[READY][GF: Phase 1 Proposal] Velodrome Finance

Project Name: Velodrome Finance

Author name and contact info: Alex (alexcutler.eth#0399), Jack (jack-anorak#6505), Tao (tao#4297)

I understand that I will be required to provide additional KYC information to the Optimism Foundation to receive this grant: Yes

L2 Recipient Address: 0xb074ec6c37659525EEf2Fb44478077901F878012

Grant category: Governance

Is this proposal applicable to a specific committee? DeFi

Project Description

Velodrome is a foundational piece of public infrastructure bootstrapped by Optimism Foundation. We’re a public good DEX that combines the best of Curve, Convex, and Univ2 into a single AMM designed to serve as the premiere ecosystem-native liquidity layer, reducing friction and lowering costs for new and existing protocols operating on the network.

  • 100% ecosystem owned and operated as the protocol has no outside investors or funding
  • 100% of its revenue goes to lockers (mostly protocols) and remains in the ecosystem
  • Lowest transaction fees of any DEX at .02% for both stable and volatile swaps
  • Optimism-native and exclusive, aligning its incentives entirely with the good of the ecosystem
  • A full-time team focused entirely on building and scaling both Optimism and Velodrome
  • Incentivizes projects to lock long term investment into the Optimism ecosystem
  • Serves as the primary liquidity and trading hub for over 30 ecosystem projects

This proposal has the support of:

  • Abracadabra
  • Alchemix
  • Angle Protocol
  • Beefy Finance
  • Byte Masons
  • dForce
  • Hop Protocol
  • Inverse Finance
  • Liquidity Protocol
  • QiDAO
  • Optimism Prime
  • Overnight Finance
  • Revest Finance
  • Sonne Finance
  • Synthetix Ambassadors
  • Synthetix Treasury Council
  • Tarot Finance
  • Yearn Finance
  • (more coming)

Project Links

Core Team Members

Previous Projects

The Velodrome Team has a diverse and multi-year background in both finance and technology. The team founded and operated veDAO in the Fantom ecosystem attracting over 2 billion in TVL at its peak and have consulted on ve tokenomics matters for Redacted Cartel and Boba Network. Our veteran development team consists of individuals who have contributed to projects such as:

Open source projects we contributed to (PRs):

  • multicall.py (OP support, performance optimizations)
  • Dune Spellbook (pricing data)
  • Rainbowkit (Gnosis Safe connector)
  • Rabby Wallet (hardware wallet support)
  • smatcontracts/Simple Optimism Node
  • alchemy-web3.js (RPC retries support)

Our own open source projects:

  • API written from scratch (backwards compatible with Solidly forks)
  • Discord bots for trades, bribes and deposits
  • Sugar project (easiest way to build on top of Velodrome)
  • Protocol documentation

Our repository changes from Solidly:

  • Solidly dApp fork: ~497 commits, 120 files changed, 4768 insertions(+), 6690 deletions(-)
  • Solidly contracts fork: ~414 commits, 45 files changed, 3660 insertions(+), 1483 deletions(-)

Ecosystem Value Proposition

Relevant Usage Metrics

Competitors, peers, or similar projects: Curve, Beethoven, Uniswap, Zipswap

Is/will this project be open sourced? Contracts and API are fully open source

Optimism native? Yes, and exclusive.

Date of deployment on Optimism: Deployed 6/2/2022

What is the problem statement this proposal hopes to solve for the Optimism ecosystem?

The Optimism ecosystem needs to grow substantially in the midst of significant headwinds from both competing ecosystems and macroeconomic forces. A strong secondary economic engine that creates access to deep ecosystem liquidity is a dependency for growth; indeed, the Optimism Foundation has identified the lack of such an engine as one of Optimism’s greatest growth impediments. New projects need resources to quickly and efficiently bootstrap initial liquidity, while existing ones need to sustain and grow their liquidity at minimal cost.

How does your proposal offer a value proposition solving the above problem?

