[READY][GF: Phase 1 Proposal] Velodrome Finance

• tao - No Role

  Oct. 20, 2022, 12:42 p.m.
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  Project Name: Velodrome Finance Author name and contact info: Alex (alexcutler.eth# 0399 ), Jack (jack-anorak# 6505 ), Tao (tao# 4297 ) I understand that I will be required to provide additional KYC information to the Optimism Foundation to receive this grant: Yes L 2 Recipient Address: 0 xb 074 ec 6 c 37659525 EEf 2 Fb 44478077901 F 878012 Grant category: Governance Is this proposal applicable to a specific committee? DeFi Project Description Velodrome is a foundational piece of public infrastructure bootstrapped by Optimism Foundation. We’re a public good DEX that combines the best of Curve, Convex, and Univ 2 into a single AMM designed to serve as the premiere ecosystem-native liquidity layer, reducing friction and lowering costs for new and existing protocols operating on the network. 100 % ecosystem owned and operated as the protocol has no outside investors or funding 100 % of its revenue goes to lockers (mostly protocols) and remains in the ecosystem Lowest transaction fees of any DEX at . 02 % for both stable and volatile swaps Optimism-native and exclusive, aligning its incentives entirely with the good of the ecosystem A full-time team focused entirely on building and scaling both Optimism and Velodrome Incentivizes projects to lock long term investment into the Optimism ecosystem Serves as the primary liquidity and trading hub for over 30 ecosystem projects This proposal has the support of: Abracadabra Alchemix Angle Protocol Beefy Finance Byte Masons dForce Hop Protocol Inverse Finance Liquidity Protocol QiDAO Optimism Prime Overnight Finance Revest Finance Sonne Finance Synthetix Ambassadors Synthetix Treasury Council Tarot Finance Yearn Finance (more coming) Project Links Website: https://app.velodrome.finance/ Twitter: @VelodromeFi Discord: https://discord.gg/Velodrome Docs: https://docs.velodrome.finance/ Core Team Members Alex @wagmiAlexander GuyWithKeyboard @Sumguy 1234 Jack @jackanorak Stas @Stas 0 x Tao @taowatts Zoomer @ZoomerAnon Previous Projects The Velodrome Team has a diverse and multi-year background in both finance and technology. The team founded and operated veDAO in the Fantom ecosystem attracting over 2 billion in TVL at its peak and have consulted on ve tokenomics matters for Redacted Cartel and Boba Network. Our veteran development team consists of individuals who have contributed to projects such as: veDAO gmStudios able.com raidguild.org defisafety.com metokens.com valorem.xyz aavegotchi.com bywassies.com metastreet.xyz cielo.finance Open source projects we contributed to (PRs): multicall.py (OP support, performance optimizations) Dune Spellbook (pricing data) Rainbowkit (Gnosis Safe connector) Rabby Wallet (hardware wallet support) smatcontracts/Simple Optimism Node alchemy-web 3 .js (RPC retries support) Our own open source projects: API written from scratch (backwards compatible with Solidly forks) Discord bots for trades, bribes and deposits Sugar project (easiest way to build on top of Velodrome) Protocol documentation Our repository changes from Solidly: Solidly dApp fork: ~ 497 commits, 120 files changed, 4768 insertions(+), 6690 deletions(-) Solidly contracts fork: ~ 414 commits, 45 files changed, 3660 insertions(+), 1483 deletions(-) Ecosystem Value Proposition Relevant Usage Metrics Velodrome Overview Velodrome Users and Activity Velodrome Trading Fees & Projected Voting APRs Velodrome Voting Data Velodrome Reward Data Optimism Bridge Statistics Optimism Usage Trends Screen Shot 2022 - 10 - 20 at 11 . 25 . 301218 × 846 128 KB Competitors, peers, or similar projects: Curve, Beethoven, Uniswap, Zipswap Is/will this project be open sourced? Contracts and API are fully open source Optimism native? Yes, and exclusive. Date of deployment on Optimism: Deployed 6 / 2 / 2022 What is the problem statement this proposal hopes to solve for the Optimism ecosystem? The Optimism ecosystem needs to grow substantially in the midst of significant headwinds from both competing ecosystems and macroeconomic forces. A strong secondary economic engine that creates access to deep ecosystem liquidity is a dependency for growth; indeed, the Optimism Foundation has identified the lack of such an engine as one of Optimism’s greatest growth impediments. New projects need resources to quickly and efficiently bootstrap initial liquidity, while existing ones need to sustain and grow their liquidity at minimal cost. How does your proposal offer a value proposition solving the above problem? Put simply, our unique public good Optimism-native protocol design makes it simple for protocols to bootstrap and build liquidity faster and with fewer resources, returning 100 % of the value generated created back to them. Optimism incentives on Velodrome are essentially a 2 x- 3 x multiplier of liquidity incentives - including grants - for the ecosystem at large, making it easier for protocols to onboard onto Optimism and cheaper for them to operate, resulting in lower burn rates for $OP and project’s native tokens as compared to direct LP incentives. On Velodrome, protocols create revenue-positive liquidity programs that will sustain them and the ecosystem at large for years to come. Why will this solution be a source of growth for the Optimism ecosystem? Velodrome is already demonstrating our ability to drive significant ecosystem growth. We are doing this by not only helping to attract and onboard new projects to Optimism, but also by lowering the operational costs associated with maintaining liquidity for existing protocols. By reducing costs ecosystem-wide, we are allowing protocols to reinvest in themselves and helping to ensure their sustainability through adverse economic conditions. And because the economic activity that Velodrome generates occurs exclusively on Optimism, it drives significant sequencer revenue, supporting the broader vision of self-sustaining retroactive public good funding. Since launch Velodrome has generated over 2 . 5 M transactions, averaging 25 K daily in the last 90 days (~ 15 % of all transactions on Optimism), and has distributed over $ 6 M in $VELO liquidity incentives, approximately at $ 300 K per week, to support the high level of trading activity. What makes Velodrome different than other AMMs on Optimism? Velodrome is a next generation Optimism native AMM that combines some of the best mechanisms from Curve, Convex, and UniV 2 into a single cohesive experience. Velodrome’s status as an Optimism exclusive public good aligns its incentives entirely with those of the ecosystem. It also ensures that all the economic activity generated by the protocol (emissions, governance, bribes, fees, LPs) stays on Optimism, supporting sequencer revenue and the broader Optimism flywheel. Velodrome has the lowest fees on Optimism ( 0 . 02 %) and supports the efficient swapping of both stable and volatile pairs, consistently attracting high volume per $ of TVL and TVL per LP incentives. We are the only AMM on Optimism that supports native governance and bribing, with no need to bridge capital or assets to main-net to participate. Additionally, 100 % of the revenue generated by the protocol is returned to $veVELO lockers (primarily partner protocols) on Optimism rather than being redirected to mainnet stakers. Enabling protocols the ability to maintain deep liquidity at very competitive rates. Essentially, Velodrome operates as an extension of Optimism itself, augmenting the economic engine of $OP incentives with $VELO as well as the business development / onboarding arms of the Foundation. Rapidly accelerating ecosystem growth and sustainability. Previous Grant History Has your project previously applied for an OP grant? We received a 3 , 000 , 000 $OP grant from the Optimism Foundation Partner Fund in July. Existing incentives are likely to be exhausted in next 4 - 8 weeks in alignment with the distribution timeline encouraged by the Foundation. This grant had three primary objectives: Lowering barriers to entry with locking incentives Boosting ecosystem efficiency with bribe matching Building deep liquidity on key ecosystem pairs The results of this program so far have been overwhelming: Screen Shot 2022 - 10 - 20 at 11 . 32 . 461920 × 1078 92 . 6 KB A consistent top 3 protocol by TVL, volume, transactions, and users $ 6 M+ VELO liquidity incentives distributed into the ecosystem ( 2 - 3 x OP grant) 30 new protocols onboarded and supported with liquidity growth in ecosystem 30 - 70 % reduction in liquidity incentive costs per $ TVL for ecosystem partners $ 5 M+ liquidity of OP token pairs, creating $ 1 B in volume $ 1 M+ in protocol revenue returned to veVELO lockers (primarily protocols) $ 10 M+ value locked as veVELO ( 70 % of total) locked into the Optimism for ~ 3 . 5 ys $ 250 k veVELO airdrop for OP Team, $ 2 M veVELO airdrop to ecosystem partners Highly engaged community of 8 , 400 + Discord members, 44 K Twitter followers Screen Shot 2022 - 10 - 14 at 12 . 06 . 161448 × 808 204 KB Since receiving the grant, Velodrome has exploded in almost every metric: TVL: 400 %+ increase, from $ 14 M to $ 80 M+ (as high as $ 150 M) Weekly Fees: 500 %+ increase, from $ 3 . 3 K to $ 20 K Cumulative Volume: 700 %+ increase, from $ 270 M to $ 2 . 2 BN+ Average Daily Volume: 150 %+ increase, from $ 2 . 2 M to $ 4 . 5 M+ VELO Holders: 100 %+ increase, from 6 . 6 K to 12 . 7 K VELO Supply Locked: 70 %+ increase, from 219 M to 373 M+ VELO Screen Shot 2022 - 10 - 13 at 13 . 57 . 461600 × 906 67 . 2 KB In summary, the ~ 3 M OP incentives have returned a massive ROI in the form of: $ 80 M+ in TVL $ 6 M+ in direct liquidity incentives $ 10 M in value locked into the ecosystem $ 15 M in market cap value living exclusively on the Optimism ecosystem New Grant Request This grant request is focused on extending the duration of the existing incentives whose effectiveness has been demonstrated for the next 6 months in order to maintain the pace and velocity of ecosystem growth it is helping to drive. During this period, Velodrome will also continue to exclusively develop its roadmap for Optimism, focused on a v 2 deployment with a number of upgrades: Velodrome Relay Concentrated liquidity pool types (UniV 3 style) Improved veNFT experiences with Quixotic Delegateable OP in LP positions Improved retail oriented UX, e.g.: Custodial wallets integration Wallet top-ups LP zappers DeFi educational content While previous grants to protocols of our size (measured by on-chain metrics TVL, volume, transactions) imply a much larger grant, we’ve chosen a lower number with the goal of preserving Governance Funds for other use-cases and even more motional timing. Number of OP Tokens Requested: 4 , 000 , 000 OP 98 % less than average OP granted per $ in TVL 80 % less than median OP granted per $ in TVL 98 % less than average OP granted per $ in Volume 65 % less than median OP granted per $ in Volume 98 % less than average OP granted per transaction 86 % less than the median OP granted per transaction 91 % less than the average OP granted per user 51 % less than the median OP granted per user Screen Shot 2022 - 10 - 20 at 11 . 29 . 191920 × 1076 82 . 4 KB Received OP tokens through the Foundation Partner Fund? Not since original grant detailed above and no new grants are in progress. How much will your project match in co-incentives? Over the next 6 months, Velodrome will distribute ~ 257 M VELO in emissions to liquidity pools. Based on historical results, 85 %- 90 % of these emissions will be directed to pools incentivized through this program: a value of $ 6 . 5 M at current VELO prices. This not only represents over 1 . 6 x the grant request size but also equals over half of all $OP incentives projected to be distributed via governance over the same period. Likewise, due to the design of our incentive programs, participating protocols are required to provide their matches, which further increases the multiplier effect on the grant. For every one dollar in lock bonuses, protocols must lock an average of $ 4 for 4 years For every one dollar in bribe boost, protocols must provide $ 2 - $ 9 in bribe value In short, we will not only be 2 - 3 x the the incentives with our own emissions, but also be requiring each partner to provide a 2 x- 9 x match to access the incentives as well. How will the OP tokens be distributed? Lowering Barriers to Entry with Locking Incentives - 37 . 5 % [ 1 . 5 M OP] To onboard new protocols to the Optimism ecosystem during uncertain times and in the face of competing incentives, we must ensure that they are able to bootstrap their liquidity in the most cost-effective method possible. At the same time, these incentives should be paired with mechanisms that require protocols to meaningfully invest in the ecosystem for the long term and thus discourage mercenary and exploitative behaviors. Incentivizing the acquisition and locking of veVELO is an ideal strategy in this regard, as it requires a multi-year lock of capital in the ecosystem to receive the lock bonus and access Velodrome’s voting and revenue generation capabilities. It is to our knowledge the only currently running incentive program that requires the locking of capital in the Optimism ecosystem. Incentivizing locking lowers the underlying costs of building an initial veVELO position (by an average of ~ 25 %) while simultaneously giving any protocol the power to direct emissions and attract liquidity for the long term. Screen Shot 2022 - 10 - 13 at 12 . 49 . 56 PM 1590 × 844 142 KB Overall, the number of tokens per 10 k VELO have roughly decreased in the last several epochs due to increased locking, and yet the %rebate has increased due to token price movements. The overall effect has been to increase the per-OP efficiency of this bonus. Token locking also supports the health of the ecosystem by a) reducing the floating supply of VELO, thereby buffering LP incentive returns denominated in VELO; b) aligning incentives between the token holder base and the overall ecosystem, as veVELO holders have a shared interest in the long-term success of Velodrome and Optimism; c) strengthening ties between participating ecosystem protocols, as they not only see aligned incentives but also collaborate as partners and are connected by Velodrome’s external-facing team. Rewarding lockers with OP tokens will not only increase the health of the Velodrome economy but also give more governance power to the deeply invested, long-term supporters Optimism is looking to attract. Since the beginning of the lock bonus on July 7 , we’ve generally seen more VELO locked than emitted, with lock rates at 60 % - 70 % at an average of 3 . 7 + years. Screen Shot 2022 - 10 - 13 at 12 . 51 . 17 PM 1596 × 714 106 KB Quantity: 1 . 5 M OP Delivery: 40 K OP incentives per week over 6 months, distributed to veVELO lockers proportionally to new veVELO balance per week, exclusively for transaction locking liquid VELO (no lock extensions or rebases). KPIs: Exceeding and maintaining 70 % VELO total supply locked Doubling share of OP protocols locking VELO among those with native tokens Attracting additional new protocols to the ecosystem that meaningfully improve layer-wide economic activity Boosting Ecosystem Efficiency with Bribe Matching - 37 . 5 % [ 1 . 5 M OP] As protocols like Curve and Convex have demonstrated, bribe-for-emission models are far more capital efficient than direct incentives in the attraction of liquidity, and Velodrome remains the only AMM in the Optimism ecosystem that supports native bribing. It’s no surprise, then, that bribing for emissions has been massively popular on Velodrome for both new and existing protocols, allowing them to draw significant liquidity at roughly 1 / 3 the cost of doing so with direct LP incentives. To date, we have been matching partner bribes at a 25 % - 75 % rate, lowering the underlying cost basis of bribing and facilitating the migration of incentives from Mainnet and other networks. This program has been an unalloyed success, with cumulative bribes, total bribed pools, and number of protocols bribing rising almost monotonically since inception. After kicking off the bribe economy, Velodrome’s incentive program has shifted to mostly supporting partner liquidity. Partner bribe matches are growing weekly as more protocols migrate to Optimism and are expected to make up the majority of Velodrome’s OP incentives in the coming months. Over time, partner bribes have taken over the majority of bribe value, greatly reducing reliance on Velodrome incentives. Screen Shot 2022 - 10 - 25 at 13 . 22 . 171562 × 1008 129 KB Screen Shot 2022 - 10 - 13 at 12 . 58 . 34 PM 1092 × 850 58 . 9 KB We see this behavior persisting and want to keep the bribe economy afloat while encouraging more of this activity. Through the bribe matching program, Velodrome will continue to support partner onboarding and enable the bribe economy to take life of its own. Extending this program for 6 months will be crucial to strengthen our partners’ liquidity depth and give them enough time to evaluate the results of their incentive programs. The expectation is that we can foster enough new building on Optimism to draw the kind of activity and ensuing liquidity demand that will fully kick off broad exploitation of the Velodrome economy. Quantity: 1 . 5 M OP Delivery: 40 K OP per week for 6 - 8 months. KPIs: Increasing the total numbers of protocols bribing Increasing number of total pools bribed Increasing the total value bribed in $ / ETH terms Building Deep Liquidity on Key Ecosystem Pairs - 25 % [ 1 M OP] For Optimism (and Velodrome) to succeed, they need to attract far more liquidity on core token pairs from Mainnet Ethereum and ensure that core ecosystem pairs that support the broader Optimism flywheel such as $OP and $VELO remain deeply liquid on chain. This is essential not only to support the onboarding of capital to the ecosystem, but supporting the broader economy. Generally speaking, these pools need to be deep enough to support the lowest fee and slippage trades for the large transactions types that tend to make up a disproportionate share of volume on Mainnet and allow easy entry/exit for those looking to engage with the ecosystem. Establishing this pool depth will create a virtuous cycle of capital migration, as the resulting economic activity will make Optimism the ideal venue for both trading and LPing DEXs across the network. We thus believe it is essential to continue supporting Velodrome emissions for key public good pools that benefit the ecosystem collectively. So far, these pools have been massively successful, attracting >$ 30 m in liquidity and generating $ 1 B+ in volume since launch. Because the Optimism Foundation is legally unable to bribe these pools directly, Velodrome will commit to bribing and boosting the votes of these key pairs to ensure they will attract the votes/emissions to build deep liquidity at no additional cost to the ecosystem protocols that depend on them. Key pairs include: Pair Current Liquidity 24 H Volume (Oct 13 ) 30 -Day Avg Volume OP - USDC $ 4 M $ 850 K $ 1 . 6 M WETH - USDC $ 3 M $ 700 K $ 1 . 3 M sUSD - USDC $ 17 M $ 240 K $ 323 K wstETH - WETH $ 12 M $ 220 K $ 123 K sETH - WETH $ 8 M $ 140 K $ 131 K MAI - USDC $ 7 . 1 M $ 340 K $ 302 K LUSD - USDC $ 3 . 8 M $ 18 K $ 62 K OP - WETH $ 500 K $ 85 K $ 183 K Quantity: 1 M OP Delivery: 30 k OP per week for 6 - 8 months. KPIs: Increasing TVL for ecosystem pairs High number of transactions Low slippage for high volume trades Why will incentivized users and liquidity on Optimism remain after incentives dry up? The purpose of the Governance Fund is “to incentivize sustainable growth of projects and communities in the Optimism ecosystem.” This growth is intended to bring to the “city of Optimism” a broad base of projects, capital, and users that can create a self-sustaining economy, driving exponential growth for all. Much like the Optimism sequencer itself, our success as a public good depends entirely on the health of that broader economy; this utility is designed to be entirely permissionless and sustainable once an economy of a sufficient size exists to support it. To put this another way, incentives will never completely disappear from Velodrome as emissions are designed to run in perpetuity, following a sustainable and predictable schedule (see our docs for details). When combined with incentives generated in perpetuity by Optimism’s retroactive public goods funding, we expect a virtuous cycle that will maintain Velodrome’s status as the premiere base liquidity layer for the ecosystem for years to come. We have strong conviction that Optimism will eventually catch up to the level of activity we see on Mainnet today, attracting billions in annual trading volume. At 10 % of Mainnet’s current volume, Velodrome’s fees would yield a 30 % return per year for veVELO holders at current value. The incentive program proposed above extends Velodrome’s built ability to stimulate the broader economy while the natural tailwinds of Optimism’s growth continue to accelerate. Once OP incentives end, protocols, organizations, and retail players alike will hold long-term veVELO positions, which will allow them to further direct VELO liquidity incentives while sharing in the upside of Velodrome’s and Optimism’s success. Moreover, the fact of being able to sustain those APRs, along with the continued presence and building of these partners, would amplify any future liquidity mining rewards they choose to implement. More broadly, we’re not just targeting users or capital: we’re targeting projects. Doing so allows us to avoid some of the pitfalls of simple liquidity mining in that development work and network connections derived from that are inherently stickier than capital drawn in by high APRs. Once partners work with us, they tend to want to continue to do so, and creating a scene of builders organically is in our view one of the primary ways that Optimism will be able to sustain its growth, shore up the value and quality of its governance, and successfully deliver on its ideals. In a time when there is frankly a diminished user base crypto-wide, it is of primary importance that Optimism use the current moment to direct its resources toward facilitating infrastructural development, setting up the conditions for the ecosystem to thrive when end users do return. Update Based on feedback from key delegates and Optimism governance participants, we propose staging the delivery of the grant to allow for evaluation of its effectiveness. Details as follows: Maintain grant amount as outlined above, but deliver only half of the funds up front. Deliver a full report on efficacy at the 2 . 5 month mark, to be submitted directly to governance Upon delivery of the report, open a 2 week window where anyone in governance can raise a proposal that, upon two delegate approvals, can proceed direct to snapshot to suspend further grant payments If none are submitted, funding continues If successful, a similar staged model could also serve for future large grant requests.

