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With Solidly gone, what Optimism does the AMM Velodrome have for the imagination?

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Velodrome had an initial supply of 400M, and of its overall allocation, it distributed 60 per cent of the bulk of the tokens to the community.

Original article by Jane

Solidly 已经偃旗息鼓，但 AC 提出的 ve(3,3) 的生命力却持续在生发。基于 Solidly 改进的 AMM Velodrome 目前已经是 Optimism 生态（同时也是以太坊 L2 上) 锁仓量第一的 DEX，锁仓量超 2 亿美金，初步验证了其经济模型的可靠性。具体机制如下图所示：

The Velodrome team grew out of veDAO, who experienced Solidly failures and learned a lot from them. In one of its tweets, the team mentioned that it did not want to simply fork Solidly, but rather actually practice the flywheel that AC imagined.

For this reason, they carefully thought and iterated on the basis of Solidly model.

1) More reasonable rhythm of token allocation and additional issuance

Solidly distributed ve tokens to the top 20 protocols on Fantom based on a TVL snapshot on defillama prior to release. Moreover, because Solidly idly increased too quickly (concentrated in the first 8 weeks), although it was good for early users, it quickly entered the dilemma of insufficient motivation.

The Velodrome has learned that lesson and completed successful cold starts. The initial supply was 400M. Unlike Solidly allocated completely to the protocol, it distributes 60% of the token bulk to the community in its overall allocation.

15% (60M) were assigned to the veteran defi user (Curve, Convex, Platypus, deep interaction, etc.), 18% (72M) to the Optimism expressed by the web user, 27% (108M) to WeVe holders, veDAO members. The remainder, 24%, was allocated to the Protocol/DAO, 10% to the team, 5% to the Optimism team, and 1% to the Genesis Pool. As shown below:

This allocation was aimed at creating a diverse ownership structure that would ultimately benefit the Velodrome ecology, tying the Optimism of the Optimism team to the engagement of both the Velodrome ecology's users and veteran defi users to help with the cold start.

而通过将大头分配给社区用户，也给后进的协议（即未收到初始空投的协议）留下了收集 VELO 的空间，避免使协议陷入被头部几个协议控制的僵化状态。在增发节奏上，其对核心的参数做了调整，周增发量在 15M（3.75% 的初始供给量占比），每周 (epoch) 衰减 1%，从而使其增发更可持续，更长尾。

2) Moderate rebase rewards for ve providers;

In Solidly, ve holders could obtain 100% dilution protection in secondary issuance, and the current secondary issuance volume was inversely related to the lock quantity, that is, the more locking proportion, the less current secondary issuance. This means that in the case of more locking, the volume of additional issuance will be reduced, most of which also flow to ve holders, liquidity providers get much compressed incentives, less attractive to potential LP.

Velodrome's rebase incentive is much more modest, offering ve holders secondary protection proportional to the cubed number of locks, capped at half of the current secondary. This is intended to give liquidity providers plenty of room to reward. In the team's initial proposal, the rebase protection was proportional to the square of the ratio, but it should have been further lowered by the cube at a later stage in order to balance rewards.

3) What is particularly worth mentioning is its embedded vote-buying mechanism.

Vote-buying is not new to defi, but Velodrome is special in that it has directly embedded the vote-buying mechanism, so that users do not have to rely on the Convex layer protocol, like that of the Convex, or be siphoned off a service tax point.

The (3,3) attribute here is reflected in the fact that the higher incentive of secondary issuance brought by vote buying can help the pool attract liquidity providers and complete the cold start. Deeper liquidity could reduce slippage and attract more trading users. The fee income from more deals combined with the vote-buying income could better motivate ve holders. More users choose to lock, which helps the protocol lock liquidity, constantly raise the water level.

从数据结果来看，目前用户的锁定动力非常强，veVELO 占比维持在 80%+ 的水平，流通 VELO 基本并未随着新增释放增加。

目前，贿选贡献了主要的 ve 奖励。而之所以各协议有很强的贿选动力，在于目前每 1 美金的贿选可以带来 1.5-2 美金的 VELO 增发奖励，也就是说可以通过贿选有效地撬动 VELO 作为奖励杠杆来吸引流动性。对于部分新协议，Velodrome 还会给予额外的 OP 奖励支持。

4）对 veNFT 机制的延伸探索

Solidly 相比于 Curve 很大的不同在于用户锁定 token 后得到的是一个 NFT，且账户中可以有多个 NFT，加总得到 veNFT 余额。NFT 化提供了很多新的可能性，不过可惜的是 Solidly 没能在此基础上进一步迭代。而在 Velodrome 的 2023 规划中，其把这块提上了议程。

其计划包括 veNFT 即使在质押/投票时也可交易，veNFT 可分割，veNFT 的借贷等，前两条预计在 Q1 就会上线。可以想见，其将给用户提供更灵活的投资选择，并创造新的协议收入来源，有望进一步提升其 ve 用户的收益率。

5）引入白名单机制加强协议稳定性

在 Solidly 中，有投资者利用增发机制的漏洞，以完全自有的交易对创建池子，获取增发奖励。Velodrome 的策略是发布初期仅支持部分 Optimism 和协议伙伴认可的 token，即利用白名单机制做严格筛选。

It has also established the Commissaire, an Emergency DAO made up of seven members of the team and Optimism Ecology, which can abolish malicious Gauge. It is also intended to follow up with on-chain governance related to whitelisting.

In addition, as the protocol continues to evolve, the team is stepping out of the Solidly model framework and trying to come up with new solutions.

In a recent article published in February, The team announced the introduction of a major new design, The VELO FED. VELO FED will replace the existing long-tail secondary issuance rule and let veVELO holders determine the rate of secondary issuance. The plan is for VELO FED to start when the weekly supply is reduced to 5M(~0.3% of total supply).

veVELO holders May 1) increase the rights issue (0.01% of the total); 2) Reduce additional issuance (0.01% of the total); 3) Keep one of the three options unchanged. The result is decided simply by a majority vote. Given the critical importance of secondary issuance rate to the model's operation (leading secondary issuance is a driving force for vote buying, which is currently the main incentive for ve, and secondary issuance itself will dilute ve holders, etc.), this is not a bold move.

但也正是这样，团队相信 ve 持有者有动力做出好的治理选择，使得增发更可持续。此举意在更动态地应对外部环境，在维持其发展的同时尽可能调控其通胀，而在需要激进发展时又保有增加增发奖励吸引力的选项。

从团队持续的迭代中，可以感受到其深厚的协议设计功底、野心和难得的耐心。不过要真正成为「协议的协议」，目前的成就恐怕只是达成了一个小目标，预计其在流动性激励和 ve 等经济模型层面会有更多迭代创新。