Put simply, our unique public good Optimism-native protocol design makes it simple for protocols to bootstrap and build liquidity faster and with fewer resources, returning 100% of the value generated created back to them.

Optimism incentives on Velodrome are essentially a 2x-3x multiplier of liquidity incentives - including grants - for the ecosystem at large, making it easier for protocols to onboard onto Optimism and cheaper for them to operate, resulting in lower burn rates for $OP and project’s native tokens as compared to direct LP incentives. On Velodrome, protocols create revenue-positive liquidity programs that will sustain them and the ecosystem at large for years to come.

Why will this solution be a source of growth for the Optimism ecosystem?

Velodrome is already demonstrating our ability to drive significant ecosystem growth. We are doing this by not only helping to attract and onboard new projects to Optimism, but also by lowering the operational costs associated with maintaining liquidity for existing protocols. By reducing costs ecosystem-wide, we are allowing protocols to reinvest in themselves and helping to ensure their sustainability through adverse economic conditions.

And because the economic activity that Velodrome generates occurs exclusively on Optimism, it drives significant sequencer revenue, supporting the broader vision of self-sustaining retroactive public good funding. Since launch Velodrome has generated over 2.5M transactions, averaging 25K daily in the last 90 days (~15% of all transactions on Optimism), and has distributed over $6M in $VELO liquidity incentives, approximately at $300K per week, to support the high level of trading activity.

What makes Velodrome different than other AMMs on Optimism?

Velodrome is a next generation Optimism native AMM that combines some of the best mechanisms from Curve, Convex, and UniV2 into a single cohesive experience. Velodrome’s status as an Optimism exclusive public good aligns its incentives entirely with those of the ecosystem. It also ensures that all the economic activity generated by the protocol (emissions, governance, bribes, fees, LPs) stays on Optimism, supporting sequencer revenue and the broader Optimism flywheel.

Velodrome has the lowest fees on Optimism (0.02%) and supports the efficient swapping of both stable and volatile pairs, consistently attracting high volume per $ of TVL and TVL per LP incentives. We are the only AMM on Optimism that supports native governance and bribing, with no need to bridge capital or assets to main-net to participate. Additionally, 100% of the revenue generated by the protocol is returned to $veVELO lockers (primarily partner protocols) on Optimism rather than being redirected to mainnet stakers. Enabling protocols the ability to maintain deep liquidity at very competitive rates.

Essentially, Velodrome operates as an extension of Optimism itself, augmenting the economic engine of $OP incentives with $VELO as well as the business development / onboarding arms of the Foundation. Rapidly accelerating ecosystem growth and sustainability.

Previous Grant History

Has your project previously applied for an OP grant?

We received a 3,000,000 $OP grant from the Optimism Foundation Partner Fund in July. Existing incentives are likely to be exhausted in next 4-8 weeks in alignment with the distribution timeline encouraged by the Foundation.

This grant had three primary objectives:

  1. Lowering barriers to entry with locking incentives
  2. Boosting ecosystem efficiency with bribe matching
  3. Building deep liquidity on key ecosystem pairs

The results of this program so far have been overwhelming:

  • A consistent top 3 protocol by TVL, volume, transactions, and users
  • $6M+ VELO liquidity incentives distributed into the ecosystem (2-3x OP grant)
  • 30 new protocols onboarded and supported with liquidity growth in ecosystem
  • 30-70% reduction in liquidity incentive costs per $ TVL for ecosystem partners
  • $5M+ liquidity of OP token pairs, creating $1B in volume
  • $1M+ in protocol revenue returned to veVELO lockers (primarily protocols)
  • $10M+ value locked as veVELO (70% of total) locked into the Optimism for ~3.5ys
  • $250k veVELO airdrop for OP Team, $2M veVELO airdrop to ecosystem partners
  • Highly engaged community of 8,400+ Discord members, 44K Twitter followers

Since receiving the grant, Velodrome has exploded in almost every metric:

