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

I’m with you in saying building a strong ecosystem is the plan, this is also my intention but sustainability is key in building a safe ecosystem.

And I disagree with your statement

the impact is evident in the chart

My fear would be, that Velodrome will continuously demand incentive plans from the Fund to keep it going. I just want to avoid the risk, of the Fund being forced to perpetually support a protocol to avoid a scenario.
So this is why I would like to see Velodrome grow more organically without OP incentives.

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No ser, it is not. I have added a line to the chart that shows the pace of lock bonuses to demonstrate this. As you can see, the lock bonus rate has remained constant for months while the price of the token has had movements up as high as 300% and down as low as 85%. You can also see in the chart where the lock bonus was decreased by 20% and price rose 15%.

The opposite effect you would expect if what you were claiming was true.

So I’ll reiterate that there is no obvious significant correlation between the bonus and price. There are too many other variables that drive price more significantly.

You can also see this in the fact that other ecosystem tokens pumped at the exact same time.

Where there is a more clear relationship is in the weekly lock rate, which increased upon the start of the incentives and has maintained a steady rate, mostly exceeding weekly emissions. Exactly what we’d expect a bonus focused on reducing barriers to locking (not price pumping) to do.

Finally, I will just note again that even if there were a clear positive correlation with price, that still wouldn’t be a bad thing as it would only lead to better outcomes for the ecosystem. If VELO were to 3x tomorrow, liquidity for the 30+ ecosystem projects we support would triple as well. There is no other token on the network that can have this kind of outsized impact.

But to reiterate, that is not really what is important. What is important is relative value of locking vs bribing and the overall health of our liquidity economy as we’ve documented in our proposal.

This is just not how investing to grow/scale works. Perhaps an analogy would help.

Think of Optimism as new city that is trying to attract citizens and businesses to it. One day in that future, it will have a broad enough base of them that the economic activity they generate will sufficient to not only drive sustainable revenue t businesses but also it’s taxes (sequencer revenue) will be sufficient to support and maintain the City of Optimism’s essential infrastructure (public goods).

But, we are not not there yet. We need to grow substantially more before the city’s economy is self-sustaining. That is why the grant programs exist.

That is where Velodrome comes in. It is part of the city’s essential infrastructure. You can think of it as the roads and highways that people use to get to the City of Optimism and that businesses use to move their goods throughout it. It charges the lowest possible fees for its use and returns 100% the value it generates back to the public, while simultaneously reducing liquidity costs ecosystem wide.

Why is this important? Because investing in infrastructure is one of the best ways to drive economic growth. It creates one of the best multiplier effects (2x-3x in our case) on the underlying investment and drives growth in economic activity across the network. As @ramblers99 put it, a “grant to velodrome is like granting the entire ecosystem”, but getting 2x-3x the results of direct grants.

As long as growth remains the focus of governance and we can demonstrate that we are one of the single best means of facilitating it, we will request grant funds (as anyone in a similar position should). But there will be a day where the city has attracted enough economic activity that investing heavily in growth will no longer be needed. That is when Optimism can pull back on economic stimulus and let public goods self-sustain through the taxes and fees they collect.

Pulling back too early will only serve to slow or reverse the hard earned growth we’ve achieved so far, long before the city is in a position to sustain itself.

(btw you could write a similar analogy for how startups scale here)


Maybe I am mistaken, but isn’t the price action of VELO actually heavily influenced by the locking bonuses via the airdrop campaign?

One could find the following points in the chart:
08/7 – it was announced that Velodrome received the grant, start of the price increase
13/7 to 27/7 – heavy campaign of the OP airdrop
29/7 – hype from the campaign ended, followed by heavy price decrease

Not sure how it’s fair to conclude that lock bonuses do not affect the price – I would definitely count extra OP for locking as a version of a lock bonus.

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Yes, the data I shared above would suggest you are indeed mistaken.

But, here let’s take a look at it again with your frame.

Seems vaguely plausible right?

The problem is that is the SNX chart, not VELO. And if you look at Thales, Lyra, or almost any ecosystem token you’ll see they follow almost the same trajectory. Suggesting the significant factors driving the price changes cannot reasonably be attributed to the ongoing lock bonus.