  Velodrome Finance is a public-good decentralized exchange platform built on the Optimism Foundation. It aims to reduce friction and costs for protocols on the network by offering features like low fees, exclusive support for Optimism, and revenue-sharing with lockers in the ecosystem. The proposal seeks continued funding to maintain growth and ecosystem liquidity, highlighting the success and impact Velodrome has had since its inception.
  Likes: 42 Replies: 9
  Likers: grunt, alexcutlerdoteth, nickbtts, Arne1503, jornx, tytytytytytyverymuch, Subli_Defi, Skaha, Ngoc, Ganc, OPGovWatch, chicco, 0xTrevor, TheDoctor, Minhng83, mastermojo, MoneyManDoug, Pee-Ped.eth, Roflmauer, Mingyue, marc, alrashel, lazeeeerlin, Squeeks, Miso, Immortal, fierydev, ccs_chak, Foxpause, AVE555, VelodromeFi, TonyStark, Lulubato, Justin, Mikeee, Lumisticat, Dgam777, Hippotangmo, dispreneur, thesleeper, homelukai, Rege
  Replies:

  • Jadmat: What a great proposal, congratulations for the amount of data The metrics indicate high dominance and tvl, but it’s normal to see dexes leading here. Velodrome is in an ideal metric scenario in its sector; since Uniswap is just deciding how it will use the grant and Curve has not received anything yet; my thought: I see this proposal as a hasty decision, seeing the performance of the rest before a second stage of grants is key; personally I also hope to see more openness of the ecosystem. I congratulate Velodrome’s enthusiasm and proactivity in the ecosystem, and I do not deny that they are a key player; but distributing $OP efficiently is the only way to generate organic and long-term growth, which is what we all want in the end Finally, what do you mean that Velodrome is a public good?
  • GFXlabs: tao: Number of OP Tokens Requested: 4,000,000 OP 98% less than average OP granted per $ in TVL 80% less than median OP granted per $ in TVL 98% less than average OP granted per $ in Volume 65% less than median OP granted per $ in Volume 98% less than average OP granted per transaction 86% less than the median OP granted per transaction 91% less than the average OP granted per user 51% less than the median OP granted per user Is there a way to trim this request? Your own metrics listed here could be used to argue Velodrome has hit “escape velocity” and does not need further grants. When speaking of millions of dollars’ worth of OP, perhaps it’s better to offer a proposal to sell VELO to governance rather than asking for a grant? Or break it into pieces so each area of large expense can be evaluated separately. This is just a really big price tag, and I think you’d have better luck either reducing it, or breaking it into pieces that are more digestible – since you have at least 3 parts that could easily be broken out. Alternatively, you could set it up so it’s delivered in monthly tranches after a required report, so governance has an opportunity to monitor the grant. The days of delivering large lump sum grants were not kind, so a sophisticated applicant like Velodrome can probably caress this into a package that sets a great example
  • OPUser: alexcutlerdoteth: Because bribing on Velodrome helps to create a 30-70% reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant I want to understand your reply to Netrim’s comment, you are saying that bribing is effective which save money and hence could be consider as builders grant. right ? If that’s the case, would you consider allocating funds specifically to builders grant. tao: Regarding incentive efficiency, the protocols are deploying much higher incentives on Uni and Curve to attract that TVL than on Velodrome. Would it be possible to see this data on monthly basis too ? So far I am very skeptical of data presented here, I believe incentives are still going on which might be giving us artificial numbers, also would like to see the uses of veVelo lock(unfortunately, I am not comfortable with Dune query so I will ask around on dicord for help). If I remember correctly, only few protocol were able to sustain liquidity, I think Beefy is one of them, which is why I dont believe that spending again on LP reward would be a good use of fund. Few pairs I see on the list has their own incentives as pointed out by Netrim. One thing I would like to see is reward ratio, how much $OP was spend monthly with respect to revenue generated on the platform. tao: We’re a public good DEX I am really curious on this, how did you reach to this conclusion? do you have any literature or peer-reviewed journal to support your statement. Good to see the pro-activeness here in gathering early feedback.
  • ScaleWeb3: Thank you for this extensive proposal. Below, we’ll dive into different aspects of the proposal but first we’d love to know what’s the Optimism Foundation‘s evaluation of the 1st grant? @lavande @bobby why do you ask the Op gov house for the 2nd grant? @jackanorak @tao @alexcutlerdoteth 1. Grant Goals tao: This grant had three primary objectives: Lowering barriers to entry with locking incentives Boosting ecosystem efficiency with bribe matching Building deep liquidity on key ecosystem pairs These goals are reasonable for Velo. For the overall DEX ecosystem on Optimism they should be Lowering barriers to entry Boosting ecosystem efficiency Building deep liquidity on key ecosystem pairs ( → $ in the right place to achieve xyz; openness & support for projects to join & contribute to Op) Velodrome had an especially positive impact on the following 3 OP ecosystem goals: Velodrome has been a key player in onboarding new protocols through personal contact. Velodrome helped bootstrapping pools for projects with locking & strong co-bribing incentives. Establish liquidity for Op & some stablecoins (1inch examples → trades routed through Velo & Uni) → Why is it that larger trades are routed more through Uni v3? Despite that, Velodrome achieved other project-specific goals: Large TVL growth veVelo locking from partners (+individuals) User attention & activity Things that we criticially look at: Deep liquidity on key ecosystem pairs & ecosystem efficiency Uniswap has been more important for key ecosystem pairs so far without incentives. (Check routing from 1inch for USDC/ETH/WBTC, Op pair somewhat split between Velo & Uni v3) High amount of incentives & TVL compared to trade volume (market share) 2. The Ask As mentioned by @GFXlabs @katie, the Ask is very large - especially given in a lump sum. Locking Incentives: 1.5M Op (40K Op per week) This incentive can help with onboarding projects to Optimism (+) Requiring projects to invest into Velo instead of Op is not optimal in our opinion. We would look at this more postive if projects were to lock Op or an 80/20 position that helps with effective liquidity (±) You mention competiting incentives: Do you mean within or outside of Optimism? What kind of impact do you expect from full deployments of Curve and the upcoming start of incentives on Uniswap, Curve, Sushi + Velodrome on Velo bribing, efficiency, market share? tao: To onboard new protocols to the Optimism ecosystem during uncertain times and in the face of competing incentives, we must ensure that they are able to bootstrap their liquidity in the most cost-effective method possible. tao: KPIs: Exceeding and maintaining 70% VELO total supply locked Doubling share of OP protocols locking VELO among those with native tokens Attracting additional new protocols to the ecosystem that meaningfully improve layer-wide economic activity Boosting ecosystem efficiency with Bribe Matching: 1.5M Op (40K Op per week) This could further help with onboarding additional projects & bootstrapping liquidity on Optimism You state that liquidity cost from bribing is cheaper than direct incentives. Do you compare the same incentives on uni v2 or uni v3 as uni v3 might make up for the “extra cost of direct incentives”? tao: It’s no surprise, then, that bribing for emissions has been massively popular on Velodrome for both new and existing protocols, allowing them to draw significant liquidity at roughly 1/3 the cost of doing so with direct LP incentives. tao: KPIs: Increasing the total numbers of protocols bribing Increasing number of total pools bribed Increasing the total value bribed in $ / ETH terms Building deep liquidity on key ecosystem pairs: 1M Op (30K Op per week) Higher liquidity in top pairs is important for Optimism (IF liquidity is utilized/effective) Would it not be a better idea to incentivize top pairs on Uni v3 and for example new projects on Velo considering ecosystem efficiency? Do you believe it makes sense to incentivize the same pairs on different DEXs? Despite “slow” market share growth of DEX aggregators on l2s, we strongly believe in abstraction over time & that users move towards wallets with built-in meta-aggregators in low-cost environments. Hence, we’d recommend a focus on protocol efficiency metrics (Slippage, trades (volume) routed, effective liquidity) over adoption KPIs (TVL, direct users, transactions). tao: KPIs: Increasing TVL for ecosystem pairs High number of transactions Low slippage for high volume trades 3. General Ask Justification Probably this doesn’t need to be stated. 4 Mio Op (110K OP per week!) is definitely a huge Ask. We appreciate the depth of the proposal and data provided, some of the “comparable metrics” are flawed though (apples & oranges) and should at most be used as small indicator in a comprehensive review. Obviously, we should not justify new Asks with previous grant amounts or Op granted/TVL but with value-added from the new proposal. Maybe, this helps anyways to stimulate a discussion which KPIs we should look at to evaluate all the different grants until today. Potentially good KPIs (for long-term sustainable growth initiatives) Op granted per unique user onboarded Op granted per top project/team onboarded Op granted per new liquidity on Optimism (+ retention, + effectivity, + network effects, + user activity, - user clusters, etc.) tao: Number of OP Tokens Requested: 4,000,000 OP 98% less than average OP granted per $ in TVL 80% less than median OP granted per $ in TVL 98% less than average OP granted per $ in Volume 65% less than median OP granted per $ in Volume 98% less than average OP granted per transaction 86% less than the median OP granted per transaction 91% less than the average OP granted per user 51% less than the median OP granted per user 4. Overall: It’s great to see a native DEX on Optimism with a team that contributes significantly to project onboarding. As many delegates such as @polynya @jackanorak have previously mentioned, it is really important that we finally have some serious evaluation of the first rounds of grants before doubling down on top initiatives. Despite that, we can only restate, that it would be very important for Optimism to have an ecosystem-wide liquidity, DeFi, NFT plan to incentivize the right partners or at least run short-term experiments that help Optimism come up with a competitive ecosystem strategy. As mentioned above, we should very deeply look at incentivizing what’s best for the ecosystem (lowering entry barriers, improving efficiency & liquidity), and not waste incentives on conflicting incentive programs or pick pre-maturely favorites & lock-ins. In that regard, thank you for the data provided. That helps already significantly in reviewing your new grant request. We believe a 2nd grant to Velo could be well-reasoned to further grow the Optimism ecosystem - esp. in regards to project onboarding & kickstarting liquidity for new projects on Optimism. Looking forward especially to your takes re: key ecosystem pairs & competiting incentive campaigns! And, we’d love to hear the evaluation from the Foundation too as mentioned in the beginning.
  • Luckyhooman.eth: Hey there, Personally I would like to see Velodrome survive without incentives. tao: Delivery: 40K OP incentives per week over 6 months, distributed to veVELO lockers My understanding is, the 1.5 Million allocation is for locked up velo. Which seems like the incentive is designed for buy pressure on your token ‘velo’. This is not what this fund is for and previous proposals were slammed for an incentive mechanism like this. Do you agree that this incentive will directly increase the price of Velo?
  • OPUser: alexcutlerdoteth: I think you are trying to create a distinction where there really isn’t one. Example:- I have 100K in $USD some veCRV and veVelo. Case 1 : Existing veToken holder Curve - As a existing holder of veCRV, I will get reward depending on the amount I hold and how I vote. Velo - same as above Case 2 : New user Curve - I can use 100K $USD to acquire more CRV, lock it to get more veCRV. My voting power increase resulting in more reward and my principle amount is locked in form new veCRV. Velo - Same as above, + I will get some % of my principle money back in form of $OP as mentioned in the proposal for buying and locking $VELO. We have seen that lock bonus vary but could possibly reach up to $1.3 in $OP for $1 in depending on amount locked in that specific epoch but even If I take an average of 80% 30% return then at the end of epoch I will back $80K back 30K in form of $OP airdropped as a reward. So basically, we are paying users to buy protocol native token which is not the case with Curve. Hope this example provide more context from my side. tao: 40K OP incentives per week over 6 months, distributed to veVELO lockers proportionally to new veVELO balance per week I am not trying to create a distinction, its clearly mentioned in the proposal. katie: do not like to see edits made after approval has been given Thank you for this, Katie. I would like us to continue this conversation during coming Reflection period.
  • beachcan: hi, please allow me quote this seemingly overlooked list: tao: This proposal has the support of: Abracadabra Alchemix Angle Protocol Beefy Finance Byte Masons dForce Hop Protocol Inverse Finance Liquidity Protocol QiDAO Optimism Prime Overnight Finance Revest Finance Sonne Finance Synthetix Ambassadors Synthetix Treasury Council Tarot Finance Yearn Finance (more coming) those are builders, the lot of them. they are the ones building on OP city, and Velodrome helped onboard them as efficiently as possible. the earliest developers on OP city - a fresh, new city on blockchain land - are trying to make a point. please, let’s try to hear them out. i would also add to that list the commoners of OP city (retail) such as myself. individually we might be small, but look at us collectively and you are looking at arguably the most committed group of citizens in OP city. we are in it for the long haul. and i thank Velodrome for providing us with a great DeFi playground for the next 4 years+. looking forward to more swings and slides, along with more neighbors to play with!
  • alexcutlerdoteth: forrest: I voted Against this proposal. forrest: Disclosure: I co-founded a different Optimism DEX so consider me biased Fair enough. I actually didn’t realize you were a Rubicon founder. I think an abstention in that case might be more appropriate, but there is no rule that you can’t vote down a fellow DEX so that’s your call. For the record, if Rubicon can come back showing that they have delivered same kind of growth multiples on your 900,000 OP grant I promise we’ll be first in line to show support for your next proposal. forrest: This Grant would be 1.72% of Optimism’s Governance Fund and would grow the circulating supply of the OP token by 1.86%. This is significant, and I do not appreciate Velodrome team members trying to say otherwise. We are talking about millions of $ here: Since you raised this again, I’ll want to make sure reemphasize all our responses that put the size of our ask in proper context so people don’t the wrong idea. Our ask is significantly smaller than those distributed to date by the Governance Fund relative to key KPIs: tao: As a share of the Optimism ecosystem, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of the Governance Fund. tao: 98% less than average OP granted per $ in TVL 80% less than median OP granted per $ in TVL 98% less than average OP granted per $ in Volume 65% less than median OP granted per $ in Volume 98% less than average OP granted per transaction 86% less than the median OP granted per transaction 91% less than the average OP granted per user 51% less than the median OP granted per user Velodrome is offering 31x the co-incentives of other DEX projects combined while only asking for 1.6x larger grant. alexcutlerdoteth: Velodrome Total Grant: 7,000,000 OP Total Co-Incentives: $12,500,000 Total Projects Supported: 29 Total Projected ROI: 2x-3x (minimum) Other DEX Protocols: Total Grant: 4,240,000 OP Total Co-Incentives: $360,000 (estimated) Total Projects Supported: 9 Total Projected ROI: TBD Our grant request is oriented towards continuing activities that have a proven ability to return 2x-3x the underlying value of grant: tao: $6M+ VELO liquidity incentives distributed into the ecosystem (2-3x OP grant) 30+ new protocols onboarded and supported with liquidity growth in ecosystem 30-70% reduction in liquidity incentive costs per $ TVL for ecosystem partners $5M+ liquidity of OP token pairs, creating $1B in volume $1M+ in protocol revenue returned to veVELO lockers (primarily protocols) $10M+ value locked as veVELO (70% of total) locked into the Optimism for ~3.5ys $250k veVELO airdrop for OP Team, $2M veVELO airdrop to ecosystem partners alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. Our grant is dramatically over performing Governance Fund grants to date: alexcutlerdoteth: According to the Foundations analysis of grants to date, the 42.6M OP granted thus far has earned: A 100% increase in transactions at a cost of 676 OP per incremental transaction A 74% increase in TVL (60M) at a cost of about .3 OP per incremental dollar In contrast, Velodrome’s grant of 3M OP from OPLabs has thus far earned: A 100% increase in transactions, at a cost of 40 OP per incremental transaction A 400% increase in TVL ($65M), at a cost of .03 OP per incremental dollar alexcutlerdoteth: Indeed, Velodrome has actually onboarded more net-new protocols (20 for 3M OP) than the Governance Fund itself (18 for 7.4M OP) and did so at a fraction of the cost. In short, the grant only looks large if you ignore baselines in terms of KPIs, massive co-investment, or demonstrated ROI multiples it has delivered. It remains significantly smaller in actual dollar terms than the one originally given to us by OPLabs. Repeatedly suggesting “it is too big” without directly engaging in this context isn’t constructive, especially from someone who received their own incredibly generous grant but has yet to produce evidence of similar returns.
  • katie: Voted yes - It seems like one of the main concerns around this proposal is grant size, which is understandable because this is a large request. However, only half of the funds will be distributed up front, with the second half being contingent upon an efficacy report at the 2.5 month mark which I feel has been overlooked (see below). This circumvents the issue of the team having to submit another proposal and go through this extremely labor intensive process (as shown by the 176 comments as of writing this) but also includes the accountability component which has been missing from previous proposals. tao: Based on feedback from key delegates and Optimism governance participants, we propose staging the delivery of the grant to allow for evaluation of its effectiveness. Details as follows: Maintain grant amount as outlined above, but deliver only half of the funds up front. Deliver a full report on efficacy at the 2.5 month mark, to be submitted directly to governance Upon delivery of the report, open a 2 week window where anyone in governance can raise a proposal that, upon two delegate approvals, can proceed direct to snapshot to suspend further grant payments If none are submitted, funding continues The Velodrome team has been extremely successful with growing the ecosystem (which is the purpose of the governance fund) with their previous grant as shown extensively by data and metrics. This is an impressive grant performance, backed by verifiable numbers and data. We should be rewarding teams that are building on Optimism. None of the funds requested are going to any internal operational costs, this grant is 100% focused on bootstrapping liquidity, lowering barriers to entry, and acquiring new users, which again, is the purpose of the governance fund. I would also like to point out that the Velodrome has responded to every single concern raised with a thoughtful response backed by numbers, facts and technical analysis. There has clearly been a massive amount of effort on the Velodrome team to address concerns and move this proposal forward which should not be taken lightly. I would encourage others to look past the grant size and focus on the data and metrics that have shown the success of this project so far. These are the types of grants and projects the governance fund should be supporting imo.
• Capt-Holt - No Role