  • TVL: 400%+ increase, from $14M to $80M+ (as high as $150M)
  • Weekly Fees: 500%+ increase, from $3.3K to $20K
  • Cumulative Volume: 700%+ increase, from $270M to $2.2BN+
  • Average Daily Volume: 150%+ increase, from $2.2M to $4.5M+
  • VELO Holders: 100%+ increase, from 6.6K to 12.7K
  • VELO Supply Locked: 70%+ increase, from 219M to 373M+ VELO

In summary, the ~3M OP incentives have returned a massive ROI in the form of:

  • $80M+ in TVL
  • $6M+ in direct liquidity incentives
  • $10M in value locked into the ecosystem
  • $15M in market cap value living exclusively on the Optimism ecosystem

New Grant Request

This grant request is focused on extending the duration of the existing incentives whose effectiveness has been demonstrated for the next 6 months in order to maintain the pace and velocity of ecosystem growth it is helping to drive.

During this period, Velodrome will also continue to exclusively develop its roadmap for Optimism, focused on a v2 deployment with a number of upgrades:

  • Velodrome Relay
  • Concentrated liquidity pool types (UniV3 style)
  • Improved veNFT experiences with Quixotic
  • Delegateable OP in LP positions
  • Improved retail oriented UX, e.g.:
    • Custodial wallets integration
    • Wallet top-ups
    • LP zappers
    • DeFi educational content

While previous grants to protocols of our size (measured by on-chain metrics TVL, volume, transactions) imply a much larger grant, we’ve chosen a lower number with the goal of preserving Governance Funds for other use-cases and even more motional timing.

Number of OP Tokens Requested: 4,000,000 OP

  • 98% less than average OP granted per $ in TVL
  • 80% less than median OP granted per $ in TVL
  • 98% less than average OP granted per $ in Volume
  • 65% less than median OP granted per $ in Volume
  • 98% less than average OP granted per transaction
  • 86% less than the median OP granted per transaction
  • 91% less than the average OP granted per user
  • 51% less than the median OP granted per user

Received OP tokens through the Foundation Partner Fund?

Not since original grant detailed above and no new grants are in progress.

How much will your project match in co-incentives?

Over the next 6 months, Velodrome will distribute ~257M VELO in emissions to liquidity pools. Based on historical results, 85%-90% of these emissions will be directed to pools incentivized through this program: a value of $6.5M at current VELO prices. This not only represents over 1.6x the grant request size but also equals over half of all $OP incentives projected to be distributed via governance over the same period.

Likewise, due to the design of our incentive programs, participating protocols are required to provide their matches, which further increases the multiplier effect on the grant.

  • For every one dollar in lock bonuses, protocols must lock an average of $4 for 4 years
  • For every one dollar in bribe boost, protocols must provide $2 - $9 in bribe value

In short, we will not only be 2-3x the the incentives with our own emissions, but also be requiring each partner to provide a 2x-9x match to access the incentives as well.

How will the OP tokens be distributed?

Lowering Barriers to Entry with Locking Incentives - 37.5% [1.5M OP]

To onboard new protocols to the Optimism ecosystem during uncertain times and in the face of competing incentives, we must ensure that they are able to bootstrap their liquidity in the most cost-effective method possible. At the same time, these incentives should be paired with mechanisms that require protocols to meaningfully invest in the ecosystem for the long term and thus discourage mercenary and exploitative behaviors.

Incentivizing the acquisition and locking of veVELO is an ideal strategy in this regard, as it requires a multi-year lock of capital in the ecosystem to receive the lock bonus and access Velodrome’s voting and revenue generation capabilities. It is to our knowledge the only currently running incentive program that requires the locking of capital in the Optimism ecosystem. Incentivizing locking lowers the underlying costs of building an initial veVELO position (by an average of ~25%) while simultaneously giving any protocol the power to direct emissions and attract liquidity for the long term.

Overall, the number of tokens per 10k VELO have roughly decreased in the last several epochs due to increased locking, and yet the %rebate has increased due to token price movements. The overall effect has been to increase the per-OP efficiency of this bonus.

