governance after receiving 3m $OP from the partner fund. Those incentives have actually done a lot to help onboard a huge amount of TVL ($123m).

By incentivizing veVELO lockers to vote, and direct emissions (of variable value, depending on token price), we are incentivizing liquidity.

These airdrops provide a direct value to the Optimism ecosystem, as witnessed by Optimism’s climb from #15 to #11 on DefiLlama’s “All Chains TVL” rankings.

We love Curve, and have repeatedly said that we are eager for Curve to continue expanding on Optimism once the technical hurdles presented by Curve team member’s above allow for it.

Let me state publicly: I am not concerned in the slightest about the impact of a $1.6m grant in terms of any “competition” between Curve and Velodrome. I think our system is robust, and we are actively working to improve our UI, bribing contract, and other elements of our protocol. That should and will be our primary focus.

Anyway, as Cryptoyieldinfo stated, our real fight is against the CEXs, not a protocol that we have long admired, and that I personally have been using faithfully since launch.

I support granting curve OP to incentive their growth on Optimism.

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Despite the furious back channeling, discord spamming, unrelentless tweeting, Velodrome team (apparently the frontline of Optimism governance) has yet to explain a very simple thing. This misunderstanding (some would say FUD) was evident from the very start, has been elaborated on, and actively deflected with irrelevant, out-of-context screenshots from these other venues. This form of engagement that Velodrome prefers has drawn praise from some quarters as “hustle” or “being passionate” and self-described as unavoidably part of “an inherently political process”:

Screen Shot 2022-07-29 at 7.26.39 PM

I do believe it is worthwhile to cut through the noise. Very rarely can one find the original causal force that starts a complex mass moving. But sometimes you can find one screenshot:

This “feeling” (less than one day after the draft proposal was posted) that value will entirely flow back to Mainnet is the initial, powerful impulse that has led to this wide-ranging discussion happening in multiple venues of social media. Everything since then has been some form of elaboration or deflection on this basic feeling.

So let’s put aside all the noise. Let’s put aside the silly inaccuracy about pool2s in the tweet, which he repeated here, and let’s put aside the various leading questions asked by Alex Cutler in his posts here, including his strange screenshot of Mainnet pools, before he finally decided to “weigh in”.

Let’s talk about this feeling that value will flow back to Mainnet. Why would someone feel that 2 basis points of volume going back to Mainnet will result in everything else going back to Mainnet?

On the face of it, this is an absurd claim.

Rather than address why 2 basis points of volume is so crucial, they ask a related but quite different question, which is easier for them to defend. In behavioral economics, this is called the substitution heuristic. When faced with a hard question you can’t answer, you substitute a similar, but different question that is easy to answer. It is quite deceptive and easy to pull off and funnily enough, not always done to you by others but by yourself. Why? So that your smoll brain can avoid facing reality.

Instead of asking the relevant question, they substitute with:

  • do you believe it’s right for value to flow back to Mainnet?
  • do you believe Optimism should incentivize value to leave Optimism?
  • do you believe people should be voting on Mainnet for something that affects Optimism?
  • do you believe Curve should be doing more on Optimism?
  • do you believe people should be allowed to use Curve on Mainnet if they use Curve on Optimism?
  • isn’t it better to not use Mainnet at all?

Note how many of these questions have to do with beliefs, particularly about seemingly deep issues that when actually pondered are quite vapid. For example, “do you believe Curve should be doing more on Optimism?” Obviously more Curve LPs will come if there are more incentives. So the practical matter is, if you want Curve LPs to come, you give them more. And why do you want them to come? Because the more of them, the better the trading and more traders come too. There is no deep philosophy here.

That doesn’t matter if the purpose is to deflect of course. Then the more absurd the better, as people get distracted from the real question:

Would 2 basis points of all the volume Curve brings to Optimism going back to Mainnet result in everything else going back to Mainnet?

So remember, next time the Velodrones ask you, “Something something value on Mainnet?” just ask them to answer this first. This is in fact the most pertinent question if you are interested in making money trading on Optimism, not in holding some vague idealistic philosophy that happens to very coincidentally align with defending one protocol’s moat.

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hey just fyi in the above post I noted that I support granting Curve their requested $OP.

We should certainly not rely on my “feelings”! Appreciate you laying out the numbers for us.

I do hope that a revision of the proposal will provide more clarity around co-incentives and maybe outline something Curve can bring to Optimism in the near future (tricrypto, for ex, as mentioned above would be amazing.)

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Been a bit busy… started writing that earlier and just posted it now, maybe after nobody cares anymore :). I think it still has some value though in reiterating what I believe to be the fundamental question here. Thanks for your other post and your support.

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I understand and appreciate your emphasis on numbers. I do disagree that our questions around this grant come from a place of fear / trying to maintain a competitive edge (ex: we have OP, they dont), but that the original points have been a bit lost in a nasty argument that I for one have zero interest in engaging in.

I do think its important that grants consider carefully the structure of protocols that are multichain, I do think governance is a political process - it involves debate - as you have participated in!

And I also think that Curve expanding their liquidity incentives to Optimism pools is a net positive for the ecosystem.

Cool, we’ll just forget Velodrome deliberately misrepresented this proposal to protect their own interests. Happy to know we can trust your objectivity in co-governing this august enterprise

Hey nagaking,

I don’t think that happened. I understand we are in disagreement here so not sure what will be gained from trying to change your mind. hope you have a nice night though - I certainly do look forward to co-governing this august enterprise with you!

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wanted to thank you @fiddy for laying out the reasons why veCRV hasn’t been implimented yet on Optimism. Point 3. also makes clear sense to me.

I believe a short discussion as above is better than a public CT rant and taking a dig at various protocols, looks like some will have fragile egos no matter how big they get.

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Great proposal. Looking forward to it.

Looks good for me. Just the security of protocol have to be improved

We want “more Curve” on Optimism and look forward to aligned roadmaps & user incentivization.

The proposal is well-written but lacks some detail in important areas such as alignment and collaboration between Op & Curve. Consequently, we’d like to see some more focus on (incentivizing) building on an Optimism deployment, moving users or pools sustainably to Optimism.

Knowing that Curve is the place for deep stablecoin liquidity and consequently a foundational building block for many use cases, we can assume a big network effect of moving pools to Optimism - if truly aligned.

I call em like I see em, ser

At any rate, no ill-will here. I like velo and still hold my airdrop. Still, I will dispute falsehoods regardless.

My best regards

Thank you all for the input and lively discussion. I have let this draft sit for some time to allow for Curve’s development on Optimism to speak for itself.

Since the OP post one month ago, TVL is up from $17.33m to $39m and average weekly volume is up from $3.4m to $13.3m. Two new gauges have been voted in by the DAO: 3pool and FRAXBP. Both of these are foundational USD pools that can be used to create metapools in the pool factory. A tricrypto pool is in the works, and will be launched after some testing and parameter adjustment.

The recipient address in the proposal is the Curve deployer address, which can be verified on Etherscan.

I’m now switching this proposal to READY, and excited to work with you all to help bring deep stablecoin liquidity to Optimism!