[DRAFT PROPOSAL]: Protocol Delegation Program

That is not true, there is a UniV3 staker contract designed specifically for permissionless liquidity mining which leaves the active management up to the individual LPs. There is also a modification of that contract which has been public since last spring Add minimum tick width by dmihal · Pull Request #1 · dmihal/v3-staker · GitHub.

I also never said that they shouldn’t have a voice, I simply pointed out that they are not nearly as committed to Optimism as other protocols are.

I should add that I’m honestly disappointed there was no attempt to make use of the UniV3 staker by UniFDN… There has literally been a handful of attempts at making use of UniV3 liquidity mining and those were very isolated small scale experiments on ETH mainnet. Due to the gas costs of opening UniV3 positions it becomes difficult for small LPs to be active in those programs, but on Optimism that is not the case.

I also like all three of the projects which had the Uniswap Liquidity Mining program outsourced to them but there is no doubt that Uniswap offering the LM program on their interface, would have a much greater impact on participation.

Any way I will voice these opinions in Uniswap’s Governance Forum but I think it essentially boils down to Uniswap not wanting to allocate dev resources to this initiative. Happy to be proven wrong on that.

On a side note, for anyone who has misconceptions about the UniV3 staker and whether it’s viable for permissionless Liquidity Mining, I suggest listening to my discussion with Guil Lambert on the topic. We go into great depth about it’s advantages and why there is a lot of misinformation about the effectiveness of the staking contract. SD083 - Spartan Space - UniswapV3 by Synthetix Discussions TL;DR - It’s NOT game-able for short tail pairs like ETH-USD or OP-USD!!!

The whole point is to take subjective assessments out of it and allocate OP to protocols based on verifiable usage metrics. You’re attempting to introduce something (commitment, interest) highly subjective into the allocation process.

This program was posted on OP channels publically with requests for feedback.

That was my suggestion on how to improve the the criteria for this program, you seem to be fixated on my mention of Uniswap in my original comment, so I will entertain your critiques.

Do you deny that had Uniswap ran the OP liquidity mining program through the official Uniswap interface, the impact of the program would be far greater?

Do you think that my suggestion is less optimal than relying on a sole metric of Gas Fees Generated the past season?

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I’m glad that the conversation is shifting from Uniswap not caring about their OP distribution to now a debate about the methodology of distributing the OP rewards because the former was not a fair characterization of the situation.

I would disagree with your metric of TVL to determine the effectiveness of a DEX like Uniswap. TVL does not reveal anything about the liquidity depth. Volume should be the more relevant metric here.

Whether or not they’re optimizing their OP distribution should be analyzed on a objective basis. Just look at who is bringing in the volumes right now.

It’s bringing in 4x the volume of Velodrome on much less incentives and only 50K of OP has been distributed via Uniswap. Let’s stick with objective metrics of value added to Optimism. This is just my opinion, but I do not think the main metric should be how involved were you in these Optimism governance forums, but the MAIN metric should be how much actual value is being provided to Optimism in terms of their core product.


where in my comments did you see “governance forum activity” as a criteria for this program?

I think the volume idea is good one and I’m happy to incorporate that into one of the necessary criteria.

So let me once again quote my original suggestion just so that it is clear what I am suggesting:

I merely provided a counterpoint that “Uniswap has displayed little interest in Optimism”. Which many people would disagree with. Particularly for judging their merit on receiving an allocation in this new program.

That depends on how you define “impact”. I think running OP through liquidity managers resulted in highly optimized liquidity for Optimism on preferred pairs. Regarding smaller LP access, I think other programs like Revert and Uni V3 staker (which both got rewards) are able to cater to their needs.

I don’t think Optimism native protocols should get any advantages with this program. Just because a protocol is deployed on other chains/layers, doesn’t mean they don’t care about the success of Optimism or that they should have any less of a voice here. Never will be a fan of “nativism”.

Nor do I think protocols that conduct governance on OP should get any advantage. The governance activity could be superfluous and inconsequential. Many protocols don’t have the resources to wholesale move their governance to Optimism. Many would have a conflict of interest in doing so.

As @BP_Gamma stated, I think volume is a better metric (or even fee generation) than TVL. TVL is just parked funds, with no description about what it’s actually doing or how it’s being used.

Certainly willing to entertain more objective metrics when evaluating protocol delegation rewards. But as I have stated many times before, I would avoid subjective assessments of a protocol’s “loyalty” or “commitment”, These kinds of things are poisonous for governance.

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Well then we clearly disagree on many points. Once again you have inserted your own words which I have not expressed. I never used the word “loyalty” but I did use the word “exposure”. I think a protocol’s exposure to Optimism is directly correlated to whether the majority of the protocol’s infrastructure is deployed to Optimism, including where they conduct their governance.

I will let others have the floor at this point and avoid crowding the forum discussion.

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Just one last point on TVL vs Volume criteria. For a DEX, you need to analyze volumes because with concentrated liquidity, TVL becomes less of a metric and liquidity depth becomes more important.

Because DEX aggregators will route volumes to pools via liquidity depth/lower price impact, volume is more indicative of performance of a DEX than TVL.


Looking at the top lines and saying Uniswap is bringing “4x the volume of Velodrome” is pretty disingenuous. At the time of our proposal, Velodrome supported over 29 projects with over a $100,000 in in their LPs to Uniswap’s 9. Uniswap is really primarily driving the bulk of its volume through a few highly efficient pairs. But, project’s need capital efficient liquidity to survive, even if their token isn’t driving high volume. That’s what we’re doing.

When you actually compare individual pools, Velodrome is absolutely competitive on a volume / TVL basis with Uniswap.

Volume can absolutely be considered. But, unless you think we should incentivize the abandonment of low volume but critical pools I think we can’t over-index on it.


Fully agree with this. I think it’s important to note that some metrics, notably Volume, are more easily or non-expensively gamed than others (such as time weighted TVL); as such I think there will have to be some governance or foundation decided metrics. I’m sure we can be a little more sophisticated than one single metric!

Agree with the suggestions above, and perhaps a few others:

  • Does the project hold its treasury on Optimism?
  • Does the project currently have an active delegate? (we may need to wait for next season outcome on definition of delegate and activity)
  • Has the project been awarded a grant? (this shows at least some level of team DD, could be size proportionate)

Ok let’s compare on a volume / TVL basis on both a global and individual pair basis.


Velodrome has TVL at $70.17M. Uniswap has TVL at $42.61M on Optimism (Optimism TVL - DefiLlama)

Velodrome has 24 hour volume at $8M. Uniswap has 24 hour volume at $29.68M. (Dexs - DefiLlama)

Velo’s volume/TVL = $8/$70 = 11.4%

Uniswap’s volume/TVL = $29/$43 = 67.4%

Uniswap’s average volume/TVL is over 5x higher than Velodrome’s.


The best comparison on an individual basis would be the pools that both Uniswap and Velodrome are concurrently incentivizing:


  • Uniswap = 12M / $5.3M = 226%

  • Velodrome = 1.5M / 2.1M = 71.4%


  • Uniswap = 1.6M / 3.2M = 50%

  • Velodrome = $162k / $2.6M = 6.2%

Source: Optimism DEX Screener

OP/USDC is one pool that Velodrome dominates on volume, but even this pool, Uniswap has $325K of volume on only $89K of liquidity = 365% Volume / TVL

Velodrome has $4.3M of volume on $2.5M of liquidity = 172% Volume / TVL


I think that we are all in agreement that volume would also make a good criteria type for the Protocol Delegation Program, Alex was simply asking not to over index it.

I agree, the items above would be useful as well, but we don’t want to over-crowd the requirements either. Perhaps we can narrow everything down to 5 important and easily measurable criteria.

Yes, like I said Uniswap over performs on certain pools and underperforms on others, especially when incentives are added to the mix.

The headline is that broadly speaking, Velodrome is competitive on TVL/Volume basis when you look relative performance of all pools as we documented here.

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I certainly agree there are pockets of pools where Velodrome does do better. However, it’s undeniable that Uniswap has provided significant value to the Optimism ecosystem despite only distributing 50K of OP out of their 1M allocation thus far.

They’re expending their own resources to analyze the results of that initial phase 1 of distributions and will be looking to improve upon that. I just don’t think we should be too quick to say one protocol doesn’t care about the ecosystem without analyzing their contributions to the ecosystem fairly.

But I’ve said my piece on that, and I think it’s fair to say that Uniswap has provided significant value to Optimism thus far and has shown they are committed to expending their own resources for the benefit of Optimism.


honestly I must say you are twisting the discussion here… This thread has nothing to do with protocols receiving further allocations, that will be up to the body over seeing Grants going forward [DRAFT PROPOSAL]: Moving to a Grants Council - #40 by lavande.

I, and no one else in the thread have said that Uniswap hasn’t provided value to Optimism. My criticism was that under the current single criteria, of gas fees generated, Uniswap would receive the largest delegation from the votable supply earmarked for this program. Optimism - Popular Apps and Project Usage Trends :abacus: :red_circle::sparkles:

Uniswap only just started distributing their OP and have done so through third parties, so I will wait until it has finished to make my judgement but I doubt that the 50k OP that is being distributed through third party projects will move the needle much on the value they have brought to Optimism.

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Apologies! You’re right that you had advocated solely on the gas fees. I went ahead and edited my post as a correction.

We would love to the see the results as well. It might or might not have. There have been other competitors who have entered the space as well. KyberSwap Elastic is doing very well on USDC-DAI because they implemented a 0.008% fee tier to undercut Uniswap’s 0.01%, and so is Balancer with their veBAL program.

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Uniswap should receive one of the largest delegations for this program. They deserve it and they should have a large voice in governance.

Isn’t that the point of this program? To give protocols that are the backbone of Optimism voting power? Right now, they have zero voting power.

They have taken very little OP for their size (including sub-projects that work on them, like Gamma, xToken, Revert) compared to some other projects here. They pledged it all to incentives. They are a power player in crypto and DeFi. They’re critical to the success of Optimism competing against other Layer 2s. They have little to no voice in Optimism governance right now. They never got a committee spot.

Velodrome is well-qualified for a delegation here as well, being they pushed, I think, all of their allocations (both from op labs and governance) to incentives. Velodrome has what? 200k OP allocated to them? That’s pretty small for a protocol of their size on this platform.

Correct me if I’m wrong, but Synthetix has 2.1m OP voting right now, with another 1.28m stuck on a multi-sig. Giving them a vote power of nearly 3.4m when fixed. Far more than any other delegate.

Synthetix 3.4m OP
Velodrome 200k OP
Uniswap 0 OP

I thought the point of this program was to fix this imbalance. Not make it worse.


So far you haven’t contributed even one idea on potentially fairer criteria…

With all due respect, I think the criteria is fair to Uniswap and many other protocols based on their utility and usage.

So why would I suggest changes?

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