The frame is also false because you are misrepresenting the nature of our communications around it, which have been as steady as the bonus itself. If you’d done us the kindness of checking your assertions before dropping them here, you would’ve seen us talking about it every week since it began.

It is fair because no one has provided a single data point to suggest there was any correlation between the lock bonus and Velodrome price. You cannot on one hand suggest it was a significant factor causing a 300% pump and while suggesting it’s claimed pumping ability was powerless against an 85% decline, especially when those same patterns were playing out on every single ecosystem token.

We also have over a week of data after decreasing the bonus showing the exact opposite of your claimed effect, the lock bonus has gone down and the price has gone up.

While the idea that you created an account last week to exclusively to comment on our proposal is certainly flattering, I do not get the sense that you are here in good faith. Now that you’ve made your voice heard on Velodrome, perhaps you can reallocate your time to any of the other 8+ proposals currently up for review and in need of feedback?



I really don’t think these kinds of responses are constructive. You answered the question fine. Trying to discredit someone doesn’t make the grant application look professional. It’s defensive and adversarial.

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You know what? You’re actually right, I apologize.

This process is intensive and at times it has felt like there has been an army of new accounts created with express purpose of kicking up dust with the goal of damaging our proposal. They even managed to get our post locked for a good 24 hours during the short feedback window which was frustrating.

I don’t know @Ardordo’s intentions and shouldn’t presume. A genuinely good call.

Can I ask that we both commit to doing better on that?
Screenshot 2022-10-28 at 7.02.56 PM

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I think before this turns into a bare-knuckle fight, let’s all take a beat and focus on the proposal at hand. (sorry alex)


Hear hear. Thanks @jackanorak. :raised_hands:t2:


Agreed. I think it’s a fine proposal with an excellent amount of supporting data.

It absolutely is frustrating to go through the process.

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I was not expressing how the price was affected by the on-going lock bonus, I was expressing how the price was affected by the OP airdrop campaign for the VELO lockers, which I would also describe as a bonus for lockers.

These are the SNX and VELO charts together, everyone is free to come to their own conclusions, but my personal take-away is that announcement of the OP grant and OP airdrop campaign definitely had a noticeable affect on the VELO price. I think it’s also fairly obvious from the fact that at some point for every $1 in VELO locked there would have been $1.3 OP airdropped as rewards. https://twitter.com/VelodromeFi/status/1548651423201730561

I have both expressed in this thread that:

  1. This grant proposal was the main reason why I felt the need to make an account and comment, since even though there was a lot of data provided, I didn’t feel it was completely fair (one could see my previous comments for the percentages provided).
  2. I am somewhat biased, since I have prior concerns about Velodrome not being sustainable in the long-term without OP incentives.

If this discredits everything I have commented here and reflects that I am not here in good faith, then it is what it is.

There is no denying that Velodrome’s team is great at marketing and making noise, which has definitely ended up with more people learning about Optimism and joining the ecosystem, but I believe the technology of Velodrome’s AMM is not that innovative and I am not sure how competitive it is in the long-term compared to the more sophisticated approaches of the competitors. I also believe that Velodrome price was heavily pumped up with the first grant and the current proposal does not reflect how substantial that effect was. Velodrome will continue growing/scaling while it is heavily reinforced with largest OP grants any project has received, but I am wary of what happens when the incentives stop and truthfully uncertain if best would be to experience it now or keep pushing it to the future with new continous grants.


Hello here; glad to see a healthy discussion happening! I wanted to give some perspective on what those OP lock bonuses achieve from the point of view of a project involved in the Velodrome races.

I am TokenBrice, DeFi Strategist at Liquity, leading the charge on topics related to LUSD/LQTY liquidity strategies and integrations of LUSD within DeFi.

We are currently leading various campaigns to sustain liquidity, whether on Curve, through Warden Bribes, or on Velodrome. In terms of the amount of liquidity sustained / $-invested, Velodrome is one to two orders of magnitude above the competition.