Token locking also supports the health of the ecosystem by

a) reducing the floating supply of VELO, thereby buffering LP incentive returns denominated in VELO;

b) aligning incentives between the token holder base and the overall ecosystem, as veVELO holders have a shared interest in the long-term success of Velodrome and Optimism;

c) strengthening ties between participating ecosystem protocols, as they not only see aligned incentives but also collaborate as partners and are connected by Velodrome’s external-facing team.

Rewarding lockers with OP tokens will not only increase the health of the Velodrome economy but also give more governance power to the deeply invested, long-term supporters Optimism is looking to attract.

Since the beginning of the lock bonus on July 7, we’ve generally seen more VELO locked than emitted, with lock rates at 60% - 70% at an average of 3.7+ years.

  • Quantity: 1.5M OP
  • Delivery: 40K OP incentives per week over 6 months, distributed to veVELO lockers proportionally to new veVELO balance per week, exclusively for transaction locking liquid VELO (no lock extensions or rebases).
  • KPIs:
    • Exceeding and maintaining 70% VELO total supply locked
    • Doubling share of OP protocols locking VELO among those with native tokens
    • Attracting additional new protocols to the ecosystem that meaningfully improve layer-wide economic activity

Boosting Ecosystem Efficiency with Bribe Matching - 37.5% [1.5M OP]

As protocols like Curve and Convex have demonstrated, bribe-for-emission models are far more capital efficient than direct incentives in the attraction of liquidity, and Velodrome remains the only AMM in the Optimism ecosystem that supports native bribing.

It’s no surprise, then, that bribing for emissions has been massively popular on Velodrome for both new and existing protocols, allowing them to draw significant liquidity at roughly 1/3 the cost of doing so with direct LP incentives.

To date, we have been matching partner bribes at a 25% - 75% rate, lowering the underlying cost basis of bribing and facilitating the migration of incentives from Mainnet and other networks.

This program has been an unalloyed success, with cumulative bribes, total bribed pools, and number of protocols bribing rising almost monotonically since inception. After kicking off the bribe economy, Velodrome’s incentive program has shifted to mostly supporting partner liquidity. Partner bribe matches are growing weekly as more protocols migrate to Optimism and are expected to make up the majority of Velodrome’s OP incentives in the coming months. Over time, partner bribes have taken over the majority of bribe value, greatly reducing reliance on Velodrome incentives.

We see this behavior persisting and want to keep the bribe economy afloat while encouraging more of this activity. Through the bribe matching program, Velodrome will continue to support partner onboarding and enable the bribe economy to take life of its own.

Extending this program for 6 months will be crucial to strengthen our partners’ liquidity depth and give them enough time to evaluate the results of their incentive programs. The expectation is that we can foster enough new building on Optimism to draw the kind of activity and ensuing liquidity demand that will fully kick off broad exploitation of the Velodrome economy.

  • Quantity: 1.5M OP
  • Delivery: 40K OP per week for 6-8 months.
  • KPIs:
    • Increasing the total numbers of protocols bribing
    • Increasing number of total pools bribed
    • Increasing the total value bribed in $ / ETH terms

Building Deep Liquidity on Key Ecosystem Pairs - 25% [1M OP]

For Optimism (and Velodrome) to succeed, they need to attract far more liquidity on core token pairs from Mainnet Ethereum and ensure that core ecosystem pairs that support the broader Optimism flywheel such as $OP and $VELO remain deeply liquid on chain. This is essential not only to support the onboarding of capital to the ecosystem, but supporting the broader economy.

Generally speaking, these pools need to be deep enough to support the lowest fee and slippage trades for the large transactions types that tend to make up a disproportionate share of volume on Mainnet and allow easy entry/exit for those looking to engage with the ecosystem. Establishing this pool depth will create a virtuous cycle of capital migration, as the resulting economic activity will make Optimism the ideal venue for both trading and LPing DEXs across the network.

