Velodrome Finance (VELO)
Velodrome Finance is an automated market maker (AMM) designed to be the central trading and liquidity marketplace on the Optimism Network.
Overview
Velodrome Finance launched on June 2, 2022, and introduced Velodrome V2 on June 22, 2023. This full protocol redesign included features such as decentralization, concentrated liquidity support, dynamic fees, a dynamic emissions rate, Velodrome Relay, and improved performance and user experience with the decentralized application (dApp). Velodrome Finance operates as a decentralized derivatives trading platform that allows users to create, trade, and settle derivatives contracts transparently. The protocol is designed to facilitate token swaps and generate fees by attracting liquidity.
| Ticker | VELO |
| Category | Decentralized Exchange (DEX) |
| Website | https://velodrome.finance/ |
| @VelodromeFi | |
| Contract Addresses | |
|---|---|
| optimistic-ethereum | 0x95...db Copied! |
On September 1, 2023, Velodrome announced it had received 1.25 million OP to support the Optimism ecosystem by expanding the optimistic vision, increasing governance participation, and enabling ecosystem growth. On February 8, 2024, Velodrome introduced itself as a MetaDEX, a unified protocol that integrates various decentralized finance (DeFi) primitives into a streamlined experience. Velodrome also plays a crucial role in the Optimism ecosystem by contributing significant rewards, serving as an economic stimulus.
Tokenomics
Velodrome Finance uses two tokens for utility and governance:
- $VELO: an ERC-20 utility token of the protocol
- $veVELO: an ERC-721 governance token in the form of a non-fungible token (NFT)
$VELO is distributed to liquidity providers through emissions, while $veVELO is used for governance. Holders of $VELO can vote-escrow ('ve') their tokens to receive $veVELO, also known as Lock or veNFT, with the option to add more tokens to the $veVELO NFT over time.
Initial distribution
The initial distribution of $VELO and $veVELO targeted users and protocols likely to contribute significantly to the protocol's mission of becoming the liquidity base layer of the Optimism ecosystem. The initial supply of $VELO is 400 million, with 60% allocated to the community, 18% to engage contributing protocols, 6% reserved for partner protocols after launch, 10% to the foundation, 5% to Optimism, and 1% to Genesis Liquidity Pools.
Velodrome Relay
On October 5, 2023, Velodrome introduced Relay, a feature designed to help protocols optimize their liquidity strategies. Velodrome Relay was created to enhance the protocol and user experience by automating the management of veNFTs. Relay allows protocols to develop personalized voting strategies, decide on reward management, and utilize Relay vaults for execution. It primarily serves protocols seeking liquidity and users seeking rewards.