I think you may have also doubled down on the “buying and locking” claim.
Would you be willing to confirm that you understand that you do not need to buy VELO to access the lock bonus? 
1 Like
By the way, there is another great way to think about the lock bonus. It may be one of the best ways to distribute Optimism Governance power to protocols and users who are most ecosystem aligned.
There have been plenty of conversations about the best ways to ensure that protocols are able to gain a voice in governance. This may be one of the best ones as it essentially represents an exchange: you lock $1 in Optimism for four years, you get 20c worth of voting power in Optimism governance.
This makes a ton of sense because projects and individuals locking for four years is demonstrating a long term commitment to ecosystem. They are now invested in both Velodrome and Optimism’s success. They are exactly the kind of people who we want to have a say in governance.
This seems far more likely to benefit the right kind of users that OP incentives that flow to fickle liquidity providers or mainnet stakers. There is also nothing in the language of this proposal that would prevent us from entering into a social contract with protocols who are earning these rewards to encourage them to hold and/or delegate the tokens they are earning.
Would that help alleviate some concerns?
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There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team.
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They’re on-boarding a ton of people the hard way - with actual customer/client services.
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They’re getting teams and users invested long-term in the ecosystem’s success.
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They’re the main Optimism point of contact if you’re a builder/developer.
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Their bribing system makes operations much lighter for small teams and startups.
They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously.
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Agree completely. There are over 100 comments in this thread (which I guess I’m adding to now lol). It feels like folks are getting caught up in the minutia and missing the forest for the trees a bit here.
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Congratulations on being post 125, @Katie! A new record! 
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Where are you getting this from and what exactly is the context?
incentives = OP tokens from the grant?
project native tokens = bal/beets?
if so, thats entirely untrue good ser.
Heya -
Happy to clarify.
I was referring to this section from the Beethoven/Balancer proposal indicating they’d $OP would be used to directly bribe $veBAL voters (i.e. requiring the token to earn the reward).
To be clear, I have no problem with as I understand how incentivizing them returns multiples versus on direct incentives. I was just trying to draw OPUser’s attention to a lack of consistency in how he was evaluating proposals that require the veTOKENs to earn the OP rewards.
It’s possible they aren’t actually bribing yet, but the point here is really just focused on what he is saying is okay to approve versus not.
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Is the net effect however, LM incentives, which liquidity providers benefit from when entering the pool utilizing whatever tokens they choose?
The OP tokens from the grant are used as bribes when the bribe roi is positive and for direct LM when the bribes roi is negative, as you hinted, this is the most capital efficient method. Either way, the end result is the same no? which is LM incentives in the pools for OP participants of all kinds, utilizing various tokens, that provide liquidity in those pools.
Also, either way, bribes or direct LM incentives, the grant tokens used are being matched 1:1 in value. Again, is this not truly benefitted at the user level, for people who join the pools, using any token they want for those various pools? therefore, to benefit from the use of the grant tokens, users simply need to provide liquidity in the pools. they are not required to attain project native tokens. Is that not the end result? would you agree with that analysis?
Id like to further note that beetx on optimism has been using fees collected to market buy OP tokens to match with much (about 75% so far) of the grant tokens used for direct LM incentives. Is this not further providing benefit to the OP eco and its users as its not simply matched with emissions only? Does that not also demonstrate a difference in the methodologies employed?
Not trying to highjack your thread mate, and my apologies for doing so. Also not trying to be negative towards you or velo at all, and not saying either the velo or beetx methods are right or wrong. I simply wanted to explain the logic while i feel the comparison in bribing may not be so directly apt, and thus perhaps why OPuser had that opinion.
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I’m tracking with you 100% and again want to reiterate that my note was in no way intended to be a criticism of either the Curve or Balancer proposal. I think it totally appropriate for OP incentives to be directed to those who acquire (or have previously acquired) native project tokens as long as the second order effects of those incentives can be clearly demonstrated to drive multiples in growth back.
As you describe, while the OP from bribes do indeed flow exclusively to those who have acquire (or have acquired) “project native tokens”, they produce second and third order effects like increasing the cumulative rewards flowing to LPs within a given epoch and growing TVL on the network.
Likewise while our OP lock bonuses flow exclusively exclusively to those acquiring “project native tokens”, they produce second and third order through requiring protocols to lock 4x the investment in the ecosystem (increasing TVL) while giving them an ability to direct more emissions than the value of the underlying lock to LPs (in perpetuity).