We thus believe it is essential to continue supporting Velodrome emissions for key public good pools that benefit the ecosystem collectively. So far, these pools have been massively successful, attracting >$30m in liquidity and generating $1B+ in volume since launch. Because the Optimism Foundation is legally unable to bribe these pools directly, Velodrome will commit to bribing and boosting the votes of these key pairs to ensure they will attract the votes/emissions to build deep liquidity at no additional cost to the ecosystem protocols that depend on them.

Key pairs include:

Pair Current Liquidity 24H Volume (Oct 13) 30-Day Avg Volume
OP - USDC $4M $850K $1.6M
WETH - USDC $3M $700K $1.3M
sUSD - USDC $17M $240K $323K
wstETH - WETH $12M $220K $123K
sETH - WETH $8M $140K $131K
MAI - USDC $7.1M $340K $302K
LUSD - USDC $3.8M $18K $62K
OP - WETH $500K $85K $183K
  • Quantity: 1M OP
  • Delivery: 30k OP per week for 6-8 months.
  • KPIs:
    • Increasing TVL for ecosystem pairs
    • High number of transactions
    • Low slippage for high volume trades

Why will incentivized users and liquidity on Optimism remain after incentives dry up?

The purpose of the Governance Fund is “to incentivize sustainable growth of projects and communities in the Optimism ecosystem.” This growth is intended to bring to the “city of Optimism” a broad base of projects, capital, and users that can create a self-sustaining economy, driving exponential growth for all. Much like the Optimism sequencer itself, our success as a public good depends entirely on the health of that broader economy; this utility is designed to be entirely permissionless and sustainable once an economy of a sufficient size exists to support it.

To put this another way, incentives will never completely disappear from Velodrome as emissions are designed to run in perpetuity, following a sustainable and predictable schedule (see our docs for details). When combined with incentives generated in perpetuity by Optimism’s retroactive public goods funding, we expect a virtuous cycle that will maintain Velodrome’s status as the premiere base liquidity layer for the ecosystem for years to come. We have strong conviction that Optimism will eventually catch up to the level of activity we see on Mainnet today, attracting billions in annual trading volume. At 10% of Mainnet’s current volume, Velodrome’s fees would yield a 30% return per year for veVELO holders at current value.

The incentive program proposed above extends Velodrome’s built ability to stimulate the broader economy while the natural tailwinds of Optimism’s growth continue to accelerate. Once OP incentives end, protocols, organizations, and retail players alike will hold long-term veVELO positions, which will allow them to further direct VELO liquidity incentives while sharing in the upside of Velodrome’s and Optimism’s success. Moreover, the fact of being able to sustain those APRs, along with the continued presence and building of these partners, would amplify any future liquidity mining rewards they choose to implement.

More broadly, we’re not just targeting users or capital: we’re targeting projects. Doing so allows us to avoid some of the pitfalls of simple liquidity mining in that development work and network connections derived from that are inherently stickier than capital drawn in by high APRs. Once partners work with us, they tend to want to continue to do so, and creating a scene of builders organically is in our view one of the primary ways that Optimism will be able to sustain its growth, shore up the value and quality of its governance, and successfully deliver on its ideals.

In a time when there is frankly a diminished user base crypto-wide, it is of primary importance that Optimism use the current moment to direct its resources toward facilitating infrastructural development, setting up the conditions for the ecosystem to thrive when end users do return.


Based on feedback from key delegates and Optimism governance participants, we propose staging the delivery of the grant to allow for evaluation of its effectiveness. Details as follows:

  • Maintain grant amount as outlined above, but deliver only half of the funds up front.
  • Deliver a full report on efficacy at the 2.5 month mark, to be submitted directly to governance
  • Upon delivery of the report, open a 2 week window where anyone in governance can raise a proposal that, upon two delegate approvals, can proceed direct to snapshot to suspend further grant payments
  • If none are submitted, funding continues

If successful, a similar staged model could also serve for future large grant requests.


Treści edukacyjne DeFi

40K OP incentives tygodniowo przez 6 miesięcy, dystrybuowane do blokad veVELO proporcjonalnie do nowego salda veVELO w tygodniu, wyłącznie za blokadę transakcji płynnych VELO (bez przedłużania blokad i rebase’ów).