  Oct. 20, 2022, 2:46 p.m.
  Treści edukacyjne DeFi 40 K OP incentives tygodniowo przez 6 miesięcy, dystrybuowane do bloka… Treści edukacyjne DeFi 40 K OP incentives tygodniowo przez 6 miesięcy, dystrybuowane do blokad veVELO proporcjonalnie do nowego salda veVELO w tygodniu, wyłącznie za blokadę transakcji płynnych VELO (bez przedłużania blokad i rebase’ów). Zwiększenie efektywności ekosystemu poprzez Bribe Matching - 37 , 5 % A good proposal. 3 M $OP will go towards veVelo locker. New here, poor word choice. Was considered as advertisement. Corrected now.
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• tao - No Role

  Oct. 20, 2022, 4:42 p.m.
  Project Name: Velodrome Finance Author name and contact info: Alex (alexcutler.eth# 0399 ), Jack (… Project Name: Velodrome Finance Author name and contact info: Alex (alexcutler.eth# 0399 ), Jack (jack-anorak# 6505 ), Tao (tao# 4297 ) I understand that I will be required to provide additional KYC information to the Optimism Foundation to receive this grant: Yes L 2 Recipient Address: 0 xb 074 ec 6 c 37659525 EEf 2 Fb 44478077901 F 878012 Grant category: Governance Is this proposal applicable to a specific committee? DeFi Project Description Velodrome is a foundational piece of public infrastructure bootstrapped by Optimism Foundation. We’re a public good DEX that combines the best of Curve, Convex, and Univ 2 into a single AMM designed to serve as the premiere ecosystem-native liquidity layer, reducing friction and lowering costs for new and existing protocols operating on the network. 100 % ecosystem owned and operated as the protocol has no outside investors or funding 100 % of its revenue goes to lockers (mostly protocols) and remains in the ecosystem Lowest transaction fees of any DEX at . 02 % for both stable and volatile swaps Optimism-native and exclusive, aligning its incentives entirely with the good of the ecosystem A full-time team focused entirely on building and scaling both Optimism and Velodrome Incentivizes projects to lock long term investment into the Optimism ecosystem Serves as the primary liquidity and trading hub for over 30 ecosystem projects This proposal has the support of: Abracadabra Alchemix Angle Protocol Beefy Finance Byte Masons dForce Hop Protocol Inverse Finance Liquidity Protocol QiDAO Optimism Prime Overnight Finance Revest Finance Sonne Finance Synthetix Ambassadors Synthetix Treasury Council Tarot Finance Yearn Finance (more coming) Project Links Website: https://app.velodrome.finance/ 33 Twitter: @VelodromeFi 5 Discord: https://discord.gg/Velodrome 4 Docs: https://docs.velodrome.finance/ 4 Core Team Members Alex @wagmiAlexander 33 GuyWithKeyboard @Sumguy 1234 15 Jack @jackanorak 6 Stas @Stas 0 x 10 Tao @taowatts 6 Zoomer @ZoomerAnon 8 Previous Projects The Velodrome Team has a diverse and multi-year background in both finance and technology. The team founded and operated veDAO 13 in the Fantom ecosystem attracting over 2 billion in TVL at its peak and have consulted on ve tokenomics matters for Redacted Cartel and Boba Network. Our veteran development team consists of individuals who have contributed to projects such as: veDAO gmStudios 8 able.com 3 raidguild.org defisafety.com metokens.com 4 valorem.xyz aavegotchi.com 7 bywassies.com metastreet.xyz cielo.finance 2 Open source projects we contributed to (PRs): multicall.py (OP support, performance optimizations) Dune Spellbook (pricing data) Rainbowkit (Gnosis Safe connector) Rabby Wallet (hardware wallet support) smatcontracts/Simple Optimism Node alchemy-web 3 .js (RPC retries support) Our own open source projects: API written from scratch (backwards compatible with Solidly forks) Discord bots for trades, bribes and deposits Sugar project (easiest way to build on top of Velodrome) Protocol documentation Our repository changes from Solidly: Solidly dApp fork: ~ 497 commits, 120 files changed, 4768 insertions(+), 6690 deletions(-) Solidly contracts fork: ~ 414 commits, 45 files changed, 3660 insertions(+), 1483 deletions(-) Ecosystem Value Proposition Relevant Usage Metrics Velodrome Overview 6 Velodrome Users and Activity 7 Velodrome Trading Fees & Projected Voting APRs 3 Velodrome Voting Data 3 Velodrome Reward Data 12 Optimism Bridge Statistics 2 Optimism Usage Trends 4 Screen Shot 2022 - 10 - 20 at 11 . 25 . 301218 × 846 128 KB Competitors, peers, or similar projects: Curve, Beethoven, Uniswap, Zipswap Is/will this project be open sourced? Contracts and API are fully open source Optimism native? Yes, and exclusive. Date of deployment on Optimism: Deployed 6 / 2 / 2022 What is the problem statement this proposal hopes to solve for the Optimism ecosystem? The Optimism ecosystem needs to grow substantially in the midst of significant headwinds from both competing ecosystems and macroeconomic forces. A strong secondary economic engine that creates access to deep ecosystem liquidity is a dependency for growth; indeed, the Optimism Foundation has identified the lack of such an engine as one of Optimism’s greatest growth impediments. New projects need resources to quickly and efficiently bootstrap initial liquidity, while existing ones need to sustain and grow their liquidity at minimal cost. How does your proposal offer a value proposition solving the above problem? Put simply, our unique public good Optimism-native protocol design makes it simple for protocols to bootstrap and build liquidity faster and with fewer resources, returning 100 % of the value generated created back to them. Optimism incentives on Velodrome are essentially a 2 x- 3 x multiplier of liquidity incentives - including grants - for the ecosystem at large, making it easier for protocols to onboard onto Optimism and cheaper for them to operate, resulting in lower burn rates for $OP and project’s native tokens as compared to direct LP incentives. On Velodrome, protocols create revenue-positive liquidity programs that will sustain them and the ecosystem at large for years to come. Why will this solution be a source of growth for the Optimism ecosystem? Velodrome is already demonstrating our ability to drive significant ecosystem growth. We are doing this by not only helping to attract and onboard new projects to Optimism, but also by lowering the operational costs associated with maintaining liquidity for existing protocols. By reducing costs ecosystem-wide, we are allowing protocols to reinvest in themselves and helping to ensure their sustainability through adverse economic conditions. And because the economic activity that Velodrome generates occurs exclusively on Optimism, it drives significant sequencer revenue, supporting the broader vision of self-sustaining retroactive public good funding. Since launch Velodrome has generated over 2 . 5 M transactions, averaging 25 K daily in the last 90 days (~ 15 % of all transactions on Optimism), and has distributed over $ 6 M in $VELO liquidity incentives, approximately at $ 300 K per week, to support the high level of trading activity. What makes Velodrome different than other AMMs on Optimism? Velodrome is a next generation Optimism native AMM that combines some of the best mechanisms from Curve, Convex, and UniV 2 into a single cohesive experience. Velodrome’s status as an Optimism exclusive public good aligns its incentives entirely with those of the ecosystem. It also ensures that all the economic activity generated by the protocol (emissions, governance, bribes, fees, LPs) stays on Optimism, supporting sequencer revenue and the broader Optimism flywheel. Velodrome has the lowest fees on Optimism ( 0 . 02 %) and supports the efficient swapping of both stable and volatile pairs, consistently attracting high volume per $ of TVL and TVL per LP incentives. We are the only AMM on Optimism that supports native governance and bribing, with no need to bridge capital or assets to main-net to participate. Additionally, 100 % of the revenue generated by the protocol is returned to $veVELO lockers (primarily partner protocols) on Optimism rather than being redirected to mainnet stakers. Enabling protocols the ability to maintain deep liquidity at very competitive rates. Essentially, Velodrome operates as an extension of Optimism itself, augmenting the economic engine of $OP incentives with $VELO as well as the business development / onboarding arms of the Foundation. Rapidly accelerating ecosystem growth and sustainability. Previous Grant History Has your project previously applied for an OP grant? We received a 3 , 000 , 000 $OP grant from the Optimism Foundation Partner Fund in July. Existing incentives are likely to be exhausted in next 4 - 8 weeks in alignment with the distribution timeline encouraged by the Foundation. This grant had three primary objectives: Lowering barriers to entry with locking incentives Boosting ecosystem efficiency with bribe matching Building deep liquidity on key ecosystem pairs The results of this program so far have been overwhelming: Screen Shot 2022 - 10 - 20 at 11 . 32 . 461920 × 1078 92 . 6 KB A consistent top 3 protocol by TVL, volume, transactions, and users $ 6 M+ VELO liquidity incentives distributed into the ecosystem ( 2 - 3 x OP grant) 30 new protocols 9 onboarded and supported with liquidity growth in ecosystem 30 - 70 % reduction in liquidity incentive costs per $ TVL for ecosystem partners $ 5 M+ liquidity of OP token pairs, creating $ 1 B in volume $ 1 M+ in protocol revenue returned to veVELO lockers (primarily protocols) $ 10 M+ value locked as veVELO ( 70 % of total) locked into the Optimism for ~ 3 . 5 ys $ 250 k veVELO airdrop for OP Team, $ 2 M veVELO airdrop to ecosystem partners Highly engaged community of 8 , 400 + Discord members, 44 K Twitter followers Screen Shot 2022 - 10 - 14 at 12 . 06 . 161448 × 808 204 KB Since receiving the grant, Velodrome has exploded in almost every metric: TVL: 400 %+ increase, from $ 14 M to $ 80 M+ (as high as $ 150 M) Weekly Fees: 500 %+ increase, from $ 3 . 3 K to $ 20 K Cumulative Volume: 700 %+ increase, from $ 270 M to $ 2 . 2 BN+ Average Daily Volume: 150 %+ increase, from $ 2 . 2 M to $ 4 . 5 M+ VELO Holders: 100 %+ increase, from 6 . 6 K to 12 . 7 K VELO Supply Locked: 70 %+ increase, from 219 M to 373 M+ VELO Screen Shot 2022 - 10 - 13 at 13 . 57 . 461600 × 906 67 . 2 KB In summary, the ~ 3 M OP incentives have returned a massive ROI in the form of: $ 80 M+ in TVL $ 6 M+ in direct liquidity incentives $ 10 M in value locked into the ecosystem $ 15 M in market cap value living exclusively on the Optimism ecosystem New Grant Request This grant request is focused on extending the duration of the existing incentives whose effectiveness has been demonstrated for the next 6 months in order to maintain the pace and velocity of ecosystem growth it is helping to drive. During this period, Velodrome will also continue to exclusively develop its roadmap for Optimism, focused on a v 2 deployment with a number of upgrades: Velodrome Relay 29 Concentrated liquidity pool types (UniV 3 style) Improved veNFT experiences with Quixotic Delegateable OP in LP positions Improved retail oriented UX, e.g.: Custodial wallets integration Wallet top-ups LP zappers DeFi educational content While previous grants to protocols of our size (measured by on-chain metrics TVL, volume, transactions) imply a much larger grant, we’ve chosen a lower number with the goal of preserving Governance Funds for other use-cases and even more motional timing. Number of OP Tokens Requested: 4 , 000 , 000 OP 98 % less than average OP granted per $ in TVL 80 % less than median OP granted per $ in TVL 98 % less than average OP granted per $ in Volume 65 % less than median OP granted per $ in Volume 98 % less than average OP granted per transaction 86 % less than the median OP granted per transaction 91 % less than the average OP granted per user 51 % less than the median OP granted per user Screen Shot 2022 - 10 - 20 at 11 . 29 . 191920 × 1076 82 . 4 KB Received OP tokens through the Foundation Partner Fund? Not since original grant detailed above and no new grants are in progress. How much will your project match in co-incentives? Over the next 6 months, Velodrome will distribute ~ 257 M VELO in emissions to liquidity pools. Based on historical results, 85 %- 90 % of these emissions will be directed to pools incentivized through this program: a value of $ 6 . 5 M at current VELO prices. This not only represents over 1 . 6 x the grant request size but also equals over half of all $OP incentives projected to be distributed via governance over the same period. Likewise, due to the design of our incentive programs, participating protocols are required to provide their matches, which further increases the multiplier effect on the grant. For every one dollar in lock bonuses, protocols must lock an average of $ 4 for 4 years For every one dollar in bribe boost, protocols must provide $ 2 - $ 9 in bribe value In short, we will not only be 2 - 3 x the the incentives with our own emissions, but also be requiring each partner to provide a 2 x- 9 x match to access the incentives as well. How will the OP tokens be distributed? Lowering Barriers to Entry with Locking Incentives - 37 . 5 % [ 1 . 5 M OP] To onboard new protocols to the Optimism ecosystem during uncertain times and in the face of competing incentives, we must ensure that they are able to bootstrap their liquidity in the most cost-effective method possible. At the same time, these incentives should be paired with mechanisms that require protocols to meaningfully invest in the ecosystem for the long term and thus discourage mercenary and exploitative behaviors. Incentivizing the acquisition and locking of veVELO is an ideal strategy in this regard, as it requires a multi-year lock of capital in the ecosystem to receive the lock bonus and access Velodrome’s voting and revenue generation capabilities. It is to our knowledge the only currently running incentive program that requires the locking of capital in the Optimism ecosystem. Incentivizing locking lowers the underlying costs of building an initial veVELO position (by an average of ~ 25 % 7 ) while simultaneously giving any protocol the power to direct emissions and attract liquidity for the long term. Screen Shot 2022 - 10 - 13 at 12 . 49 . 56 PM 1590 × 844 142 KB Overall, the number of tokens per 10 k VELO have roughly decreased in the last several epochs due to increased locking, and yet the %rebate has increased due to token price movements. The overall effect has been to increase the per-OP efficiency of this bonus. Token locking also supports the health of the ecosystem by a) reducing the floating supply of VELO, thereby buffering LP incentive returns denominated in VELO; b) aligning incentives between the token holder base and the overall ecosystem, as veVELO holders have a shared interest in the long-term success of Velodrome and Optimism; c) strengthening ties between participating ecosystem protocols, as they not only see aligned incentives but also collaborate as partners and are connected by Velodrome’s external-facing team. Rewarding lockers with OP tokens will not only increase the health of the Velodrome economy but also give more governance power to the deeply invested, long-term supporters Optimism is looking to attract. Since the beginning of the lock bonus on July 7 , we’ve generally seen more VELO locked than emitted, with lock rates at 60 % - 70 % at an average of 3 . 7 + years. Screen Shot 2022 - 10 - 13 at 12 . 51 . 17 PM 1596 × 714 106 KB Quantity: 1 . 5 M OP Delivery: 40 K OP incentives per week over 6 months, distributed to veVELO lockers proportionally to new veVELO balance per week, exclusively for transaction locking liquid VELO (no lock extensions or rebases). KPIs: Exceeding and maintaining 70 % VELO total supply locked Doubling share of OP protocols locking VELO among those with native tokens Attracting additional new protocols to the ecosystem that meaningfully improve layer-wide economic activity Boosting Ecosystem Efficiency with Bribe Matching - 37 . 5 % [ 1 . 5 M OP] As protocols like Curve and Convex have demonstrated, bribe-for-emission models are far more capital efficient than direct incentives in the attraction of liquidity, and Velodrome remains the only AMM in the Optimism ecosystem that supports native bribing. It’s no surprise, then, that bribing for emissions has been massively popular on Velodrome for both new and existing protocols, allowing them to draw significant liquidity at roughly 1 / 3 the cost of doing so with direct LP incentives. To date, we have been matching partner bribes at a 25 % - 75 % rate, lowering the underlying cost basis of bribing and facilitating the migration of incentives from Mainnet and other networks. This program has been an unalloyed success, with cumulative bribes, total bribed pools, and number of protocols bribing rising almost monotonically since inception. After kicking off the bribe economy, Velodrome’s incentive program has shifted to mostly supporting partner liquidity. Partner bribe matches are growing weekly as more protocols migrate to Optimism and are expected to make up the majority of Velodrome’s OP incentives in the coming months. Over time, partner bribes have taken over the majority of bribe value, greatly reducing reliance on Velodrome incentives. Screen Shot 2022 - 10 - 25 at 13 . 22 . 171562 × 1008 129 KB Screen Shot 2022 - 10 - 13 at 12 . 58 . 34 PM 1092 × 850 58 . 9 KB We see this behavior persisting and want to keep the bribe economy afloat while encouraging more of this activity. Through the bribe matching program, Velodrome will continue to support partner onboarding and enable the bribe economy to take life of its own. Extending this program for 6 months will be crucial to strengthen our partners’ liquidity depth and give them enough time to evaluate the results of their incentive programs. The expectation is that we can foster enough new building on Optimism to draw the kind of activity and ensuing liquidity demand that will fully kick off broad exploitation of the Velodrome economy. Quantity: 1 . 5 M OP Delivery: 40 K OP per week for 6 - 8 months. KPIs: Increasing the total numbers of protocols bribing Increasing number of total pools bribed Increasing the total value bribed in $ / ETH terms Building Deep Liquidity on Key Ecosystem Pairs - 25 % [ 1 M OP] For Optimism (and Velodrome) to succeed, they need to attract far more liquidity on core token pairs from Mainnet Ethereum and ensure that core ecosystem pairs that support the broader Optimism flywheel such as $OP and $VELO remain deeply liquid on chain. This is essential not only to support the onboarding of capital to the ecosystem, but supporting the broader economy. Generally speaking, these pools need to be deep enough to support the lowest fee and slippage trades for the large transactions types that tend to make up a disproportionate share of volume on Mainnet and allow easy entry/exit for those looking to engage with the ecosystem. Establishing this pool depth will create a virtuous cycle of capital migration, as the resulting economic activity will make Optimism the ideal venue for both trading and LPing DEXs across the network. We thus believe it is essential to continue supporting Velodrome emissions for key public good pools that benefit the ecosystem collectively. So far, these pools have been massively successful, attracting >$ 30 m in liquidity and generating $ 1 B+ in volume since launch. Because the Optimism Foundation is legally unable to bribe these pools directly, Velodrome will commit to bribing and boosting the votes of these key pairs to ensure they will attract the votes/emissions to build deep liquidity at no additional cost to the ecosystem protocols that depend on them. Key pairs include: Pair Current Liquidity 24 H Volume (Oct 13 ) 30 -Day Avg Volume OP - USDC $ 4 M $ 850 K $ 1 . 6 M WETH - USDC $ 3 M $ 700 K $ 1 . 3 M sUSD - USDC $ 17 M $ 240 K $ 323 K wstETH - WETH $ 12 M $ 220 K $ 123 K sETH - WETH $ 8 M $ 140 K $ 131 K MAI - USDC $ 7 . 1 M $ 340 K $ 302 K LUSD - USDC $ 3 . 8 M $ 18 K $ 62 K OP - WETH $ 500 K $ 85 K $ 183 K Quantity: 1 M OP Delivery: 30 k OP per week for 6 - 8 months. KPIs: Increasing TVL for ecosystem pairs High number of transactions Low slippage for high volume trades Why will incentivized users and liquidity on Optimism remain after incentives dry up? The purpose of the Governance Fund is “to incentivize sustainable growth of projects and communities in the Optimism ecosystem.” This growth is intended to bring to the “city of Optimism” a broad base of projects, capital, and users that can create a self-sustaining economy, driving exponential growth for all. Much like the Optimism sequencer itself, our success as a public good depends entirely on the health of that broader economy; this utility is designed to be entirely permissionless and sustainable once an economy of a sufficient size exists to support it. To put this another way, incentives will never completely disappear from Velodrome as emissions are designed to run in perpetuity, following a sustainable and predictable schedule (see our docs 5 for details). When combined with incentives generated in perpetuity by Optimism’s retroactive public goods funding, we expect a virtuous cycle that will maintain Velodrome’s status as the premiere base liquidity layer for the ecosystem for years to come. We have strong conviction that Optimism will eventually catch up to the level of activity we see on Mainnet today, attracting billions in annual trading volume. At 10 % of Mainnet’s current volume, Velodrome’s fees would yield a 30 % return per year for veVELO holders at current value. The incentive program proposed above extends Velodrome’s built ability to stimulate the broader economy while the natural tailwinds of Optimism’s growth continue to accelerate. Once OP incentives end, protocols, organizations, and retail players alike will hold long-term veVELO positions, which will allow them to further direct VELO liquidity incentives while sharing in the upside of Velodrome’s and Optimism’s success. Moreover, the fact of being able to sustain those APRs, along with the continued presence and building of these partners, would amplify any future liquidity mining rewards they choose to implement. More broadly, we’re not just targeting users or capital: we’re targeting projects. Doing so allows us to avoid some of the pitfalls of simple liquidity mining in that development work and network connections derived from that are inherently stickier than capital drawn in by high APRs. Once partners work with us, they tend to want to continue to do so, and creating a scene of builders organically is in our view one of the primary ways that Optimism will be able to sustain its growth, shore up the value and quality of its governance, and successfully deliver on its ideals. In a time when there is frankly a diminished user base crypto-wide, it is of primary importance that Optimism use the current moment to direct its resources toward facilitating infrastructural development, setting up the conditions for the ecosystem to thrive when end users do return. Update Based on feedback from key delegates and Optimism governance participants, we propose staging the delivery of the grant to allow for evaluation of its effectiveness. Details as follows: Maintain grant amount as outlined above, but deliver only half of the funds up front. Deliver a full report on efficacy at the 2 . 5 month mark, to be submitted directly to governance Upon delivery of the report, open a 2 week window where anyone in governance can raise a proposal that, upon two delegate approvals, can proceed direct to snapshot to suspend further grant payments If none are submitted, funding continues If successful, a similar staged model could also serve for future large grant requests.
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  • Jadmat: What a great proposal, congratulations for the amount of data The metrics indicate high dominance and tvl, but it’s normal to see dexes leading here. Velodrome is in an ideal metric scenario in its sector; since Uniswap is just deciding how it will use the grant and Curve has not received anything yet; my thought: I see this proposal as a hasty decision, seeing the performance of the rest before a second stage of grants is key; personally I also hope to see more openness of the ecosystem. I congratulate Velodrome’s enthusiasm and proactivity in the ecosystem, and I do not deny that they are a key player; but distributing $OP efficiently is the only way to generate organic and long-term growth, which is what we all want in the end Finally, what do you mean that Velodrome is a public good?
  • GFXlabs: tao: Number of OP Tokens Requested: 4,000,000 OP 98% less than average OP granted per $ in TVL 80% less than median OP granted per $ in TVL 98% less than average OP granted per $ in Volume 65% less than median OP granted per $ in Volume 98% less than average OP granted per transaction 86% less than the median OP granted per transaction 91% less than the average OP granted per user 51% less than the median OP granted per user Is there a way to trim this request? Your own metrics listed here could be used to argue Velodrome has hit “escape velocity” and does not need further grants. When speaking of millions of dollars’ worth of OP, perhaps it’s better to offer a proposal to sell VELO to governance rather than asking for a grant? Or break it into pieces so each area of large expense can be evaluated separately. This is just a really big price tag, and I think you’d have better luck either reducing it, or breaking it into pieces that are more digestible – since you have at least 3 parts that could easily be broken out. Alternatively, you could set it up so it’s delivered in monthly tranches after a required report, so governance has an opportunity to monitor the grant. The days of delivering large lump sum grants were not kind, so a sophisticated applicant like Velodrome can probably caress this into a package that sets a great example
  • OPUser: alexcutlerdoteth: Because bribing on Velodrome helps to create a 30-70% reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant I want to understand your reply to Netrim’s comment, you are saying that bribing is effective which save money and hence could be consider as builders grant. right ? If that’s the case, would you consider allocating funds specifically to builders grant. tao: Regarding incentive efficiency, the protocols are deploying much higher incentives on Uni and Curve to attract that TVL than on Velodrome. Would it be possible to see this data on monthly basis too ? So far I am very skeptical of data presented here, I believe incentives are still going on which might be giving us artificial numbers, also would like to see the uses of veVelo lock(unfortunately, I am not comfortable with Dune query so I will ask around on dicord for help). If I remember correctly, only few protocol were able to sustain liquidity, I think Beefy is one of them, which is why I dont believe that spending again on LP reward would be a good use of fund. Few pairs I see on the list has their own incentives as pointed out by Netrim. One thing I would like to see is reward ratio, how much $OP was spend monthly with respect to revenue generated on the platform. tao: We’re a public good DEX I am really curious on this, how did you reach to this conclusion? do you have any literature or peer-reviewed journal to support your statement. Good to see the pro-activeness here in gathering early feedback.
  • ScaleWeb3: Thank you for this extensive proposal. Below, we’ll dive into different aspects of the proposal but first we’d love to know what’s the Optimism Foundation‘s evaluation of the 1st grant? @lavande @bobby why do you ask the Op gov house for the 2nd grant? @jackanorak @tao @alexcutlerdoteth 1. Grant Goals tao: This grant had three primary objectives: Lowering barriers to entry with locking incentives Boosting ecosystem efficiency with bribe matching Building deep liquidity on key ecosystem pairs These goals are reasonable for Velo. For the overall DEX ecosystem on Optimism they should be Lowering barriers to entry Boosting ecosystem efficiency Building deep liquidity on key ecosystem pairs ( → $ in the right place to achieve xyz; openness & support for projects to join & contribute to Op) Velodrome had an especially positive impact on the following 3 OP ecosystem goals: Velodrome has been a key player in onboarding new protocols through personal contact. Velodrome helped bootstrapping pools for projects with locking & strong co-bribing incentives. Establish liquidity for Op & some stablecoins (1inch examples → trades routed through Velo & Uni) → Why is it that larger trades are routed more through Uni v3? Despite that, Velodrome achieved other project-specific goals: Large TVL growth veVelo locking from partners (+individuals) User attention & activity Things that we criticially look at: Deep liquidity on key ecosystem pairs & ecosystem efficiency Uniswap has been more important for key ecosystem pairs so far without incentives. (Check routing from 1inch for USDC/ETH/WBTC, Op pair somewhat split between Velo & Uni v3) High amount of incentives & TVL compared to trade volume (market share) 2. The Ask As mentioned by @GFXlabs @katie, the Ask is very large - especially given in a lump sum. Locking Incentives: 1.5M Op (40K Op per week) This incentive can help with onboarding projects to Optimism (+) Requiring projects to invest into Velo instead of Op is not optimal in our opinion. We would look at this more postive if projects were to lock Op or an 80/20 position that helps with effective liquidity (±) You mention competiting incentives: Do you mean within or outside of Optimism? What kind of impact do you expect from full deployments of Curve and the upcoming start of incentives on Uniswap, Curve, Sushi + Velodrome on Velo bribing, efficiency, market share? tao: To onboard new protocols to the Optimism ecosystem during uncertain times and in the face of competing incentives, we must ensure that they are able to bootstrap their liquidity in the most cost-effective method possible. tao: KPIs: Exceeding and maintaining 70% VELO total supply locked Doubling share of OP protocols locking VELO among those with native tokens Attracting additional new protocols to the ecosystem that meaningfully improve layer-wide economic activity Boosting ecosystem efficiency with Bribe Matching: 1.5M Op (40K Op per week) This could further help with onboarding additional projects & bootstrapping liquidity on Optimism You state that liquidity cost from bribing is cheaper than direct incentives. Do you compare the same incentives on uni v2 or uni v3 as uni v3 might make up for the “extra cost of direct incentives”? tao: It’s no surprise, then, that bribing for emissions has been massively popular on Velodrome for both new and existing protocols, allowing them to draw significant liquidity at roughly 1/3 the cost of doing so with direct LP incentives. tao: KPIs: Increasing the total numbers of protocols bribing Increasing number of total pools bribed Increasing the total value bribed in $ / ETH terms Building deep liquidity on key ecosystem pairs: 1M Op (30K Op per week) Higher liquidity in top pairs is important for Optimism (IF liquidity is utilized/effective) Would it not be a better idea to incentivize top pairs on Uni v3 and for example new projects on Velo considering ecosystem efficiency? Do you believe it makes sense to incentivize the same pairs on different DEXs? Despite “slow” market share growth of DEX aggregators on l2s, we strongly believe in abstraction over time & that users move towards wallets with built-in meta-aggregators in low-cost environments. Hence, we’d recommend a focus on protocol efficiency metrics (Slippage, trades (volume) routed, effective liquidity) over adoption KPIs (TVL, direct users, transactions). tao: KPIs: Increasing TVL for ecosystem pairs High number of transactions Low slippage for high volume trades 3. General Ask Justification Probably this doesn’t need to be stated. 4 Mio Op (110K OP per week!) is definitely a huge Ask. We appreciate the depth of the proposal and data provided, some of the “comparable metrics” are flawed though (apples & oranges) and should at most be used as small indicator in a comprehensive review. Obviously, we should not justify new Asks with previous grant amounts or Op granted/TVL but with value-added from the new proposal. Maybe, this helps anyways to stimulate a discussion which KPIs we should look at to evaluate all the different grants until today. Potentially good KPIs (for long-term sustainable growth initiatives) Op granted per unique user onboarded Op granted per top project/team onboarded Op granted per new liquidity on Optimism (+ retention, + effectivity, + network effects, + user activity, - user clusters, etc.) tao: Number of OP Tokens Requested: 4,000,000 OP 98% less than average OP granted per $ in TVL 80% less than median OP granted per $ in TVL 98% less than average OP granted per $ in Volume 65% less than median OP granted per $ in Volume 98% less than average OP granted per transaction 86% less than the median OP granted per transaction 91% less than the average OP granted per user 51% less than the median OP granted per user 4. Overall: It’s great to see a native DEX on Optimism with a team that contributes significantly to project onboarding. As many delegates such as @polynya @jackanorak have previously mentioned, it is really important that we finally have some serious evaluation of the first rounds of grants before doubling down on top initiatives. Despite that, we can only restate, that it would be very important for Optimism to have an ecosystem-wide liquidity, DeFi, NFT plan to incentivize the right partners or at least run short-term experiments that help Optimism come up with a competitive ecosystem strategy. As mentioned above, we should very deeply look at incentivizing what’s best for the ecosystem (lowering entry barriers, improving efficiency & liquidity), and not waste incentives on conflicting incentive programs or pick pre-maturely favorites & lock-ins. In that regard, thank you for the data provided. That helps already significantly in reviewing your new grant request. We believe a 2nd grant to Velo could be well-reasoned to further grow the Optimism ecosystem - esp. in regards to project onboarding & kickstarting liquidity for new projects on Optimism. Looking forward especially to your takes re: key ecosystem pairs & competiting incentive campaigns! And, we’d love to hear the evaluation from the Foundation too as mentioned in the beginning.
  • Butterbum: Hey there, Personally I would like to see Velodrome survive without incentives. tao: Delivery: 40K OP incentives per week over 6 months, distributed to veVELO lockers My understanding is, the 1.5 Million allocation is for locked up velo. Which seems like the incentive is designed for buy pressure on your token ‘velo’. This is not what this fund is for and previous proposals were slammed for an incentive mechanism like this. Do you agree that this incentive will directly increase the price of Velo?
  • OPUser: alexcutlerdoteth: I think you are trying to create a distinction where there really isn’t one. Example:- I have 100K in $USD some veCRV and veVelo. Case 1 : Existing veToken holder Curve - As a existing holder of veCRV, I will get reward depending on the amount I hold and how I vote. Velo - same as above Case 2 : New user Curve - I can use 100K $USD to acquire more CRV, lock it to get more veCRV. My voting power increase resulting in more reward and my principle amount is locked in form new veCRV. Velo - Same as above, + I will get some % of my principle money back in form of $OP as mentioned in the proposal for buying and locking $VELO. We have seen that lock bonus vary but could possibly reach up to $1.3 in $OP for $1 in depending on amount locked in that specific epoch but even If I take an average of 80% 30% return then at the end of epoch I will back $80K back 30K in form of $OP airdropped as a reward. So basically, we are paying users to buy protocol native token which is not the case with Curve. Hope this example provide more context from my side. tao: 40K OP incentives per week over 6 months, distributed to veVELO lockers proportionally to new veVELO balance per week I am not trying to create a distinction, its clearly mentioned in the proposal. katie: do not like to see edits made after approval has been given Thank you for this, Katie. I would like us to continue this conversation during coming Reflection period.
  • beachcan: hi, please allow me quote this seemingly overlooked list: tao: This proposal has the support of: Abracadabra Alchemix Angle Protocol Beefy Finance Byte Masons dForce Hop Protocol Inverse Finance Liquidity Protocol QiDAO Optimism Prime Overnight Finance Revest Finance Sonne Finance Synthetix Ambassadors Synthetix Treasury Council Tarot Finance Yearn Finance (more coming) those are builders, the lot of them. they are the ones building on OP city, and Velodrome helped onboard them as efficiently as possible. the earliest developers on OP city - a fresh, new city on blockchain land - are trying to make a point. please, let’s try to hear them out. i would also add to that list the commoners of OP city (retail) such as myself. individually we might be small, but look at us collectively and you are looking at arguably the most committed group of citizens in OP city. we are in it for the long haul. and i thank Velodrome for providing us with a great DeFi playground for the next 4 years+. looking forward to more swings and slides, along with more neighbors to play with!
  • alexcutlerdoteth: forrest: I voted Against this proposal. forrest: Disclosure: I co-founded a different Optimism DEX so consider me biased Fair enough. I actually didn’t realize you were a Rubicon founder. I think an abstention in that case might be more appropriate, but there is no rule that you can’t vote down a fellow DEX so that’s your call. For the record, if Rubicon can come back showing that they have delivered same kind of growth multiples on your 900,000 OP grant I promise we’ll be first in line to show support for your next proposal. forrest: This Grant would be 1.72% of Optimism’s Governance Fund and would grow the circulating supply of the OP token by 1.86%. This is significant, and I do not appreciate Velodrome team members trying to say otherwise. We are talking about millions of $ here: Since you raised this again, I’ll want to make sure reemphasize all our responses that put the size of our ask in proper context so people don’t the wrong idea. Our ask is significantly smaller than those distributed to date by the Governance Fund relative to key KPIs: tao: As a share of the Optimism ecosystem, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of the Governance Fund. tao: 98% less than average OP granted per $ in TVL 80% less than median OP granted per $ in TVL 98% less than average OP granted per $ in Volume 65% less than median OP granted per $ in Volume 98% less than average OP granted per transaction 86% less than the median OP granted per transaction 91% less than the average OP granted per user 51% less than the median OP granted per user Velodrome is offering 31x the co-incentives of other DEX projects combined while only asking for 1.6x larger grant. alexcutlerdoteth: Velodrome Total Grant: 7,000,000 OP Total Co-Incentives: $12,500,000 Total Projects Supported: 29 Total Projected ROI: 2x-3x (minimum) Other DEX Protocols: Total Grant: 4,240,000 OP Total Co-Incentives: $360,000 (estimated) Total Projects Supported: 9 Total Projected ROI: TBD Our grant request is oriented towards continuing activities that have a proven ability to return 2x-3x the underlying value of grant: tao: $6M+ VELO liquidity incentives distributed into the ecosystem (2-3x OP grant) 30+ new protocols onboarded and supported with liquidity growth in ecosystem 30-70% reduction in liquidity incentive costs per $ TVL for ecosystem partners $5M+ liquidity of OP token pairs, creating $1B in volume $1M+ in protocol revenue returned to veVELO lockers (primarily protocols) $10M+ value locked as veVELO (70% of total) locked into the Optimism for ~3.5ys $250k veVELO airdrop for OP Team, $2M veVELO airdrop to ecosystem partners alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. Our grant is dramatically over performing Governance Fund grants to date: alexcutlerdoteth: According to the Foundations analysis of grants to date, the 42.6M OP granted thus far has earned: A 100% increase in transactions at a cost of 676 OP per incremental transaction A 74% increase in TVL (60M) at a cost of about .3 OP per incremental dollar In contrast, Velodrome’s grant of 3M OP from OPLabs has thus far earned: A 100% increase in transactions, at a cost of 40 OP per incremental transaction A 400% increase in TVL ($65M), at a cost of .03 OP per incremental dollar alexcutlerdoteth: Indeed, Velodrome has actually onboarded more net-new protocols (20 for 3M OP) than the Governance Fund itself (18 for 7.4M OP) and did so at a fraction of the cost. In short, the grant only looks large if you ignore baselines in terms of KPIs, massive co-investment, or demonstrated ROI multiples it has delivered. It remains significantly smaller in actual dollar terms than the one originally given to us by OPLabs. Repeatedly suggesting “it is too big” without directly engaging in this context isn’t constructive, especially from someone who received their own incredibly generous grant but has yet to produce evidence of similar returns.
  • katie: Voted yes - It seems like one of the main concerns around this proposal is grant size, which is understandable because this is a large request. However, only half of the funds will be distributed up front, with the second half being contingent upon an efficacy report at the 2.5 month mark which I feel has been overlooked (see below). This circumvents the issue of the team having to submit another proposal and go through this extremely labor intensive process (as shown by the 176 comments as of writing this) but also includes the accountability component which has been missing from previous proposals. tao: Based on feedback from key delegates and Optimism governance participants, we propose staging the delivery of the grant to allow for evaluation of its effectiveness. Details as follows: Maintain grant amount as outlined above, but deliver only half of the funds up front. Deliver a full report on efficacy at the 2.5 month mark, to be submitted directly to governance Upon delivery of the report, open a 2 week window where anyone in governance can raise a proposal that, upon two delegate approvals, can proceed direct to snapshot to suspend further grant payments If none are submitted, funding continues The Velodrome team has been extremely successful with growing the ecosystem (which is the purpose of the governance fund) with their previous grant as shown extensively by data and metrics. This is an impressive grant performance, backed by verifiable numbers and data. We should be rewarding teams that are building on Optimism. None of the funds requested are going to any internal operational costs, this grant is 100% focused on bootstrapping liquidity, lowering barriers to entry, and acquiring new users, which again, is the purpose of the governance fund. I would also like to point out that the Velodrome has responded to every single concern raised with a thoughtful response backed by numbers, facts and technical analysis. There has clearly been a massive amount of effort on the Velodrome team to address concerns and move this proposal forward which should not be taken lightly. I would encourage others to look past the grant size and focus on the data and metrics that have shown the success of this project so far. These are the types of grants and projects the governance fund should be supporting imo.
• Capt-Holt - No Role

  Oct. 20, 2022, 6:46 p.m.
  Treści edukacyjne DeFi 40 K OP incentives tygodniowo przez 6 miesięcy, dystrybuowane do bloka… Treści edukacyjne DeFi 40 K OP incentives tygodniowo przez 6 miesięcy, dystrybuowane do blokad veVELO proporcjonalnie do nowego salda veVELO w tygodniu, wyłącznie za blokadę transakcji płynnych VELO (bez przedłużania blokad i rebase’ów). Zwiększenie efektywności ekosystemu poprzez Bribe Matching - 37 , 5 % A good proposal. 3 M $OP will go towards veVelo locker. New here, poor word choice. Was considered as advertisement. Corrected now.
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• Jadmat - No Role

  Oct. 20, 2022, 8:56 p.m.
  What a great proposal, congratulations for the amount of data The metrics indicate high dominance a… What a great proposal, congratulations for the amount of data The metrics indicate high dominance and tvl, but it’s normal to see dexes leading here. Velodrome is in an ideal metric scenario in its sector; since Uniswap is just deciding how it will use the grant and Curve has not received anything yet; my thought: I see this proposal as a hasty decision, seeing the performance of the rest before a second stage of grants is key; personally I also hope to see more openness of the ecosystem. I congratulate Velodrome’s enthusiasm and proactivity in the ecosystem, and I do not deny that they are a key player; but distributing $OP efficiently is the only way to generate organic and long-term growth, which is what we all want in the end Finally, what do you mean that Velodrome is a public good?
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  Likers: Ngoc, OPUser, TheDoctor, Roflmauer, Olawalesh2, AVE555, Foxpause, TonyStark, Hippotangmo
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  • tao: Appreciate the compliments. We’ve prepared a comprehensive overview, backed by data, and would appreciate to see data to back counterpoints as well. If metrics such as TVL, transaction volume, and users lead to “normal” dominance by dexes, which other metrics would you propose we look into? How do proposed alternative metrics benefit the Optimism ecosystem? Velodrome has gained significant traction in a tough market environment. Losing momentum now will predictably lead to lower liquidity and activity, especially against competing ecosystems with upcoming grant programs such as Arbitrum. Why is waiting for a second stage of grants preferable to continuing the current program? Stopping and restarting incentives is measurably less efficient than extending a program. We specifically included data and a visual representation on efficiency of OP incentives and Velodrome is a clear leader. Would you propose an alternative grant size for a protocol attracting ~15% of the ecosystems transaction volume and ~10% of TVL?
  • alexcutlerdoteth: Jadmat: distributing $OP efficiently is the only way to generate organic and long-term growth This is exactly why we’ve documented just how overwhelming effective the distribution has been, returning to the broader ecosystem 2x-3x the value of the grant itself while helping to onboard 30+ new projects, most of which haven’t received any funding through governance. Jadmat: seeing the performance of the rest before a second stage of grants is key; Given that demonstrated effectiveness, the only thing that delaying an extension of Velodrome incentives would achieve is massively slowing the current rate of ecosystem growth while making it harder for existing projects to operate. That is why we’ve got so much of the ecosystem, even those with long relationships with competitive DEX co-signing our proposal. Jadmat: Velodrome is in an ideal metric scenario in its sector; since Uniswap is just deciding how it will use the grant and Curve We have to keep in mind that battle isn’t between DEXs on Optimism, it is in their collective battle for attracting liquidity and builders from mainnet and alt L1s. We’ve been hugely successful in this. Incentives on Uniswap, Curve, Sushi, and Beethoven will have a role to play too, but the ecosystem shouldn’t wait on them to get the ball rolling – especially given they are not Optimism native and have competing priorities. Once all the programs are live, some comparative analysis would certainly be welcome, but I think that is all the more reason to keep the existing program running. Ending one before the others begin will not just make it harder for us to collectively attract liquidity from mainnet, but will make it harder to do 1:1 comparative analysis on efficacy.
• Jadmat - No Role

  Oct. 21, 2022, 12:56 a.m.
  What a great proposal, congratulations for the amount of data The metrics indicate high dominance a… What a great proposal, congratulations for the amount of data The metrics indicate high dominance and tvl, but it’s normal to see dexes leading here. Velodrome is in an ideal metric scenario in its sector; since Uniswap is just deciding how it will use the grant and Curve has not received anything yet; my thought: I see this proposal as a hasty decision, seeing the performance of the rest before a second stage of grants is key; personally I also hope to see more openness of the ecosystem. I congratulate Velodrome’s enthusiasm and proactivity in the ecosystem, and I do not deny that they are a key player; but distributing $OP efficiently is the only way to generate organic and long-term growth, which is what we all want in the end Finally, what do you mean that Velodrome is a public good?
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  • tao: Appreciate the compliments. We’ve prepared a comprehensive overview, backed by data, and would appreciate to see data to back counterpoints as well. If metrics such as TVL, transaction volume, and users lead to “normal” dominance by dexes, which other metrics would you propose we look into? How do proposed alternative metrics benefit the Optimism ecosystem? Velodrome has gained significant traction in a tough market environment. Losing momentum now will predictably lead to lower liquidity and activity, especially against competing ecosystems with upcoming grant programs such as Arbitrum. Why is waiting for a second stage of grants preferable to continuing the current program? Stopping and restarting incentives is measurably less efficient than extending a program. We specifically included data and a visual representation on efficiency of OP incentives and Velodrome is a clear leader. Would you propose an alternative grant size for a protocol attracting ~15% of the ecosystems transaction volume and ~10% of TVL?
  • alexcutlerdoteth: Jadmat: distributing $OP efficiently is the only way to generate organic and long-term growth This is exactly why we’ve documented just how overwhelming effective the distribution has been, returning to the broader ecosystem 2x-3x the value of the grant itself while helping to onboard 30+ new projects, most of which haven’t received any funding through governance. Jadmat: seeing the performance of the rest before a second stage of grants is key; Given that demonstrated effectiveness, the only thing that delaying an extension of Velodrome incentives would achieve is massively slowing the current rate of ecosystem growth while making it harder for existing projects to operate. That is why we’ve got so much of the ecosystem, even those with long relationships with competitive DEX co-signing our proposal. Jadmat: Velodrome is in an ideal metric scenario in its sector; since Uniswap is just deciding how it will use the grant and Curve We have to keep in mind that battle isn’t between DEXs on Optimism, it is in their collective battle for attracting liquidity and builders from mainnet and alt L1s. We’ve been hugely successful in this. Incentives on Uniswap, Curve, Sushi, and Beethoven will have a role to play too, but the ecosystem shouldn’t wait on them to get the ball rolling – especially given they are not Optimism native and have competing priorities. Once all the programs are live, some comparative analysis would certainly be welcome, but I think that is all the more reason to keep the existing program running. Ending one before the others begin will not just make it harder for us to collectively attract liquidity from mainnet, but will make it harder to do 1:1 comparative analysis on efficacy.
• tao - No Role

  Oct. 21, 2022, 8:15 a.m.
  Appreciate the compliments. We’ve prepared a comprehensive overview, backed by data, and would appr… Appreciate the compliments. We’ve prepared a comprehensive overview, backed by data, and would appreciate to see data to back counterpoints as well. If metrics such as TVL, transaction volume, and users lead to “normal” dominance by dexes, which other metrics would you propose we look into? How do proposed alternative metrics benefit the Optimism ecosystem? Velodrome has gained significant traction in a tough market environment. Losing momentum now will predictably lead to lower liquidity and activity, especially against competing ecosystems with upcoming grant programs such as Arbitrum. Why is waiting for a second stage of grants preferable to continuing the current program? Stopping and restarting incentives is measurably less efficient than extending a program. We specifically included data and a visual representation on efficiency of OP incentives and Velodrome is a clear leader. Would you propose an alternative grant size for a protocol attracting ~ 15 % of the ecosystems transaction volume and ~ 10 % of TVL?
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• Netrim - No Role

  Oct. 21, 2022, 9:08 a.m.
  First, very well written and researched proposal with an incredible data set. From my own research … First, very well written and researched proposal with an incredible data set. From my own research and understanding of dexes, you generally want deep liquidity and volume in what I like to call the base pairs. Network Coin + Dominant Stable. For Optimism that is clearly ETH/USDC, on top of that I can understand OP/ETH AND OP/USDC since we all understand that deep liquidity on OP as a token can only be a good thing. But then some of the other pairs become a bit difficult, I added a column here of what I call ratio, the 24 H Volume divided by Liquidity. From my understanding this is the actual information we want to analyze pairs for since it’s what ultimately drives usage. Pair Current Liquidity 24 H Volume Ratio 7 D Volume Ratio OP - USDC $ 4 , 000 , 000 . 00 $ 850 , 000 . 00 21 . 25 % $ 10 , 359 , 358 . 00 258 . 98 % WETH - USDC $ 3 , 000 , 000 . 00 $ 700 , 000 . 00 23 . 33 % $ 6 , 577 , 178 . 00 219 . 24 % OP - WETH $ 500 , 000 . 00 $ 85 , 000 . 00 17 . 00 % $ 869 , 076 . 00 173 . 82 % MAI - USDC $ 7 , 100 , 000 . 00 $ 340 , 000 . 00 4 . 79 % $ 2 , 050 , 891 . 00 28 . 89 % sETH - WETH $ 8 , 000 , 000 . 00 $ 140 , 000 . 00 1 . 75 % $ 1 , 025 , 624 . 00 12 . 82 % sUSD - USDC $ 17 , 000 , 000 . 00 $ 240 , 000 . 00 1 . 41 % $ 1 , 935 , 689 . 00 11 . 39 % wstETH - WETH $ 12 , 000 , 000 . 00 $ 220 , 000 . 00 1 . 83 % $ 1 , 249 , 708 . 00 10 . 41 % LUSD - USDC $ 3 , 800 , 000 . 00 $ 18 , 000 . 00 0 . 47 % $ 285 , 555 . 00 7 . 51 % Edit: Added 7 D volume I reordered the information so it goes from biggest ratio to smallest. ETH/USDC + OP/USDC + OP/USDC have all impressive Ratio. MAI/USDC has a great ratio. wstETH/ETH I can understand is a new pair but liquidity depth on that is great, so clearly volume is lagging. After that the shown pairs are not impressive in regards to ratio. Outside of the declared pairs USDC/DAI boasts an impressive swap volume as do some VELO pairs like VELO/USDC and VELO/OP. (I am basing my information on this dune dashboard, Velodrome Finance On Optimism) To the questions: Both Synthetix and QiDAO have their own proposals and allocations for their tokens, and your proposal shows how the bribe economy is shaping up, but couldn’t the Velodrome incentives be directed to other uses, like a builders grant on top Velodrome? The bribe economy has shown itself to be very effective to attract TVL, looking at Defillama, Optimism holds a very different landscape if we see Volume/TVL metrics Optimism Volumes - DefiLlama. How is the team thinking the competing dex landscape for Optimism specifically? Confirmation request, your proposal doesn’t include any provision for delegation and/or usage of the OP while it’s not being distributed. Would you consider any of them as possible? if so, please update the main post
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  • Ganc: These numbers for working out the ratio are misleading. 24hr volume varies massively on a day to day basis, for example if its a weekend, public holiday, and with market fluctations. The average daily volume over the last month for WETH/USDC for instance was $1,731,560. For OP/USDC it was $1,709,287. For LUSD/USDC it was $90,000 - which is 5x the number you are using. TVL per pair also varies on a day to day basis so to make a valid comparison you’d have to compare it with the average TVL. You can find historical TVL and volume data here: https://info.velodrome.finance/
  • alexcutlerdoteth: Netrim: Both Synthetix and QiDAO have their own proposals and allocations for their tokens, and your proposal shows how the bribe economy is shaping up, but couldn’t the Velodrome incentives be directed to other uses, like a builders grant on top Velodrome? A great question, ser. Because bribing on Velodrome helps to create a 30-70% reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant. It allows builders to save potentially millions a year in incentive costs, which they can reinvest in their own projects. And they can do this without having to go through some cumbersome process. It’s why we’ve been able to attract over 30 new projects to the network without builder grants (and most haven’t received OP grants either). Netrim: The bribe economy has shown itself to be very effective to attract TVL, looking at Defillama, Optimism holds a very different landscape if we see Volume/TVL metrics Optimism Volumes - DefiLlama. Volume comes with utility and activity. As of now, many of the projects that we’re helping to bootstrap are in their infancy on Optimism. They need some initial liquidity to support their operations, but they are not yet at sufficient maturity to expect their pairs to drive significant volume. That (of course) will come in time as their products are fully developed and more activity migrates to L2. Volume will come once these projects have matured and the ecosystem is booming. That is why it is so important for something like Velodrome to exist at this critical point in ecosystem development. Netrim: Confirmation request, your proposal doesn’t include any provision for delegation and/or usage of the OP while it’s not being distributed. Would you consider any of them as possible? if so, please update the main post We strongly believe protocols and builders need more representation in governance for the ecosystem to be successful. We are supportive of those who have suggested a consistent framework for self-delegation as a norm. That said, it has seemed like enough of a non-negotiable for some that we didn’t feel it was worth including. The most important thing to us at the moment is ensuring ecosystem growth can continue at pace and don’t want to distract from that.
• alexcutlerdoteth - No Role