In one case, you’re using incentives to rent the direction of LP emissions and in the other case you’re using incentives to acquire the ability to direct emissions. In both cases, you need to own the project native token to access the first order incentive, but you do not need to hold the token to access the downstream benefits.
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I can see and understand your points made, thank you for the responses.
hopefully we did some good here in fleshing out the second and third order effects as you’ve worded it, which I believe is a good way to put it.
I feel those effects could be different for each separate protocol but the important point imo is the value add to the OP eco. I believe the protocol 4x lock requirement has the ability to achieve this.
Again, apologies for any derailment, and thank you for your time and attention in this discussion.
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No worries at all! Appreciated the opportunity to tighten up my articulation of why these incentives all share the attribute of requiring "the project native token to be part of OP incentive” (OPUsers objection to us) while still creating second and third order multiplier effects that anyone can access and grow the ecosystem as a whole.
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Good Morning
Voting is coming up so we wanted to create a summary/guide of the discussion so far for those unable to parts through the record breaking 133 comments on the proposal. 
Overview
Velodrome spent several weeks creating what is likely the detailed and evidenced proposal to be submitted to governance yet. If you have the time, please consider reading its in it’s entirety.
Since it’s posting 12 days ago it has received 133 comments from 31 commentators:
- Positive Commentators: 17 (58%)
- Mixed Commentators: 5 (17%)
- Negative Commentators: 7 (24%)
As you can see, there are more positive commentators than negative and mixed commentators combined. Though it may be hard to tell from differentials in the volume of post:
- 2.4x more commentators were positive than negative
- 100% of comments from builders were positive
- 43% of negative commentators were from new accounts
- Only 13% of positive comments were from new accounts
Notable Positive Comments
Since there are have been far more positive comments than negative ones on the proposal, we’ll start by highlighting a few positive ones that we think emphasize our impact well. You can also check out the testimonials we’ve collected from 10+ partners (and counting) on our Twitter.
Key Discussion Points
While negative and mixed commenters have represented a minority of the total engagement on the proposal, questions and concerns they’ve raised have allowed us to discuss and clarify key points on our proposal. We provide a quick overview of some of the key questions raised and provide short summaries of our responses:
Is Velodrome Asking for Too Large a Grant?
TLDR: No. It is 90%+ smaller than the average grant by every KPI, offers a proven 2x-3x ROI, and comes with Velodrome offering $6.5mm in co-incentives (31x those of other DEXs combined). Likewise, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of grant funds. No alternative frameworks for grant size evaluation have been suggested or offered.
Is The Lock Bonus An Appropriate Use of Funds?
TLDR: Yes. The incentive flows to veTOKEN lockers consistent with other proposals such as Curve/Balancer and while drive similar second order effects that grow the ecosystem by multiples and reduce costs for the ecosystem. No data has been provided suggesting it has any meaningful impact on price.
Would Builder Grants be Better?
TLDR: No. Velodrome grants have brought 30+ new builders to the ecosystem by reducing their incentive costs by 20% - 70% while less accountable direct builder grants offered by other protocols have yet to demonstrate their efficacy.
Is Velodrome Really Competitive with Curve and Uniswap?
TLDR: Yes. Velodrome is more efficient in TVL/Volume / $ spent in incentives (lowering costs ecosystem wide). It also attracts similar levels of volume per dollar in TVL while simultaneously hosting 3.2x more ecosystem projects tokens than Uniswap and Curve combined.
Should Velodrome Be Forced to Operate Without OP Incentives?
TLDR: Velodrome has demonstrated the highest ROI in terms of ecosystem growth of any governance or partner fund grant to date. The primary impact of pulling back on incentives would be to slow or reverse that ecosystem growth while simultaneously continuing the flow of incentives to less effective programs on other DEXs making comparative evaluations of different programs more challenging. Incentives already represent a declining proportion of our total activity and we expect that to continue to shrink over the course of this grant.
Does Granting Velodrome Harm Other DEXs?
TLDR: Ecosystem native DEXs and multi-chain DEXs have different goals and incentives when it comes to growing Optimism and cannot be easily compared. Overall though, all should be evaluated / granted equally in terms of the growth multiple they can return and growing ecosystem activity will benefit all.
Summary
We hope you’ve found this summary helpful and will continue to add it if/when new topics are raised to make the overall thread a bit easier to navigate as we move into the voting page.
Thank you for reading!
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Velodrome has cimented its place as the liquidity engine for Optimism, creating more long term value in locking massive POL than it is requesting in the proposal. The model works, but the additional OP will only accelerate its growth.
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Defi Committee A Recommendation
Our committee is abstaining from making a formal recommendation for this proposal. We encourage delegates to read the proposal and vote accordingly.
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Hello Katie, pls may I know the reason(s) for this?
I’m supportive of this proposal.
Even though I’ve had some disagreements with the Velodrome team in the past, I can’t deny that they have stimulated a lot of activity on Optimism, especially in regards to their liquidity mining program and the numerous protocol collaborations as a result of it.
Before Velodrome launched their program with OP incentives, the liquidity situation on Optimism was quite shallow. You could hardly swap even minor amounts of ETH without slippage those days. Today swaps for ETH are as competitive on Optimism as most other chains/rollups with Velodrome being the leading DEX (by liquidity).
In regards to OP incentives for vote-locking $VELO, I think it’s an aggressive strategy but one that is logical given that LPs will be receiving $VELO rewards, and those LPs are OP community members and ecosystem token holders after all. So essentially the value is distributed among Optimism ecosystem protocols, aligning values accordingly.
This proposal will essentially extend their OP liquidity mining program to Optimism’s 1 year anniversary and ensure Optimism remains appealing to new entrants and competitive in that time. IMO Velodrome has been a net positive for Optimism and I think they’ll continue to be so.
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I have loved Velodrome since I bridged over to optimism and it was actually the first Dapp I used when I received my OP airdrop. I am supportive of this proposal not only because Velodrome has the best team to work out the best use case for an OP grant that benefits the average OP ecosystem user but because of the beneficial deep and stable liquidity velodrome holds for the entire blockchain.
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Velodrome is undoubtedly a flagship Optimism protocol, this is a thorough proposal, and the team has been very responsive here. With the committee not reaching consensus, I’ll however vote Against.
I mentioned earlier as a request to committees that at Cycle 8 we have reached a point where it’s time to carefully evaluate the results of prior cycles and be increasingly more stringent about grants. Particularly for repeat projects, we have to be very particular. So, I’m going to practice that here.
While Governance Fund has certainly benefited activity and user acquisition on Optimism, in my opinion it has far lagged the $OP tokens that have been distributed - not just Velodrome, but across the board. Arbitrum One has continued to grow organically without any incentives, and continues to be the leading smart contract L2 - further muddying the waters. My impression of this proposal - and skimming through the 140 comments - is this approximately maintains status quo without bringing any new innovation to user acquisition that we are seeking. Sure, continued incentives will onboard more users, but there’s also a heavy cost in misallocating $OP tokens to mercenary liquidity farmers, whose time shouldn’t be extended for an entire year or so. We have seen ecosystems like Avalanche & NEAR plundered by long-term liquidity mining, with nothing to show for today - they remain veritable ghost chains. Generally, I personally don’t like to see incentives that are aimed at mining liquidity and growing TVL, and I’ve also written extensively about the risks of doing so while Optimism is still heavily centralized. Further, we have reached a point where liquidity isn’t the bottleneck on Optimism - we need to focus on growing other applications and onboard more users who can actually leverage all this excess liquidity. Velodrome has now established itself, and even without these incentives I’m sure they’ll continue to thrive, only losing some mercenary liquidity in the process. I have some other minor qualms, some of which are mentioned above, but overall, all things considered, in my opinion, we’ve been there, done that. There’ll be a more opportune time in the future to try this again - new ideas to incentivize user acquisition, more activity across other usecases, a more mature Optimism, a bull market etc.
16 Likes
Appreciate the thoughts. Before responding, it would be good to get a better sense of your underlying thinking.
Can you give us some sense from a quantitative standpoint what metrics Velodrome would’ve needed to hit in order for it to (in your eyes) justify what is essentially a 3-6 month conditional extension of it’s incentive programs?
We provided an unprecedented amount of data demonstrating our impact and the massive multiplier on grant funds committed to date, just hope to clearly understand where specifically you think we may have missed the mark.
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I agree with Millie. The Synthetix Ambassadors will be voting Yes on this proposal.
Velodrome is a net positive for Optimism. I urge voters to also vote yes for this proposal.
6 Likes