Velodrome Grant Performance Update

Delivering on our Promises

Velodrome has prepared a report to OP Governance on the performance of our second grant. We believe that this report will show Velodrome continues to be a force multiplier in the Optimism ecosystem, returning an ever-increasing multiple of value for each OP spent.

Many of the metrics we present will discuss these different multipliers. For total value returned to the ecosystem, external bribe dollars, partners onboarded and liquidity for key trading pairs, Velodrome has become a maximally efficient growth hub for the Optimism ecosystem. In our discussions with protocols, the number-one need to launch and scale on a new chain is liquidity. The combination of our incentive programs make us a one-stop shop to support new ecosystem partners, as evidenced by our success bringing new players into the ecosystem.

We achieved this success while gradually phasing out OP incentives to maintain responsible spend levels as our utilization for our programs increased. We believe this demonstrates our sustainability and longevity as a protocol. However, OP remains in a competitive L2 environment and these incentives continue to make the difference in swaying protocols to come here and influencing their choice to invest here. Our combination of impact and efficiency make Velodrome an incredibly useful tool for OP governance to invest small amounts of limited resources and achieve outcomes tailored to its ongoing needs.

This report will cover each of the promises made and KPIs we laid out in our initial grant proposal. We will also outline our strategy for being good stewards of our OP grant and how we managed our grant spend throughout the long grant time period. We believe this report justifies both the size and duration of this investment by OP governance and we look forward to a discussion about these results.

Stimulus for the Optimism Economy

Velodrome delivers a multiplier effect to OP incentives for the Optimism ecosystem through emissions, bribes and fees flowing to users and protocols. At the time of our grant request, the value multiplier hovered around 2-3x. Since receiving our second grant, we have seen this multiplier increase to over 8x. In other words, Velodrome has delivered $8 in value to liquidity providers and veVELO voters for every $1 in OP spent. Capital-efficiency is our core focus. By remaining disciplined and leveraging Velodrome’s novel mechanics, the protocol has been able to grow rapidly and maintain a consistently high level of TVL without increasing OP incentives in real terms.

Attracting partners and capital

A major revision to our grant spend from our Partner Fund Grant to our Governance Grant was the Tour de OP. Bribes to veVoters remain the most efficient way to quickly bootstrap liquidity for protocols. This program was designed to attract bribes and also incentivize ideal behaviors by bribers to increase investment in the Optimism ecosystem. We identified 3 KPIS, increasing the total number of protocols bribing, increasing the number of pools being bribed and an overall increase in total bribes. This also posed a grant spend management challenge for us. If successful, utilization of incentives would increase to unsustainable levels so we have systematically scaled back incentives to maintain a consistent spend while continuing to increase these KPIs.

The program was incredibly successful at attracting an increasing dollar value of bribes while maintaining consistency in our OP spend.

When put in multiplier terms, we are now attracting over $10 in bribes to the Optimism ecosystem for every OP spent on matches.

In order to achieve these outcomes, we have been engaging with partners to utilize the OP incentives available. Our stated goal was to increase the number of projects bribing during our second grant and we went from 20 to 47, more than doubling the number of engaged partners. (Red months indicate the start of the 2nd grant)

We have also more than doubled the number of pools consistently bribed each week.

This is in large part due to our active business development. We have engaged with over 107 projects. Of these projects, 41 reached out directly to us as a first point of contact while coming to Optimism. Building liquidity on a new chain is a top priority for new projects and Velodrome’s incentive program often made the difference in where protocols chose to invest.

Encouraging long term investment in Optimism

veVELO lockers are invested long term in the success of the protocol and the Optimism ecosystem. We have attracted 34 protocols as lockers both by directly incentivizing locking and by making it a bonus category for our bribe matches. Protocols have averaged a ~30% bonus on their lock during the entire lock bonus time period, which means for every $1 in incentives $3.3 value was locked in the Optimism ecosystem for 4 years. As far as we know, this is the only OP incentive program that requires users to lock capital to participate making it uniquely resistant to mercenary incentive farmers and the drawback of typical liquidity incentive programs.

We have a detailed Dune dashboard that shows protocol locking activity for those interested in further analysis, but here are some highlights based on our stated goals.

Increase the number of protocols locking:

We have seen a large increase in the number of protocols in the Velodrome races. Over 150m veVelo is now locked by 34 protocols who have a long term investment in the Optimism ecosystem.

Increase the total veVelo lock rate:

We successfully increased the amount of locked veVelo to 730m and have maintained a 75% lock rate through the majority of this grant cycle.

Attract protocols to the ecosystem that meaningfully improve layer wide economic activity:

Looking at the Optimism TVL on Defi Llama prominently features several of our most active racers. Some highlights (Stats as of 05/11 on Defi LLama):

  • Beefy Finance now has achieved its highest TVL on Optimism of any chain, attracting over $72 million in TVL.
  • Sonne Finance is a homegrown lending protocol that utilizes the Velodrome flywheel to incent locking of its own token by using its Velodrome lock to distribute rewards. It has attracted over $92 million in TVL.
  • Stargate Finance has made Velodrome its liquidity base for its STG token and attracted $6 million in liquidity during its first week of bribing.
  • Inverse Finance has attracted over $26m in liquidity to DOLA pairs making Optimism its 2nd largest home behind mainnet by a wide margin.

Building liquidity for key ecosystem pairs

The third aspect of our OP incentive program was to efficiently bribe key ecosystem pairs to build liquidity that benefits the ecosystem as a whole.