Thanks to an initial 3.4M veVELO position (protocol airdrop), compounded weekly to now ~4.5M veVELO, Liquity can sustain about ~$6.3M on four different pools (LUSD/sUSD, LUSD/USDC, LUSD/MAI, LUSD/USD+).

Adding the OP lock bonus drove us to adjust our strategy, increasing the weekly locks to enhance our gauge supporting power while maximizing the reward.

To put some numbers in perspective:

  • 4.5M veVELO (~$120K) locked enable to support ~$6M of stablecoin liquidity on Velodrome. (+some bribes from projects we work with that are re-injected as bribes again the following round)
  • To direct 1% of CRV emissions, you’d need to bribe either ~25K a week or a ~5M veCRV position costing ~$4.8M. 1% of CRV-gauge votes is enough to draw a ~3% base APY to a $25M TVL pool.
  • Translating back above into similar terms, it means that to sustain a >3% base APY on a 6M TVL stable Curve Pool you’d need roughly either 6.2K weekly bribes (0.25% total gauge voting) or 1.25M veCRV ($1.2M)

I think those napkin maths illustrate what I meant by “one or two orders of magnitude above” when it comes to Velodrome’s efficiency for a project. Of course, there are other things to consider, and the comparison should be based on various dimensions.

However, one of Velodrome’s core value propositions is enabling projects to attract and sustain liquidity efficiently. In that regard, it is delivering beyond what was expected: the OP veVELO locking bonus is a key part of the equation - increasing the efficiency of the flywheel even further. Besides, it drives projects to lock VELO, which means they enter a long-term commitment with Velodrome and Optimism.

Hope this helps fuel the discussion, I am available if there are more questions about the impact of the OP-bonuses on the strategies projects involved in the races harness.


I think you’ve just tried moved the goal posts a bit, but that is fine with me as our new proposal does not have any kind of front-loaded “OP airdrop campaign”. Only an extension of the ongoing lock bonus (at a lower rate).

So it sounds like we agree that on an ongoing basis the significant factors driving the price changes cannot reasonably be attributed to a ongoing lock bonus such as the one contained within this proposal. :+1:

You could say this every single week as the the “eligible lockers” resets to 0 so the ratio of OP:VELO looks artificially high which is offset by a fairly predictable and consistent locking rate. This feels like you intentionally trying to misrepresent things.

What is driving your biases? You’ve shared nothing about your background or experiences. It seems something in them has rendered Velodrome as the only topic of interest in Optimism governance. Perhaps you could share more about yourself so we could understand how your biases are shaping your perspective here? Which projects have you contributed to / are contributing to?

We already have an sense of it, but might be good for you to share.

Given how exhaustively we’ve documented our product performing incredibly well against both Curve, Uniswap, and Beethoven perhaps you could offer evidence to support this rather than stating it as fact?

This is not even remotely true. Why do you keep misrepresenting things? Multiple 9M OP grants have gone out to top projects Optimism, significantly larger than both of our requested grants combined.

None of the grants to date have demonstrated the same kind of 2x-3x impact as our grant. According to Optimism’s own numbers our 3M OP grant brought more TVL than every grant distributed by governance to date combined.

Look, I continue to believe you should show some interest in other proposals if you mean for us to take your objections to ours as serious and principled. But, if you are going to continue exclusively here, I beg you to back up your thesis’s with data and evidence so we can have a constructive conversation.

This team put literally weeks of work into all the research underpinning the that Velodrome has (perhaps) delivered the best ROI of any grant to date. This proposal may be the single most deeply researched and sourced one to be submitted to governance yet. It represents not just our voice, but the voices of is over 20 ecosystem builders/partners who signed on to support it.

Perhaps you do indeed know better than people like @TokenBrice, but trying to undercut our collective perspectives with specious arguments and misrepresentations does them and us a substantial disservice.


Good day @alexcutlerdoteth I’m back.
I am not denying the fact that more stimulus will have a positive impact on metrics all round for the short term.

This is not an investment Fund It is a Grant Fund to help build a sustainable ecosystem. Not to make a protocol sustainable.

Its the difference between growth and sustainable growth.

