Velodrome (VELO) has evolved from an AMM project with a ve(3,3) model into the leading decentralized exchange within Optimism’s Superchain ecosystem. This guide dives into Velodrome’s key features, tokenomics, and innovations.
What is Velodrome?
Velodrome is an Automated Market Maker (AMM) designed to serve as the liquidity hub for Optimism’s Superchain. Inspired by Solidly’s ve(3,3) model (originally from Fantom’s ecosystem), Velodrome introduces unique enhancements to improve efficiency and user rewards.
Key Advantages:
- Low fees: Competitive transaction costs.
- Deep liquidity: Optimized pools for minimal slippage.
- Governance incentives: veVELO holders direct emissions and earn protocol fees.
- Flywheel effect: Synergy between traders, liquidity providers (LPs), and voters sustains ecosystem growth.
👉 Discover how Velodrome’s AMM outperforms competitors
How Velodrome Finance Works
Velodrome’s model revolves around three core participants:
- Traders: Swap tokens and generate fees (the protocol’s primary revenue).
- Liquidity Providers (LPs): Deposit tokens into pools to earn VELO rewards, amplified by staking in “gauges.”
- veVELO Voters: Lock VELO to govern emissions allocation and share protocol fees.
This creates a self-reinforcing cycle where:
– Traders fund rewards.
– LPs maintain liquidity.
– Voters optimize emissions for long-term growth.
Velodrome’s Core Products
1. Automated Market Maker (AMM)
- Supports 90+ assets on Optimism.
- Features low slippage and fees via ve(3,3) mechanics.
2. Liquidity Marketplace
- Incentivizes LPs with VELO emissions.
- Enhances capital efficiency for traders.
3. Velodrome Relay
A tool to automate veVELO management:
– Auto-compounding: Rewards are converted into additional veVELO.
– Custom voting strategies: Direct emissions to prioritized pools.
– 10%+ of veVELO supply is managed via Relay, boosting ecosystem alignment.
👉 Learn how Relay maximizes veVELO returns
VELO Tokenomics
Detail | Value |
---|---|
Token Name | Velodrome |
Symbol | VELO |
Blockchain | Optimism |
Total Supply | 1.94B VELO |
Allocation
- Community: 60%
- DAOs: 24%
- Velodrome Foundation: 10%
- Optimism Team: 5%
- Genesis Liquidity: 1%
Use Cases
- LP rewards: Earn VELO for providing liquidity.
- Governance: Lock VELO as veVELO to vote on emissions.
FAQs
Q: How does ve(3,3) benefit Velodrome?
A: It aligns incentives—traders, LPs, and voters all profit from protocol growth, creating a sustainable flywheel.
Q: What’s the advantage of staking VELO as veVELO?
A: veVELO holders earn protocol fees and influence which pools receive emissions.
Q: Is Velodrome only for Optimism?
A: Currently, yes—it’s the central AMM for Superchain’s Layer 2 ecosystem.
Q: How does Relay simplify veVELO?
A: It automates voting, reward collection, and compounding, reducing manual effort.
Conclusion
Velodrome combines low-cost trading, liquidity incentives, and community governance to dominate Optimism’s DeFi landscape. Its ve(3,3) model and Relay toolset set a new standard for AMM efficiency.