There are also many people asking me to write about the velodrome project again.
I combined the official introduction and some of my thoughts
🪂Velo is a DEX using ve3,3 architecture. It combines the comprehensive advantages of Curve, Convex and Uniswap, and currently occupies a leading position in the op ecosystem. Of course, it is still far from the ARB ecology, so its space also has a certain contrast.
A question that people have asked a lot recently ❓❓ is the high-emission additional issuance brought about by the Ve33 model. Let’s first talk about its token model.
🪫How much is the total amount of Velodrome? I saw some other people sharing on various platforms, as well as on the official website, but there is no completely clear answer. There is no so-called total amount of velodrome, it is constantly being issued. Yes, this is the issue of additional issuance that you are worried about. When it comes to additional issuance, everyone will subconsciously Scared 😨
👇🏻But watch me go on
400 million VELO are initially allocated.
The community owns 60% of the shares (27% for WEVE holders, 18% for Optimism users, and 15% for Defi users including vecrv holders and vlcvx holders)
24% of the tokens will be airdropped to partners to encourage them to participate in the long-term development of Velodrome.
10% of VELO and 25% of veVELO tokens are allocated to the protocol team.
5% will be allocated to the Optimism team. The remainder is given to the initial liquidity pool.
After the airdrop is completed, that is, after it went online last year, there will be a cycle of 200 weeks. The weekly emission will be 15 million $VELO (3.75% of the initial supply) starting from June 4, 2022, and will be 1% per week. Velocity decay in (epochs).
At present, about 600 million have been emitted, and the total supply is about 1 billion.
According to the current emission rate of 1% weekly decrease in emissions, the total supply after one year will be approximately 1.8 billion, maintaining an overall 80% lock-in rate (average lock-up of 3.62 years), and circulating supply = 370 million
Talking about the history of defi, the well-known Vecrv model of CRV and the Olympus (3,3) model. First of all, Vecrv has a high cognitive threshold and is difficult for ordinary people to understand. Secondly, the emergence of the "governance nesting doll" phenomenon has led to centralization. Governance.
The users of the Olympus (3,3) model mainly refer to Stake. Users lock the OHM they buy in the market or obtain through Bond operations for a period of time to obtain more OHM. However, after the bull turns to bear, this mechanism has also accelerated. The death of OHM. OHM also needs support behind its additional issuance. For Olympus, support comes from the transaction fees charged by the agreement and the assets held by the agreement. On the one hand, the protocol obtains the tokens in the hands of LPs by giving LPs a low price to purchase OHM, and deposits these tokens into the liquidity pool to obtain transaction fees. In addition, 80% of the reserves are OHM tokens, and the remaining As a stable currency. This means that the fate of Olympus depends on the price of OHM. Once the price of OHM currency drops beyond a certain level, users will only choose to sell and sell, entering a death spiral.
Well, in fact, both Vecrv and Olympus(3,3) have their own problems. Ve(3,3) is synthesized from the previous DEFI model and came into being.
The dex solidily used on FTM before was also the ve33 model, which is considered a veteran, with a high of 2.4 billion.
TV L, due to various reasons, I have been relatively quiet recently. At that time, I also combined the previous defi experience.
And velo is an optimized version of solidly. Let me emphasize again that VE(3,3) combines the Olympus DAO mechanism and voting custody token economics from Curve, Convex and other protocols, and can be applied to any defi or cefi project
Using Solidly's experience, we created an "enhanced version of the ve model" for Velo, forming a positive flywheel of lock-up - governance - income - bribery - depth improvement - income amplification.
Let’s talk about the above loop
Users lock TOKEN in exchange for veTOKEN to gain voting rights
Voters decide which pools or LPs new emissions go to
Voters receive transaction fees + bribes allocated to measure
Traders get low slippage
Protocols pay bribes and gain liquidity
The capital efficiency of bribes/fees is how many dollars of emissions you get for every $1 of bribes or fees you pay.
Usually the bribe capital efficiency of early ve(3,3) decentralized exchanges is 3-10 times.
This means $3-10 in emissions for every $1 of bribes + fees.
For more mature ve(3,3) decentralized exchanges, capital efficiency is between 2x and 3x.
The dream of ve(3,3) is to implement a self-sustaining flywheel that incentivizes voters through transaction fees alone.
Use heavy bribes to get CL pool emissions started
Establish TVL in Mining Farm
Transaction fees maintain (or increase) emissions next week
Gradually reduce bribes as fees rise
If development is blocked repeat the above steps
To put it simply, everyone’s understanding of defi is staking and locking, mining, selling and withdrawing. So going back to the issue of additional issuance of emissions that I mentioned at the beginning, velodrome needs to attract enough protocol participation to start the flywheel. The more native assets on a chain, the more powerful it will be. The ve3,3 on this chain will be stronger.
There are already many protocols built around Velo, such as @Extra Finance and Exactly Protocol. For example, base chain @Aerodrome, etc. These protocols are the liquidity locks of velo. Currently, most of velo is held by various defi protocols. There are currently nearly 60 protocols that are cooperating with it, and there may be more in the future. "Lock position" veVelo gameplay
Velodrome combines liquidity mining and governance, allowing liquidity providers to obtain veVELO NFTs by staking VELO tokens, and participate in governance and obtain protocol benefits through veVELO NFTs. This mechanism can effectively incentivize and reward liquidity providers, while also preventing valueless inflation and short-term speculation of tokens.
Then everyone can understand that for defi, any model may be borderline Pond's, and even have high apr, quickly attract liquidity, and face problems such as emissions. Velodrome, as the current leader of ve33, draws on the improvements of the previous defi model. Expected to perform better
And at the same time, it is not only the model leader of ve33, but also the engine of OP's ecological development. I know and have said that OP is supporting it, including the recent joint activities between OP and it. OP has given out 1.25 million rewards to encourage users to support velo. The lock-up is also a blessing to the OP ecology at the same time, so its hope for success goes further, because it is the engine, L2 is here, OP is here, remember that it is not just a single functional protocol, it is the decision-maker for half of the entire Ecological applications.
There is also the issue of V1 and V2 of the exchange. The exchange does not pay attention to the development of the project. It is more that there is a currency on it and everyone has a handling fee. As far as I know, the team may have been doing some docking and communication. Currently, the replacement Whether or not to replace it is without intervention, it is a natural behavior. Of course, V1 currently has no incentives, so the real V1 is of little significance. V2 is what is really happening now.
Finally, these are just some of my opinions. Please don’t fomo a certain token just because of what I said. I am just doing some research on some issues that you are more interested in🧐
If you think it is useful to you, please comment and like it👍
