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

Are you asking how we know how much in co-incentives Curve is likely to match for incentivized pools?

If so, we really don’t. Curve has not committed to any sort of targets that I know of (as we have) and the overwhelming majority Curve’s emissions will continue to go to mainnet for the foreseeable future. It will take time before there is hard data on the effectiveness of using bribing veCRV voters with non-main net asset like $OP and we get a clear picture on their rate of their coincentivization.

That said, Optimism’s research into the effectiveness of incentive programs to date did document the current rate of CRV emissions flowing to Optimism, which is what we used for our projection.
Screenshot 2022-10-29 at 11.29.28 AM

To put this in perspective, that is $90,000 in co-incentives from Curve over a period where Velodrome distributed $2,900,000. That means we are pumping 32x the stimulus into the Optimism economy that Curve is while asking for a grant merely 8x the size of theirs.

We’ve addressed this ad naseum at this point, both in the proposal and in our responses. Please refer to those answers here, here, here, and here.

If you want to dispute any particular arguments, please quote them and provide data or evidence to support your assertion.

To be clear, Uniswap received their grant before us. I think the pace at which they’ve moved to put it to use makes it clear how much of a priority Optimism currently is for them.

As for if our metrics would be the same? It’s impossible to know.

Even before the grant, we had plenty of data indicating we were the most capital efficient DEX on Optimism and were beginning to attract new partners so it’s possible we would still be in a strong position. However, it would’ve made it far more expensive for the 15+ new protocols we’ve onboarded who have not received grants from the governance to onboard their users, liquidity, and activity to Optimism.

In other words, any loss of Velodrome’s would’ve also been a loss for the growth of the ecosystem and that would’ve knock on effects that are difficulty to extrapolate.

I do not really understand your words here, but I will reiterate that every DEX that comes back to Optimism demonstrating a 2x-3x return on investment in terms of the growth multiple they’ve provided should be strongly considered for an extension of their incentive programs.

The only thing a “wait and see” approach will give you is slowing growth to the detriment of the ecosystem and a messy comparative data set on DEX incentives.

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Thanks for you time, and for being present at this late stage in the proposal cycle(review period). :pray:

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Thank you for the engagement. There are couple of things but one major I would like to clarify, it is final that you are moving ahead with

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

using 1.5M OP for veVelo lockers.

Hey everyone - this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism.

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Thank you for the kind words, ser. Excited for our plan to come for fruition in the next few weeks here. :eyes:

Forgive me, but the proposal is locked after two delegates approve for it to move to the review phase is it not? You probably know the rules better than me, so are you saying we can still make edits?

I’m also curious why we wouldn’t be? They have been demonstrated to deliver a massive ROI on the underlying incentive and help new protocols onboard / lock capital into the ecosystem.

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Yes, you can. We are in delegate feedback week, so making changes are totally fine depending on feedback. Only problem would be if you made a major change to which either committee is not comfortable or delegate initially approved your proposal revoke their approval.

I’m also curious why we wouldn’t be

As a user if I need to buy project native token to be part of OP incentive, then I am not in favor of it. We discussed this in depth on two prior proposal. here and here.

All though few accounts are new here which raises some skepticism but they are also sharing the same thought. I have read your past reply but I just want to clarify if its final or you are still considering.

Again, appreciate your effort here.

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Curve’s proposal requires the buying and locking of veCRV on mainnet to directly access the the $OP bribes they are requesting as incentives. The pools that get those incentives are also 100% controlled by the votes of veCRV stakers on mainnet, requiring staked veCRV to access. Likewise to earn the fees the boosted liquidity offers, you must again stake veCRV on mainnet. In other words, projects and individuals need to buy and lock veCRV to access their proposed incentives as well.

I have not seen you raise a similar objection in their case. Is there a reason for this?

In contrast every .20c in lock incentives spent earns the ecosystem $1 in TVL locked in Optimism for 4 years (a 5x return). As far as I know, it is the only program in existence that requires projects to lock investment into the ecosystem to access $OP rewards. You yourself have mentioned worrying about capital moving off of the network when incentives tapper, this solves for that at a 5x multiple.

Do you have a suggestion for better a strategy? Or an explanation why you’d call this out as a deal breaker for us, but not Curve which actually requires capital flight from Optimism?

I would also direct you back to @TokenBrice’s eloquent explanation on the impact these incentives on projects like his. It’d be good to understand how think the removal of them would impact the strategy they are currently employing to grow their presence on Optimism.

Thank you for this and I glad we got to clarify this earlier.

Curve:- rewards goes towards new or existing veCRV users.
Velo:- Same as above, existing and new users will be rewarded. + if you buy and lock new token then we give back some of your principle amount in form of $OP reward. The $OP reward of-course vary from epoch to epoch like mentioned above in comments.

This is where these two proposal are different.

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Jumping in here quickly to say that alex’s post shouldn’t be taken as a direct knock on curve’s proposal, which i think (and i know he thinks) has been admirably shaped through a lot of cooperation and effort. I do think, though, it’s important to have consistency in your standards and reasoning – that’s the only way you get the outcomes you want.

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Just a quick note here, I haven’t the time right now to write my full thoughts for you guys but just want to note that you certainly do not have to buy the VELO token to lock and get OP rewards. You can simply farm the VELO we distribute through LP incentives, we distribute around ~12m VELO (~$350k) a week right now so plenty to go around, and take your VELO to lock it for veVELO. No purchase necessary.

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first time poster, just want to say that Velodrome have been incredibly active and I have been following them since their initial airdrop, I was sceptic at first and had my issues early with a miscommunication however they have been very active and have been very hard at work at building and growing the network and fixing bugs and adding features to the website, they are way more active on the Optimism network than any other protocol I have seen so far and I think they are worthy of this grant.

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This is tough for me to wrap my head around.

I think you are trying to create a distinction where there really isn’t one.

Your objection was:

Curve: You must acquire (or have acquired) and lock veCRV on Ethereum mainnet to access incentives designed to facilitate growth on Optimism.

Velodrome: You must acquire and lock veVELO on Optimism to access the incentives designed to facilitate growth on Optimism.

In both cases, you need to acquire “the project native token to be part of OP incentive”, though as @GuyWithKeyboard just noted this is not limited to “buying” as you suggest.

If I am understanding your attempt at a distinction, for Curve you are saying you see no issue with requiring the acquisition of veCRV to access OP rewards, despite the fact that it leaks value and activity from Optimism to mainnet. But in the case of Velodrome, you don’t think it is appropriate because it requires the acquisition of new tokens?

So there is something intrinsically better about requiring the acquisition of a project native token when you you include both existing AND new veCRV lockers on mainnet rather than focusing the incentive just on new veVELO lockers on Optimism? Even when considering in our case the result is millions in new capital locked in the ecosystem, versus value leakage?

This seems really hard to square fren, especially given when you’ve supported other proposals that likewise “require the acquisition of project native tokens” to access the incentives such as Balancer and Beethoven.

And to be clear here, I think the Curve proposal is a perfectly acceptable given the technical limitations that exist at the moment to them supporting a fully native solution. It may be worth it to the ecosystem even if the incentive isn’t quite as efficient. But, I’m just struggling to find coherency in your suggestion that it’s okay in the case of a solution that is objectively less optimal for Optimism and not okay in the case of an example that has demonstrated itself to be a ecosystem growth multiplier.

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Jumping in here to say I don’t agree with this. As one of the 2 delegates that gave their approval, I personally do not like to see edits made after approval has been given. In previous cycles where changes were made after delegate approval, the proposals were withdrawn and resubmitted. If the velodrome team is comfortable with their proposal in the current state, then I would not suggest any changes be made at this time.

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no, @tao in his last post shows 2 charts reporting weekly uniswap and curve incentives for particular pools; how can you find out the weekly Curve $OP rewards that will go to each Pool???

That’s right, and that pumping was absorbed by the skaters, each one chooses how to mistreat their tokenomica

There is only data on how incentives and subsidies bring tvl; there is no data of a working product without this
I have read the complete thread, you can look for the statements that without subsidy there seems to be no traction

100% agree with this

your conclusion is that if Optimims doesn’t inject 4M of $OP now ngmi? or is Velodrome who ngmi?

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I have been hesitant to post because I didn’t want to be cliche and be another new-ish account posting on the Veldodrome thread. But here we go.

It seems like the main source of the criticisms is that the benefit for Optimism looks like this:

Optimism should be looking to cultivate the presence of legacy mainnet protocols rather than supporting OP native upstarts with flashy marketing and distortive incentives. Supporting deep liquidity on known legacy protocols will be better for OP in the long run. Putting our thumb on the scale for Velodrome will prevent this needed development.

I think this is a flawed argument based on the data provided and I don’t see how any other current ecosystem player will step in to fill the niche Velodrome is filling in the near term.
This isn’t a knock on the legacy protocols. Onboarding a bunch of new protocols to Optimism makes no sense for them as a growth strategy. This shows up If you look at their grant proposals. They are looking to extend their current competitive advantage on mainnet to Optimism - not get into the business Velodrome is in.