Velodrome is a newish protocol an upgrade to Olympus DAO design with features that mitigate selling with the Vote Escrow system. I understand a collapse like OHM suffered is unlikely but such an event would be detrimental to Optimism, other protocols on Optimism and mostly the Optimism users. than rapidly on boarding in the near term. This is why I am concerned and would like to see sustainability in the for front of all protocols requesting funds.

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I feel @Ardordo r concerns are legitimate. Just cause they don’t agree with you doesn’t give you the right to discredit them.

If they like I choose to comment only here on velodrome proposal is because they like I feel it is warranted. This is the second time Velodrome would be receiving Op form this grant fund, Yes some got more than you but none of them are already back for more, so you can expect exclusively form some community members here.

How can you know the weekly Curve $OP rewards that will go to each Pool???

This thread makes me think that subsidies are actually the product that is in demand here.

Some of us have emphasized here, Sustainable Growth.
This does not include the increase in metrics for constant subsidy/issuance; but what will happen when both end?
The incentives generate tvl and volume, but when the incentives end, the liquidity disappears.

Let’s focus on the concept of “Growth”, the goal of Optimism:
Do you think that if it hadn’t received the first grant, Velodrome would hold metrics above other dexes today?
Curve and Uniswap have not yet received/used the subsidy.
If your answer is:

Yes, it will continue to maintain metrics above these; Well, then the new scholarship is not necessary, , since no dex has applied for a second grant.

Not, if you think Velodrome wouldn’t be the major Dex; (as I said in my first answer) we should wait to see how the Uni and Curve grants work out before continuing to subsidize Velodrome

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Hey Everyone -

I want to take a quick step back here from the weeds and share some qualitative analysis of the conversation so far. We’ve had an extraordinary 26 total non-Velodrome commenters on our proposal so far. They fit into four overarching categories:

  • New Anon Accounts (less than 2w old)
  • Old Anon Accounts (greater than 2w old)
  • Delegate Accounts
  • Builder Accounts

In coding at the sentiment of commenters we find that 84% are either positive or mixed on the proposal, while just 21% are negative.

  • Positive: 12 (52%)
  • Mixed: 6 (26%)
  • Negative: 5 (21%)

That said, sentiment varies significantly depending on account type:

New Anon Accounts (6 total)
– 3 positive (25% of all positive)
– 0 mixed (0% of all mixed)
– 3 negative (60% of all negative)

Old Anon Accounts (6 total)
– 3 positive (25% of all positive)
– 2 mixed (33% of all mixed)
– 1 negative (16% of all negative)

Delegate Accounts (5 total)
– 0 positive (0% of positive)
– 4 mixed (71% of all mixed)
– 1 negative (20% of all negative)

Builder Accounts (6 total)
– 6 positive (50% of positive)
– 0 mixed (0% of all mixed)
– 0 negative (0% of all negative)

While it may be difficult to perceive to the sheer velocity of their posting, negative proposal sentiment to date has really just coming from about 5 accounts, of which 3 are new anon accounts created in the last two weeks. While that does not mean that their feedback should not be taken into consideration, we do hope it helpful to understand the nature of the overarching sentiment of the feedback to so far.

We hope to see more feedback from delegate and builder accounts in the coming days to ensure that we can address their questions/concerns and make sure their voices are not being drowned out of this process.

:v: Thank you for all the conversation so far!


Ser, I fear you are fundamentally misunderstanding the role that stimulus and infrastructure development plays in growing a sustainable economy. The whole point of it is to create “stimulate” long term growth and sustainability.

I’ve tried to convey this idea to you through linking to resources and using metaphors and analogies. I think at this point it is clear that you are not persuaded and you’ve made that clear. Perhaps we leave the space for some perspectives rather than continuing to go in circles on this.

Agreed, which is why the bulk of our proposal is focused on demonstrating our ecosystem impact and is co-signed by a significant portion of it.

This is not even remotely what Velodrome is and it is extremely troubling to me that you have been so vocal in our proposal without taking the time to understand what kind of protocol we are. Please consider reviewing our docs or watching a video explainer.


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.


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.