Velodrome Finance Overview

What is Velodrome Finance?

Velodrome Finance is a decentralized exchange that aims to be a central hub for trading and liquidity providers within the Optimism ecosystem. t's designed as a venue where users can trade tokens, provide liquidity to earn rewards, and engage in yield farming.

Main Features
Governed by community with $veVELO
Central liquidity hub for Optimism
Low trading fees and minimal slippage
Incentives and fees distributed to Velodrome NFT holders
Earn rewards by providing liquidity
Blockchains
Optimism

Related Apps

  • A pioneering DEX allowing users to trade directly from their wallets anonymously without needing a CEX.

    Decentralized Finance ·
  • A DEX that facilitates automated swapping of tokens using liquidity pools across different blockchains.

    Decentralized Finance ·
  • A suite of infrastructure products that provide APIs to developers to fast-track the creation of DEXes.

    Infrastructure ·

Frequently asked questions

Velodrome Finance is a decentralized exchange (DEX) that operates as the liquidity layer for the Optimism network. It combines the features of Curve, Convex, and Uniswap V2 to create a cohesive automated market maker (AMM). Velodrome uses two tokens: VELO, which is a utility token used for rewarding liquidity providers through emissions, and veVELO, which is a governance token used for voting. VELO holders can vote-escrow their tokens for up to 4 years and receive a veVELO NFT in exchange. veVELO holders vote every week on which pools receive VELO emissions and receive 100% of the fees and incentives collected by the pool. The goal of Velodrome is to provide deep liquidity in a capital-efficient manner by directing VELO emissions to specific pools.

Liquidity providers deposit tokens on Velodrome and receive VELO emissions as rewards. Protocols can offer incentives to veVELO voters to attract votes and VELO emissions to their pools, allowing them to build liquidity at a low cost. The goal is to have more liquidity for a token, which enables higher trading volumes without significant price impact.

To become a liquidity provider on Velodrome Finance, you will need to follow these steps:

  1. Obtain VELO tokens: VELO is the utility token used for rewarding liquidity providers on Velodrome Finance. You will need to acquire VELO tokens to participate as a liquidity provider.

  2. Lock VELO tokens to convert to veVELO: Any VELO holder can lock their tokens to convert them into veVELO. This can be done by voting to receive a veVELO NFT, which gives you voting power to distribute to pools.

  3. Vote on pools to receive VELO emissions: As a veVELO holder, you can vote on which pools should receive VELO emissions. This vote happens weekly. By voting for specific pools, you can increase compensation for liquidity providers in those pools.

  4. Deposit tokens into a liquidity pool: Once you have veVELO tokens, you can deposit the tokens you want to provide liquidity for into a liquidity pool on Velodrome Finance. This can be done by creating a pair and staking the deposited tokens.

  5. Add incentives and vote: As a liquidity provider, you have the option to add incentives for the pool you are providing liquidity to. This can attract more liquidity and potentially increase your rewards. Additionally, you can continue voting for pools to receive VELO emissions to further support the liquidity ecosystem.

By following these steps, you can become a liquidity provider on Velodrome Finance and receive VELO emissions as rewards for your participation.

To enhance the security of your Velodrome Finance account, you can add an additional layer of security by using a supported Ledger hardware wallet. This hardware wallet provides increased protection for your account and helps safeguard your assets.

Last updated: