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

Looking good :+1: One of the most complete and beneficial proposals on optimism. Without on chain liquidity there is no success for the cain. Velodrome have created a liquidity machine.

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This is pretty much my position right now. Just like @polynya I am going to wait before I vote on this since the amount at stake is high and the community doesn’t seem to be aligned. I want to allow for a couple more days of discussion.

I am going to be honest though: at the moment, the entity of the amount requested and the back and forth on this thread makes me want to lean towards a vote against this proposal. A vote against is a two way door (a new proposal can be submitted and discussed with more time), a vote for is not.

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I wish somehow we could pin this so that many user could see.

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Hey @DanieleSalatti

Appreciate you giving us a sense of where your head is at.

Hope you’ll indulge me probing on your thinking just a little bit more.

Can you give us an idea of what you’d need to see to convince you that the ask wasn’t actually high in any kind of comparative terms to other grants? Including those active up for votes at this moment?

We’ve tried to break this down any number of different ways.

Can you give us an idea of what would convince you that community is actually fairly aligned?

We’ve done qualitative analysis on the commenters on this proposal and found 65% of them (24 total) to be positive with just 22% of them negative (8 total, 40% new accounts). This is mirrored pretty closely in the current voting where 55% of voters have voted yes (2636 total) where just 10% have against (515 total). You’ll also notice that over 20 protocols and builders are supporting our proposal as wel.

There is certainly a vocal minority opposed, but surely we need tools to see the bigger picture.

This I would push back on a bit.

A vote against is almost certainly a vote to put an indefinite end on what is arguably the most effective incentive program currently active as there is currently no timeline for “Season 3”. The Optimism Foundation has already hinted that big changes are coming, so really no one knows when a new proposal could conceivably be put up for review let alone be approved/implemented.

The protocols we’re actively onboarding to the ecosystem (32 already and another 12 or so in the pipeline) need the ability carefully plan and model their expansion and investment in Optimism. The reliability and consistency of incentives is critical to that as builders like @TokenBrice, @cryptoharry, @Smerdyakov, and others have expressed in this discussion. Letting incentives lapse would not come without a significant cost and risks stalling the hard earned momentum we’ve built.

I will also note that this really isn’t a lump-sum grant of 4M OP. It is a grant of 2M that gives governance the option of ending the program at the three month mark if they are not pleased with the results per the mechanism we designed with @Katie.

Extending existing programs that have proven their effectiveness for three more months while securing our commitment to pump $6.5M in stimulus exclusively into the Optimism ecosystem feels far less risky than letting the program lapse.

I will also add that this process is incredibly intensive and has taken our team away from the core work of our protocol for weeks on end now. I think we can deliver a lot more value if we can put our attention back on onboarding another protocols, not spending all of our time trying to persuade delegates of our value.

Voted yes - It seems like one of the main concerns around this proposal is grant size, which is understandable because this is a large request. However, only half of the funds will be distributed up front, with the second half being contingent upon an efficacy report at the 2.5 month mark which I feel has been overlooked (see below). This circumvents the issue of the team having to submit another proposal and go through this extremely labor intensive process (as shown by the 176 comments as of writing this) but also includes the accountability component which has been missing from previous proposals.

The Velodrome team has been extremely successful with growing the ecosystem (which is the purpose of the governance fund) with their previous grant as shown extensively by data and metrics. This is an impressive grant performance, backed by verifiable numbers and data.

We should be rewarding teams that are building on Optimism. None of the funds requested are going to any internal operational costs, this grant is 100% focused on bootstrapping liquidity, lowering barriers to entry, and acquiring new users, which again, is the purpose of the governance fund.

I would also like to point out that the Velodrome has responded to every single concern raised with a thoughtful response backed by numbers, facts and technical analysis. There has clearly been a massive amount of effort on the Velodrome team to address concerns and move this proposal forward which should not be taken lightly.

I would encourage others to look past the grant size and focus on the data and metrics that have shown the success of this project so far. These are the types of grants and projects the governance fund should be supporting imo.

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Hi folks — regarding the discussion around accuracy of Velo’s metrics: want to draw your attention to these summaries from OP Labs’ analytics team on Velo’s affect on TVL.

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Good to see some numbers from a neutral source. I think this is more evidence that liquidity mining programs are beneficial to boostrap some initial liquidity, but after the initial couple of weeks it’s best to let the protocols organically find their equilibrium. As such, we should focus more on user onboarding and diverse activity, rather than liquidity mining and chasing TVLs repeatedly - particularly given other factors like the high risk of Optimism’s current centralized state.

Earlier, I had written my personal guidelines for what would qualify a project for a repeat grant: Polynya - Delegate Communication Thread - :classical_building: Governance / Delegate Updates - Optimism Collective

Having mulled over it, Velodrome does not meet my criteria. a) Rises in liquidity and adoption was largely frontloaded in July & August and growth has flatlined over time. Even if it had continued growing linearly, I would expect a gradual wind-down of incentives over time. b) Time has not passed yet without incentives to assess the effects. And c) there’s no new approaches - it’s still mostly about liquidity irrespective of adjacent narratives.

As such, I have now voted Against. I’ll be following along the conversation, and I’ll be open to changing my vote to Abstain if more compelling arguments emerge.

