Velodrome Airdrop Review: Marketplace on Optimism

About Velodrome Airdrop

Velodrome Airdrop Finance is the trading and liquidity marketplace on Optimism. As an AMM (automated market maker) adapted from Solidly, Velodrome Finance comes with standard features popularized by Uniswap v2, and some novel ones, critical to Optimism’s ecosystem development.

Velodrome is airdropping a total of 240,000,000 VELO to OP, WeVE and other Cross-chain DeFi users. Users who’re eligible for the OP airdrop as Repeat Optimism Users, WeVE holders and other Cross-chain DeFi users such as veCRV and vlCVX holders are eligible for the airdrop.

Velodrome Finance, at its core, is a solution for protocols on Optimism to properly incentivize liquidity for their own use cases. Building on top of the groundwork laid out by Solidly, our team has addressed that first iteration’s core issues to realize its full potential.

Step-by-Step Guide:

1. Visit the Velodrome airdrop claim page.
2. Connect your ETH wallet.
3. If you’re eligible, then you will be able to claim free VELO.
4. Eligible users are:
   • Users who’re eligible for the Optimism airdrop as Repeat Optimism Users
   • WeVe hodlers
   • Curve Protocol wallets with a 1450+ days (maximum) veCRV lock time
   • Convex Protocol lockers of vlCVX since the new lock contract deployment
   • Treasure DAO Genesis Mine MAGIC stakers for 1- and 3-month periods
   • Platypus Protocol stakers with vePTP and PTP balance
   • Redacted Cartel participants in the genesis Dutch auction who didn’t sell their BTRFLY
   • Eminence Finance wallets affected with EMN, eAAVE, eLINK, eYFI, eSNX or eCRV balance

Who is behind this project?#

The team behind Velodrome Finance previously launched veDAO, an initiative incubated by Information Token. veDAO’s founding mandate was to engage with the Solidly ecosystem, a protocol launched on the Fantom network by Andre Cronje, while driving long-term value to the veDAO community.

The veDAO team has since developed deep subject matter expertise on both Solidly, the veNFT primitive, and the ve(3,3) mechanism, becoming the go-to resource for protocols and chains seeking support around these topics.

By the numbers, Velodrome Airdrop , managed to attract $2.6B in TVL (total value locked) in the early days, securing ~10% of Solidly voting power and ~$1.1M USDC in treasury assets.

Introducing Velodrome

Velodrome addresses these issues and presents an attractive alternative by addressing the core issues in Solidly and adding its own improvements. To recall, the key innovation of Solidly was to align protocol emissions with fees generated, not simply liquidity.

To do this, it would allow protocols and other large stakeholders to become veNFT “voters”, using their locked voting power to direct future emissions and collecting fees (termed bribes in Solidly) from the pools they voted for.

Velodrome Airdrop has made several improvements to the Solidly codebase, all of which were thoughtfully chosen to ensure that the protocol would carry out the original intended mechanism of allowing voters to fairly compensate LPs for impermanent loss.

Prolonged Emissions Decay#

In Solidly, protocol emissions decayed too quickly, leading to minimal incentives for late entrants. Obviously early adopters should be rewarded for the risks they’re taking, but we observed that the emissions decayed too quickly in the Solidly model. As a result, we made a few small tweaks to ensure that while early adopters would still be rewarded, the protocol would still be an attractive opportunity for future protocols.

White-Glove Support#

In Solidly, Velodrome Airdrop lack of a “team” meant lack of support post-launch. In line with the veDAO ethos, we want to ensure that the protocol has white-glove support for the partners and other stakeholders. To ensure that the team has sufficient resources to pay contributors an expand on the product offering, 3% of perpetual emissions will be directed towards our team multisig.

Tokenomics

Velodrome Finance uses two tokens to manage its utility and governance:

• $VELO — ERC-20 utility token of the protocol
• $veVELO — ERC-721 governance token in the form of an NFT (non-fungible token)

$VELO is used for rewarding liquidity providers through emissions.

$veVELO is used for governance. Any $VELO holder can vote-escrow their tokens and receive a $veVELO (also known as veNFT) in exchange. Additional tokens can be added to the $veVELO NFT at any time.

The lock period (also known as vote-escrowed period, hence the ve prefix) can be up to 4 years, following the linear relationship shown below:

• 100 $VELO locked for 4 years will become 100 $veVELO
• 100 $VELO locked for 1 year will become 25 $veVELO

The longer the vesting time, the higher the voting power (voting weight) and rewards the $veVELO holder receives.