If Velodrome was proposing using the OP grant to spend a ton of money bribing a 3-pool, tricrypto or funding the development of v3 pools then sure… they are trying to box out the competition. However, they aren’t trying to use the grant for this. They are asking to continue the incentives that have been filling a needed niche for OP’s future growth. Protocols that have come here are backing up that these incentives, including the lock bonus, were the easiest way for them to come to Optimism.

The mindset that we stop incentives and let Velodrome succeed or fail because we have so many well known protocols around to pick up the slack seems super short sighted. How will waiting to see what happens with the Uni/Curve incentive programs onboard 20 protocols to Optimism? Their incentive programs aren’t even designed to do this.

I’m sure there will be competition between the different DEX/AMMs, but this grant doesn’t seem to be playing a role in that. There are still a ton of needs to fill where legacy protocols have an obvious competitive advantage they will be able to exploit with some focused development.

Velodrome making good use of incentives also goes both ways. Optimism governance benefits from having a DEX that they have significant influence (and voting power) over that can adapt on the fly to ecosystem needs. The Velodrome team is willing to take on a ton of due diligence responsibilities to get the grant and they have basically created their own accountability metrics they will be measured by. Seems like an obvious win.

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For a protocol that seeks to boost its incentives, it is not comparable to do it with $velo or with $crv, the metrics here show a much greater loss of capital for $velo stakers.

Curve’s proposal encourages the diversion of $crv rewards TOWARDS OPTIMISM, it is exactly the opposite of what you indicate, under your analogy it would be an “importing value from the main network”

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Seems like item “5) Velodrome should prove itself without incentives” is the main theme of comments challenging the proposal.

Our stance is simple: given than Optimism has chosen to run a continuous program to incentivize growth and activity in the ecosystem – and created this Governance Fund specifically for it – , then Velodrome is an obvious protocol to continue incentivizing. We’ve shared plenty of data for why this is the case.

We also welcome continuous incentives for other protocols demonstrating success in growing the ecosystem.

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At this point, VELO and OP have pretty much become synonymous!

VELO is basically in investment in the OP ecosystem, but amplified!

It is the place where every OP protocol wants to host liquidity!

VEO wars has been a success, as a participant, I fully support this proposal!

*VELO has also helped onboard RevenantLabs! The DAO has made a 100k$ VELO buy to get them started!

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Example:-

I have 100K in $USD some veCRV and veVelo.

Case 1 : Existing veToken holder

  • Curve - As a existing holder of veCRV, I will get reward depending on the amount I hold and how I vote.
  • Velo - same as above

Case 2 : New user

  • Curve - I can use 100K $USD to acquire more CRV, lock it to get more veCRV. My voting power increase resulting in more reward and my principle amount is locked in form new veCRV.
    Velo - Same as above, + I will get some % of my principle money back in form of $OP as mentioned in the proposal for buying and locking $VELO. We have seen that lock bonus vary but could possibly reach up to $1.3 in $OP for $1 in depending on amount locked in that specific epoch but even If I take an average of 80% 30% return then at the end of epoch I will back $80K back 30K in form of $OP airdropped as a reward.

So basically, we are paying users to buy protocol native token which is not the case with Curve. Hope this example provide more context from my side.

I am not trying to create a distinction, its clearly mentioned in the proposal.

Thank you for this, Katie. I would like us to continue this conversation during coming Reflection period.

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Yes, I’m understanding you correctly.

You are arguing that governance should have no problem with an incentive that requires acquisition "the project native token to be part of OP incentive” as long as previous holders were eligible too. So you’d rather Optimism’s incentivizes go to previous holders of veCRV on mainnet (who have no vested interest in Optimism), than reward veVELO holders who are locking millions in new investments in Optimism. I still struggle to understand how think this is a defensible position.

No, we are not. We pointed this out here, here, and here. The token can bought or farmed from the ~12m VELO (~$350k) we distribute weekly. I’m not sure why you continue to say this when it is not true, but I’d appreciate it if you corrected your statement publicly so there is no confusion.

You are again saying something that is not true here. @tao pointed you to the dashboard with the chart you see below on two occasions. The lock bonus has never exceeded a 37% airdrop for new veVELO lockers. Again I would ask that you correct your statement so there is no confusion.

I think what you are advocating for here is objectively a bad deal for growing Optimism. You could have an incentive that lowers the costs for new protocols onboarding the ecosystem (locking $1 in capital for every 20c in incentives), but it seems that you think that ensuring that existing lockers are included is more important, even if that means rewarding $veCRV voters with no vested interest or investment in the ecosystem over actual Optimism users. I think we’ll have to agree to disagree.

Do any other delegates have a POV here?

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