My hope would be to assess the effects of Velodrome without incentives, and to see a more compelling proposal in the future based on a) what’s learned from that and b) new strategies to onboard users beyond focusing on liquidity - already been there, done that with the first grant. If the vote passes, I would expect significant increase in activity on Velodrome & the wider Optimism community versus what has come before. If all I see is status quo or mild growth, it’s not good enough for a repeat grant.

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gm ser

This seems to be our biggest disconnect. This is exactly what we think we are doing and we’ve been trying to demonstrate that we’re doing it more effectively and efficiently than (possibly) anyone else.

Can you describe what kind data or evidence you’d need to see to persuade you on this point?

To be honest, this hurts. We’ve driven more growth than any grant to date across nearly every KPI while attracting more net-new protocols to Optimism (20) than the entirety of the Governance Fund (18). And we’ve done so with a fraction of the funds distributed by this body (ostensibly) to drive ecosystem growth.

To have a delegate of your stature call that kind of impact “mild” is frankly a bit chilling.

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@polynya,

Upstream of user onboarding is development on the ecosystem. Our focus from day 1 has been to attract talent to come build on Optimism, and tbh we’ve done an excellent job. Just look at the teams we’re working with, including many of which have taken the time to express their support in this proposal.

This grant is designed to incentivize protocols first and foremost by rewarding projects that take a stake in the ecosystem (bribing and/or locking). We believe that by increasing the diversity of protocols on Optimism, we’ll be able to accelerate the overall network flywheel of more users > more protocols > more users.

But onboarding protocols takes time. Our ask here is to extend a program that has had incredible success attracting teams willing to build. We’re in active communication with dozens of teams that are planning to launch on Optimism or have already done so through us.

Consider the case of Sonne Finance, a protocol with >$28M TVL and growing. They leveraged Velodrome’s mechanics to design a sustainable token launch strategy:

  1. Paired USDC raised from TGE to create SONNE-USDC LP
  2. Staked SONNE-USDC LP on Velodrome and bribed the pool with more SONNE
  3. Redirected VELO emissions collected from their staked LP to their own platform as rewards

By redirecting VELO rewards, they were able to majorly reduce their SONNE burn rate during a crucial period and demonstrated that Velodrome really is a base layer protocol. This is the type of novelty we want to enable.

I believe we’ll see similar fascinating experiments arise over the next few months.

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Hey Guys! Romy from https://abracadabra.money/ here!

I just wanted to share our experience on how amazing was our experience with Velodrome. Velodrome was the first project we dealt with when coming to Optimism, and not only they were super helpful in helping us understand better how to join the community, but they also been extremely supportive in brining $MIM liquidity.

If it was not for velodrome, I highly doubt we would have ever been able to deploy on Optimism!
On behalf of the Abracadabra team, I dont think there would be any proposal more appropriate than this.

gg sers

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I was talking about a future scenario if the proposal is approved, apologies if it’s poorly worded.

If the vote passes, I would expect significant increase in activity on Velodrome & the wider Optimism community versus what has come before. If all I see is status quo or mild growth, it’s not good enough for a repeat grant.

Perhaps better wording would be “it would have proven to not be good enough for a repeat grant”

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This is a great proposal and It explain in fully details I will go for it

On behalf of the Lido Finance team I want to share how impressed we are by the level of detail provided by the Velodrome team in their proposal. Totally aside from the merits of the proposal (which we believe are significant) it is really exciting to see proposals taken so seriously be DeFi protocol teams. I’ll be sharing this one as an example to other protocols seeking grants and partnerships with Lido going forward.

Lido fully supports this proposal. As many have attested to, Velodrome has been a great advocate and resource for the Optimism ecosystem. They’ve been super helpful to us as we planned the migration of wstETH to Optimism and have proven to be reliable, smart partners to us so far.

In case it is helpful - I offer Lido Analytics’ Dune dashboard for wstETH on Optimism: wstETH on Optimism

We encourage the Optimism community to approve the Velodrome team’s proposal and have faith that their work in supporting the growth of the Optimism network will be worth every penny.

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Voted Against

I share the same concerns as other.
Sustainability should be top priority.

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This is a difficult vote and I am conflicted about it. I will be voting against it for now though I am quite torn.

Cons

  • The amount asked is huge. They are asking for $4m $OP
  • They already received $3m $OP back in July
  • We perpetuate the unsustainable cycle of yield hunting by making people move to optimism to get extra incentives with the foundation footing the bill.

Pros

  • The project is definitely a good one for optimism. Most protocols that have worked with velodrome have only good things to say about them
  • I have used velodrome. Pretty smooth experience. Definitely good for the ecosystem
  • They responded to most feedback here in the forums.

Just like @polynya stated I would like to see velodrome without incentives for a bit to see how such a protocol can stand on its own without someone else injecting artificial yield to attract users.

At some point we really need to consider sustainability of the ecosystem.

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I think velodrome is really really cool, and this is a fantastic proposal, but I chose to vote against this proposal for similar reasons as Lefteris.

The main thing is that 4m $OP (even if it is broken into 2 parts) is just too large of a proposal, despite that, from the metrics, it is a totally legitimate ask. I think @polynya nails it here:

It would be good to see the $OP in our coffers focus more towards onboarding new projects with diverse users outside instead of bribing more LPs that will likely leave when the incentives dry up.

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In the end, because of the reasons I gave above, I decided to vote against.

Snapshot vote - passed

@tao can you provide a Telegram handle or other contact method so the Optimism team can get in touch about paying out this grant! Feel free to comment on this thread, DM, or email palash@optimism.io