We have consistently been bribing 4 pairs equally for the last 12 weeks with 4,000 OP/Week on average. This small bribe has attracted multiples in both TVL and volume and decreases the friction to participate in numerous Optimism protocols. This bribe efficiency reinforces what a valuable tool Velodrome is for OP governance to skate to where the puck is going and build liquidity in anticipation of ecosystem needs.

Sustainability and Accountability

OP governance entrusted us with a very large grant to be used over an extended time frame. The metrics above show we have achieved the intended impact with our grant. One equally important success has been active and conscientious management of our grant funds. As the utilization of our programs has scaled up, we have consistently scaled back to maintain the amount of OP we are spending each week. These reductions ensured program longevity and sustainability by encouraging organic growth with as few incentives as possible.

Here is an accounting of all of the Velodrome OP spent to date for both grants (grant 2 starts at week 27).


Both the Optimism Partner Fund and OP Governance has entrusted Velodrome with two grants. We are proud to share that through our responsible management we have far exceeded our goals and expectations we agreed to during the grant-making process. Our incentive programs have delivered increasing multipliers of bribes, protocol partners, capital committed to the ecosystem, and liquidity for key ecosystem pairs. For every dollar of OP spent on Velodrome, we consistently return 6-8x the dollars in ecosystem stimulus, all while maintaining a consistent grant spend on a week to week basis.

In a competitive environment, Optimism’s grant programs are a distinguishing feature that can be a powerful way to grow the ecosystem. We believe that incentivizing programs with demonstrated results is critical to ongoing ecosystem growth and achieving the scale required for chain sustainability and longevity.


Very impressive numbers


Amazing use of OP grants!


Velodrome remains the powerhouse of Optimism, no contest!

Well done Team Velodrome :clap:.

Of the TVL on Optimism, what % is from Velodrome TVL?


Congrats on a successful program and thanks for the excellent writeup.


Would love to see this kind of post-program analysis become a norm among grant recipients

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Hi, love seeing detailed analysis! This helps share learnings and insight back to the Collective, and I hope it sets a precedent for other teams & projects to follow. There’s so so so much left to uncover and explore.

Adding the tag ‘program-analysis’ for all similar posts would be helpful so we can all filter easily

A few comments & tactical questions:

  • It would be helpful to share query / data source links under the charts so we can evaluate ourselves.
  • For non-standard metrics (i.e. “value created”) it would be helpful to define how this is calculated up front. (i.e. What does “value created” mean? Is this DEX Trading Fees, other Bribes, both, something else?)
  • Seeing metrics on “Protocols Onboarded” is super useful. The measure is fairly straight forward here, but for other programs, it would be great to test methods for “how did this program help provide value to the overall ecosystem/collective” versus just focusing on each app individually (which is how we’ve measured in the past).
  • Also a fan of calling out how efforts beyond issuing OP rewards had an impact. One of our early hypothesis from a prior update was around “Rewards alone likely lead to high churn. Rewards + Product Development / Improvements may lead to better retention.” So it would be awesome to see similar insight into this for future updates from other teams.
  • Clear accounting of where the OP has been used is also a great precedent. This is so hard to track without the context of each program (and the teams have the context).

Thanks for making the post and setting an example on insight sharing! Definitely want to encourage others to do the same.

Were there any takeaways that you didn’t know/expect that you all discovered while putting this analysis together? I’ve found that writing/presenting things helps uncover things that “staring at numbers” doesn’t.


Hey @MSilb7 thanks for taking the time to respond!

First time posting in the forums here, but one of the strategy/analytics people on the Velo team. Wanted to answer your questions and share some responses.

Most of these charts are from internal operations document we use to track our matching/biz dev work on a week to week basis. Most of this ends up on chain and I agree we should point to some resources for verification! This dashboard tracks our historical voting information and contains a lot of this info, but not in quite the same frame/analysis. Definitely something we can work in for the future.

We discussed this same metric in our initial application for the grant. It includes weekly bribes, fees and emissions. The goal is to provide a sense of scale of the overall impact of the protocol on Optimism relative to the OP incentives spent. I don’t think we had a super robust discussion about the different KPIs we would be held accountable for. I think making that connection more explicit in the future is a great idea!

Yes, “protocols onboarded” is a much more straightforward metric to track than what a lot of projects face. As you all discussed on the recent governance call in May, it is a pretty meaty analytics challenge to track changes at the user adoption level. To your point about retention, this would help measure that. We know incentives will attract users, but how loyal are they? And if a project can show they can attract and keep users after or with fewer incentives that is super powerful.

For us, I think evidence of this is how our multipliers have increased as we have scaled back incentives. Spend has remained relatively consistent but adoption/new users continue to increase despite fewer incentives. This demonstrates a strong connection between attracting new users and then seeing their continued investment in Velodrome/Optimism as the relative amount of incentives decreases.

Managing the grant this way is helpful as a within program, program evaluation. Grant proposals could include a plan to scale up incentives to attract users, but then reach a target spend level and hold constant/phase out to see if metrics hold up. This would help build in some useful information for grant performance updates and provide some insight how continued investment by governance would perform with these types of strategies. We didn’t specifically discuss this in our proposal, but we were incentivized by wanting to efficiently use our incentives over a long time frame.

Assembling everything into one place definitely reinforced for us how well the incentives complimented each other! It was great to see protocols reach out to us, take advantage of a bribe match, then become active lockers, then use the full Velodrome flywheel to create a sustainable liquidity program and that demonstrated success led to more protocols reaching out. We believe this is why incentives were able to get more efficient over time! A lot of thought went into the design and it was rewarding to summarize the success across different areas of the team.


Impressive results and very robust reporting. Truly setting the standard here for other protocols to follow. Well done Velodrome team.