Our goal is to create at least 3 metrics on Velodrome, each with a description, that demonstrate its traction and success based on data. Moreover, we aim to explain “How healthy is this project?” to the readers.
An Overview Of Velodrome
To create Velodrome, the premier trading and liquidity marketplace on Optimism, the Velodrome Team sought to bring together the top traders and analysts. As a public good, Velodrome is a public market maker modeled after Solidly. It provides deep liquidity and low slippage to token pairs essential for the growth of the Optimism ecosystem. Bringing together an automated market maker (AMM) and a full financial platform in a single protocol can dramatically improve user experience and sustainability. Similar decentralized exchanges like Solidly, Curve, and Delegate seem to always be spawned by external protocols like aggregators, auto-compounders, and delegators. Users and protocols are therefore less likely to be able to play the game effectively because of unnecessary inefficiency, value extraction, and confusion. Using Velodrome Relay will eliminate this requirement and streamline the process.
A Velodrome’s flywheel is composed of numerous groups, including:
Here from the below tweet we can see how does Velodrome works .
Simply, Velodrome works as follows…
— Velodrome (🚴,🚴) (@VelodromeFi) May 29, 2022
veVELO voters choose which pools get emissions.
veVELO voters receive the trading fees / bribes collected by the pairs they vote for.
LPs receive the emissions directed to their pools.
veVELO lockers receive anti-dilutive weekly rebases. pic.twitter.com/zhls7XOXkK
- AMM is ultimately designed for traders and protocols because they drive Velodrome’s cash flow.
- In exchange for supplying the assets necessary for low slippage swap executions, liquidity providers (LPs) are rewarded with VELO emissions.
- As VELO grows in popularity, holders share in its success. Token holders who vest-lock their tokens receive a veNFT with the power to vote which trading pairs they would like to receive VELO emissions and receive 100% of the fees generated for the pairs they vote for, along with an anti-dilute rebasing process.
Using Velodrome, each group is rewarded for taking actions that contribute to the protocol’s success. Slippage can be reduced by liquidity. Trades are boosted when slippage is low. Protocol revenue is generated by trades, which are shared by token lockers. Additionally, this model encourages long-term token holding and active governance participation, which are crucial to the sustainability of the ecosystem.