Zwiększenie efektywności ekosystemu poprzez Bribe Matching - 37,5%

A good proposal. 3M $OP will go towards veVelo locker. New here, poor word choice. Was considered as advertisement. Corrected now.


What a great proposal, congratulations for the amount of data

The metrics indicate high dominance and tvl, but it’s normal to see dexes leading here.
Velodrome is in an ideal metric scenario in its sector; since Uniswap is just deciding how it will use the grant and Curve has not received anything yet; my thought:

I see this proposal as a hasty decision, seeing the performance of the rest before a second stage of grants is key; personally I also hope to see more openness of the ecosystem.

I congratulate Velodrome’s enthusiasm and proactivity in the ecosystem, and I do not deny that they are a key player; but distributing $OP efficiently is the only way to generate organic and long-term growth, which is what we all want in the end

Finally, what do you mean that Velodrome is a public good?


Appreciate the compliments.

We’ve prepared a comprehensive overview, backed by data, and would appreciate to see data to back counterpoints as well.

  • If metrics such as TVL, transaction volume, and users lead to “normal” dominance by dexes, which other metrics would you propose we look into? How do proposed alternative metrics benefit the Optimism ecosystem?

  • Velodrome has gained significant traction in a tough market environment. Losing momentum now will predictably lead to lower liquidity and activity, especially against competing ecosystems with upcoming grant programs such as Arbitrum. Why is waiting for a second stage of grants preferable to continuing the current program? Stopping and restarting incentives is measurably less efficient than extending a program.

  • We specifically included data and a visual representation on efficiency of OP incentives and Velodrome is a clear leader. Would you propose an alternative grant size for a protocol attracting ~15% of the ecosystems transaction volume and ~10% of TVL?


First, very well written and researched proposal with an incredible data set.

From my own research and understanding of dexes, you generally want deep liquidity and volume in what I like to call the base pairs. Network Coin + Dominant Stable. For Optimism that is clearly ETH/USDC, on top of that I can understand OP/ETH AND OP/USDC since we all understand that deep liquidity on OP as a token can only be a good thing.

But then some of the other pairs become a bit difficult, I added a column here of what I call ratio, the 24H Volume divided by Liquidity. From my understanding this is the actual information we want to analyze pairs for since it’s what ultimately drives usage.

Pair Current Liquidity 24H Volume Ratio 7D Volume Ratio
OP - USDC $4,000,000.00 $850,000.00 21.25% $10,359,358.00 258.98%
WETH - USDC $3,000,000.00 $700,000.00 23.33% $6,577,178.00 219.24%
OP - WETH $500,000.00 $85,000.00 17.00% $869,076.00 173.82%
MAI - USDC $7,100,000.00 $340,000.00 4.79% $2,050,891.00 28.89%
sETH - WETH $8,000,000.00 $140,000.00 1.75% $1,025,624.00 12.82%
sUSD - USDC $17,000,000.00 $240,000.00 1.41% $1,935,689.00 11.39%
wstETH - WETH $12,000,000.00 $220,000.00 1.83% $1,249,708.00 10.41%
LUSD - USDC $3,800,000.00 $18,000.00 0.47% $285,555.00 7.51%
Edit: Added 7D volume

I reordered the information so it goes from biggest ratio to smallest.
ETH/USDC + OP/USDC + OP/USDC have all impressive Ratio.
MAI/USDC has a great ratio.
wstETH/ETH I can understand is a new pair but liquidity depth on that is great, so clearly volume is lagging.
After that the shown pairs are not impressive in regards to ratio.

Outside of the declared pairs USDC/DAI boasts an impressive swap volume as do some VELO pairs like VELO/USDC and VELO/OP.
(I am basing my information on this dune dashboard, Velodrome Finance On Optimism)

To the questions:

  1. Both Synthetix and QiDAO have their own proposals and allocations for their tokens, and your proposal shows how the bribe economy is shaping up, but couldn’t the Velodrome incentives be directed to other uses, like a builders grant on top Velodrome?
  2. The bribe economy has shown itself to be very effective to attract TVL, looking at Defillama, Optimism holds a very different landscape if we see Volume/TVL metrics Optimism Volumes - DefiLlama.
    How is the team thinking the competing dex landscape for Optimism specifically?
  3. Confirmation request, your proposal doesn’t include any provision for delegation and/or usage of the OP while it’s not being distributed. Would you consider any of them as possible? if so, please update the main post

This is exactly why we’ve documented just how overwhelming effective the distribution has been, returning to the broader ecosystem 2x-3x the value of the grant itself while helping to onboard 30+ new projects, most of which haven’t received any funding through governance.

Given that demonstrated effectiveness, the only thing that delaying an extension of Velodrome incentives would achieve is massively slowing the current rate of ecosystem growth while making it harder for existing projects to operate. That is why we’ve got so much of the ecosystem, even those with long relationships with competitive DEX co-signing our proposal.

We have to keep in mind that battle isn’t between DEXs on Optimism, it is in their collective battle for attracting liquidity and builders from mainnet and alt L1s. We’ve been hugely successful in this. Incentives on Uniswap, Curve, Sushi, and Beethoven will have a role to play too, but the ecosystem shouldn’t wait on them to get the ball rolling – especially given they are not Optimism native and have competing priorities.

Once all the programs are live, some comparative analysis would certainly be welcome, but I think that is all the more reason to keep the existing program running. Ending one before the others begin will not just make it harder for us to collectively attract liquidity from mainnet, but will make it harder to do 1:1 comparative analysis on efficacy.


These numbers for working out the ratio are misleading. 24hr volume varies massively on a day to day basis, for example if its a weekend, public holiday, and with market fluctations.

The average daily volume over the last month for WETH/USDC for instance was $1,731,560. For OP/USDC it was $1,709,287. For LUSD/USDC it was $90,000 - which is 5x the number you are using. TVL per pair also varies on a day to day basis so to make a valid comparison you’d have to compare it with the average TVL. You can find historical TVL and volume data here: https://info.velodrome.finance/


Hi Ganc, thanks for the internal page. I have updated the info and added 7D volume, the proportion and arguments stay the same even taking a longer time frame.


I do not understand your point really. If Optimism was a fully mature Layer 2 with high amounts of pre-existing volume which Velodrome then plugged into, maybe it would be worthwhile looking at this ratio. However, when Optimism has zero existing volume or liquidity for these pairs, if not for the Velodrome pair existing, what are you comparing it with? Ethereum mainnet Dexes?

1 Like

A great question, ser. Because bribing on Velodrome helps to create a 30-70% reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant. It allows builders to save potentially millions a year in incentive costs, which they can reinvest in their own projects. And they can do this without having to go through some cumbersome process. It’s why we’ve been able to attract over 30 new projects to the network without builder grants (and most haven’t received OP grants either).

Volume comes with utility and activity. As of now, many of the projects that we’re helping to bootstrap are in their infancy on Optimism. They need some initial liquidity to support their operations, but they are not yet at sufficient maturity to expect their pairs to drive significant volume. That (of course) will come in time as their products are fully developed and more activity migrates to L2. Volume will come once these projects have matured and the ecosystem is booming. That is why it is so important for something like Velodrome to exist at this critical point in ecosystem development.

We strongly believe protocols and builders need more representation in governance for the ecosystem to be successful. We are supportive of those who have suggested a consistent framework for self-delegation as a norm. That said, it has seemed like enough of a non-negotiable for some that we didn’t feel it was worth including. The most important thing to us at the moment is ensuring ecosystem growth can continue at pace and don’t want to distract from that.


Hello Tao -

I enjoyed reading your proposal. It answered many of my questions before I asked them and I appreciated all the data.

I wanted to check DEX stats one way you did not mention, looking at how many projects they each support. My filter is they must have at least $100,000 in liquidity on tokens be valid.

Here is what I found:

Uniswap: 9 projects, 6 if you filter out ETH/OP/USDC

Beethoven: 7 projects, 4 if you filter out ETH/USDC/USDT

Curve: 6 projects, 4 if you filter out USDC/USDT

Velodrome: 29 projects, 26 if you filter out OP/USDC/ETH

This does seem to validate your claim that you have a unique claim on growing and supporting the ecosystem. I was actually quite surprised how limited an impact the others have.

I did have one question. If Velodrome is more efficient as you claim, then why is liquidity deeper on tokens like Lyra and Thales on Uniswap and sUSD and sETH on Curve? Doesn’t that suggest it is less efficient for those tokens?


I am comparing ratio to ratio. It doesn’t matter where it’s happening since it’s a measure of usage and by being a percentage I can actually compare it against the other pairs

Hi @tao , I am still going through couple of dashboard you have provided, do you have a dashboard where I can see total number of addresses participated in current/on-going veVelo lock reward program and number of $OP distributed to them ?


Hi OPGovWatch,

Great analysis on the number of pools. We see onboarding protocols as our bread and butter.

Regarding incentive efficiency, the protocols are deploying much higher incentives on Uni and Curve to attract that TVL than on Velodrome.

When you compare TVL per $ of incentives, you get some remarkable results. Thales is getting 2.8x TVL per $ of incentives on Velodrome vs Uni and 6.6x the volume per $ incentive! While Lyra is basically getting all their liquidity for free using the airdropped veVELO we gave them at launch:

Note that Thales, Lyra, and Synthetix all have veVELO votepower we airdropped to them, which they’ve been using to vote on their pools and automatically get a rebate for any bribes they deposit.

For sETH and sUSD liquidity, the results also speak for themselves:


Yessir, you can find a historic breakdown here Velodrome $OP Airdrop 🚴🔴🪂


This will also give you an idea of the growth in holders during the duration of the program.


This data is quite interesting. Thank you. You are right that it appears it is just because they overpay.

Can you tell me why you think the Solidly approach is working on Optimism? It seems most other versions have not been as successful.


very thorough proposal. Definitely appreciate the effort that went into creating this!

Under current market conditions, more OP is of course necessary to continuing a profitable bribing ecosystem. That’s just the market we’re in. And Optimism should support Velodrome, as it’s one of the most recognizable success stories of Optimism.

I’m glad the Velodrome team is looking at volume/TVL in pairs while building their “key pairs”. Shows that they’re not leaning on preconceptions and are analyzing their DEX seriously.

If I were a competitor DEX, I would perhaps have some reservations. Would love to see other DEXs comment on this proposal.


As I have discussed with jack in some chats on the Optimism Discord, I feel like we need to move away from straight up liquidity mining incentives.

Having said that I feel like neither Synthetix nor QiDAO need the Velodrome bribes on top, since they have their own proposals and usage to be distributed. Couldn’t this part of bribes be directed to composability on top of Velodrome? A builder’s grant is much more than simply giving away incentives, for instance Interest Protocol had a solution for composability of OP that would let you keep your voting power even when using said OP. Having that sort of composability on top of Velodrome LPs would be great.

I understand where you are coming from here and you guys need to pick your battles, but I still feel like it’s a missed opportunity to discuss this.
As per the proposal this would run over 6 to 8 months, let’s settle on 6 months.
4M OP ~10% APY would give you ~1k OP per day, which could then be set aside to keep on growing even if the 4M start being distributed. On a very ideal scenario, Velodrome could amass their own self reliant OP stash to use and my own understand is that those could be used as the team/DAO (if applicable) see fit.

It is of great significance to grant more op to native optimism protocols(i.e.Velodrome) rather than those mutichain projects such as uniswap and curve.Uniswap and curve’s boom will do very little help to optimism’s prosperous,and,their TVL is also not steady,that is to say when op grants over,those TVL would more probably move to other chains(Arbitrum,Zksync,and many other new chains) in lack of enough incentives.Only native protocol can help optimism’s big prosperous in bull market and grow up in bear market.