  Oct. 21, 2022, 9:46 a.m.
  Jadmat: distributing $OP efficiently is the only way to generate organic and long-term growth … Jadmat: distributing $OP efficiently is the only way to generate organic and long-term growth This is exactly why we’ve documented just how overwhelming effective the distribution has been, returning to the broader ecosystem 2 x- 3 x the value of the grant itself while helping to onboard 30 + new projects, most of which haven’t received any funding through governance. Jadmat: seeing the performance of the rest before a second stage of grants is key; Given that demonstrated effectiveness, the only thing that delaying an extension of Velodrome incentives would achieve is massively slowing the current rate of ecosystem growth while making it harder for existing projects to operate. That is why we’ve got so much of the ecosystem, even those with long relationships with competitive DEX co-signing our proposal. Jadmat: Velodrome is in an ideal metric scenario in its sector; since Uniswap is just deciding how it will use the grant and Curve We have to keep in mind that battle isn’t between DEXs on Optimism, it is in their collective battle for attracting liquidity and builders from mainnet and alt L 1 s. We’ve been hugely successful in this. Incentives on Uniswap, Curve, Sushi, and Beethoven will have a role to play too, but the ecosystem shouldn’t wait on them to get the ball rolling – especially given they are not Optimism native and have competing priorities. Once all the programs are live, some comparative analysis would certainly be welcome, but I think that is all the more reason to keep the existing program running. Ending one before the others begin will not just make it harder for us to collectively attract liquidity from mainnet, but will make it harder to do 1 : 1 comparative analysis on efficacy.
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• Ganc - No Role

  Oct. 21, 2022, 9:54 a.m.
  These numbers for working out the ratio are misleading. 24 hr volume varies massively on a day to … These numbers for working out the ratio are misleading. 24 hr volume varies massively on a day to day basis, for example if its a weekend, public holiday, and with market fluctations. The average daily volume over the last month for WETH/USDC for instance was $ 1 , 731 , 560 . For OP/USDC it was $ 1 , 709 , 287 . For LUSD/USDC it was $ 90 , 000 - which is 5 x the number you are using. TVL per pair also varies on a day to day basis so to make a valid comparison you’d have to compare it with the average TVL. You can find historical TVL and volume data here: https://info.velodrome.finance/
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• Netrim - No Role

  Oct. 21, 2022, 10:01 a.m.
  Hi Ganc, thanks for the internal page. I have updated the info and added 7 D volume, the proportio… Hi Ganc, thanks for the internal page. I have updated the info and added 7 D volume, the proportion and arguments stay the same even taking a longer time frame.
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• Ganc - No Role

  Oct. 21, 2022, 10:15 a.m.
  I do not understand your point really. If Optimism was a fully mature Layer 2 with high amounts o… I do not understand your point really. If Optimism was a fully mature Layer 2 with high amounts of pre-existing volume which Velodrome then plugged into, maybe it would be worthwhile looking at this ratio. However, when Optimism has zero existing volume or liquidity for these pairs, if not for the Velodrome pair existing, what are you comparing it with? Ethereum mainnet Dexes?
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  • Netrim: I am comparing ratio to ratio. It doesn’t matter where it’s happening since it’s a measure of usage and by being a percentage I can actually compare it against the other pairs
• alexcutlerdoteth - No Role

  Oct. 21, 2022, 10:22 a.m.
  Netrim: Both Synthetix and QiDAO have their own proposals and allocations for their tokens, an… Netrim: Both Synthetix and QiDAO have their own proposals and allocations for their tokens, and your proposal shows how the bribe economy is shaping up, but couldn’t the Velodrome incentives be directed to other uses, like a builders grant on top Velodrome? A great question, ser. Because bribing on Velodrome helps to create a 30 - 70 % reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant. It allows builders to save potentially millions a year in incentive costs, which they can reinvest in their own projects. And they can do this without having to go through some cumbersome process. It’s why we’ve been able to attract over 30 new projects to the network without builder grants (and most haven’t received OP grants either). Netrim: The bribe economy has shown itself to be very effective to attract TVL, looking at Defillama, Optimism holds a very different landscape if we see Volume/TVL metrics Optimism Volumes - DefiLlama. Volume comes with utility and activity. As of now, many of the projects that we’re helping to bootstrap are in their infancy on Optimism. They need some initial liquidity to support their operations, but they are not yet at sufficient maturity to expect their pairs to drive significant volume. That (of course) will come in time as their products are fully developed and more activity migrates to L 2 . Volume will come once these projects have matured and the ecosystem is booming. That is why it is so important for something like Velodrome to exist at this critical point in ecosystem development. Netrim: Confirmation request, your proposal doesn’t include any provision for delegation and/or usage of the OP while it’s not being distributed. Would you consider any of them as possible? if so, please update the main post We strongly believe protocols and builders need more representation in governance for the ecosystem to be successful. We are supportive of those who have suggested a consistent framework for self-delegation as a norm. That said, it has seemed like enough of a non-negotiable for some that we didn’t feel it was worth including. The most important thing to us at the moment is ensuring ecosystem growth can continue at pace and don’t want to distract from that.
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  • Netrim: As I have discussed with jack in some chats on the Optimism Discord, I feel like we need to move away from straight up liquidity mining incentives. alexcutlerdoteth: A great question, ser. Because bribing on Velodrome helps to create a 30-70% reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant. It allows builders to save potentially millions a year in incentive costs, which they can reinvest in their own projects. And they can do this without having to go through some cumbersome process. It’s why we’ve been able to attract over 30 new projects to the network without builder grants (and most haven’t received OP grants either). Having said that I feel like neither Synthetix nor QiDAO need the Velodrome bribes on top, since they have their own proposals and usage to be distributed. Couldn’t this part of bribes be directed to composability on top of Velodrome? A builder’s grant is much more than simply giving away incentives, for instance Interest Protocol had a solution for composability of OP that would let you keep your voting power even when using said OP. Having that sort of composability on top of Velodrome LPs would be great. alexcutlerdoteth: We strongly believe protocols and builders need more representation in governance for the ecosystem to be successful. We are supportive of those who have suggested a consistent framework for self-delegation as a norm. That said, it has seemed like enough of a non-negotiable for some that we didn’t feel it was worth including. The most important thing to us at the moment is ensuring ecosystem growth can continue at pace and don’t want to distract from that. I understand where you are coming from here and you guys need to pick your battles, but I still feel like it’s a missed opportunity to discuss this. As per the proposal this would run over 6 to 8 months, let’s settle on 6 months. 4M OP ~10% APY would give you ~1k OP per day, which could then be set aside to keep on growing even if the 4M start being distributed. On a very ideal scenario, Velodrome could amass their own self reliant OP stash to use and my own understand is that those could be used as the team/DAO (if applicable) see fit.
  • OPUser: alexcutlerdoteth: Because bribing on Velodrome helps to create a 30-70% reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant I want to understand your reply to Netrim’s comment, you are saying that bribing is effective which save money and hence could be consider as builders grant. right ? If that’s the case, would you consider allocating funds specifically to builders grant. tao: Regarding incentive efficiency, the protocols are deploying much higher incentives on Uni and Curve to attract that TVL than on Velodrome. Would it be possible to see this data on monthly basis too ? So far I am very skeptical of data presented here, I believe incentives are still going on which might be giving us artificial numbers, also would like to see the uses of veVelo lock(unfortunately, I am not comfortable with Dune query so I will ask around on dicord for help). If I remember correctly, only few protocol were able to sustain liquidity, I think Beefy is one of them, which is why I dont believe that spending again on LP reward would be a good use of fund. Few pairs I see on the list has their own incentives as pointed out by Netrim. One thing I would like to see is reward ratio, how much $OP was spend monthly with respect to revenue generated on the platform. tao: We’re a public good DEX I am really curious on this, how did you reach to this conclusion? do you have any literature or peer-reviewed journal to support your statement. Good to see the pro-activeness here in gathering early feedback.
  • alexcutlerdoteth: Good Morning Voting is coming up so we wanted to create a summary/guide of the discussion so far for those unable to parts through the record breaking 133 comments on the proposal. Overview Velodrome spent several weeks creating what is likely the detailed and evidenced proposal to be submitted to governance yet. If you have the time, please consider reading its in it’s entirety. Since it’s posting 12 days ago it has received 133 comments from 31 commentators: Positive Commentators: 17 (58%) Mixed Commentators: 5 (17%) Negative Commentators: 7 (24%) As you can see, there are more positive commentators than negative and mixed commentators combined. Though it may be hard to tell from differentials in the volume of post: 2.4x more commentators were positive than negative 100% of comments from builders were positive 43% of negative commentators were from new accounts Only 13% of positive comments were from new accounts Notable Positive Comments Since there are have been far more positive comments than negative ones on the proposal, we’ll start by highlighting a few positive ones that we think emphasize our impact well. You can also check out the testimonials we’ve collected from 10+ partners (and counting) on our Twitter. Aes: this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism. bebis: There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team. They’re on-boarding a ton of people the hard way - with actual customer/client services. They’re getting teams and users invested long-term in the ecosystem’s success. They’re the main Optimism point of contact if you’re a builder/developer. Their bribing system makes operations much lighter for small teams and startups. They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously. SethVdL: alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. I am not one for long winded governance debates and even knowingly sat out on the Overtime discussion even though I sit on the Thales Council … That being said, I feel compelled to point out this statement from Alex because I feel the Velodrome ROI is in a class of it’s own and I want voters to understand what’s at stake … the system is working and it’s currently providing multiple protocols the opportunity to have deep liquidity for a fraction of the cost elsewhere. An approved grant to velodrome is like granting the entire ecosystem imo… which is what we are set out to do. TokenBrice: We are currently leading various campaigns to sustain liquidity, whether on Curve, through Warden Bribes, or on Velodrome. In terms of the amount of liquidity sustained / $-invested, Velodrome is one to two orders of magnitude above the competition. …it is delivering beyond what was expected : the OP veVELO locking bonus is a key part of the equation - increasing the efficiency of the flywheel even further. Besides, it drives projects to lock VELO, which means they enter a long-term commitment with Velodrome and Optimism. states_of_nature1651: It seems like the main source of the criticisms is that the benefit for Optimism looks like this: Optimism should be looking to cultivate the presence of legacy mainnet protocols rather than supporting OP native upstarts with flashy marketing and distortive incentives. Supporting deep liquidity on known legacy protocols will be better for OP in the long run. Putting our thumb on the scale for Velodrome will prevent this needed development. I think this is a flawed argument based on the data provided and I don’t see how any other current ecosystem player will step in to fill the niche Velodrome is filling in the near term. This isn’t a knock on the legacy protocols. Onboarding a bunch of new protocols to Optimism makes no sense for them as a growth strategy. This shows up If you look at their grant proposals. They are looking to extend their current competitive advantage on mainnet to Optimism - not get into the business Velodrome is in. jornx: I’ve been a long time user of Optimism and I use it frequently since I do a lot of arbitrage and other trading strategies on here…Optimism was never that interesting because liquidity was very limited on the main DEX at that time (uniswap). When Velodrome was added and especially when the OP grant was liquidity boomed and there were a lot more projects with deep liquidity on Optimism.When I look at all the grants that have been given by OP in my opinion Velodrome must have been one of the most succesful, onboarding new users and creating more possibilities for the user on the network. Key Discussion Points While negative and mixed commenters have represented a minority of the total engagement on the proposal, questions and concerns they’ve raised have allowed us to discuss and clarify key points on our proposal. We provide a quick overview of some of the key questions raised and provide short summaries of our responses: Is Velodrome Asking for Too Large a Grant? TLDR: No. It is 90%+ smaller than the average grant by every KPI, offers a proven 2x-3x ROI, and comes with Velodrome offering $6.5mm in co-incentives (31x those of other DEXs combined). Likewise, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of grant funds. No alternative frameworks for grant size evaluation have been suggested or offered. Is The Lock Bonus An Appropriate Use of Funds? TLDR: Yes. The incentive flows to veTOKEN lockers consistent with other proposals such as Curve/Balancer and while drive similar second order effects that grow the ecosystem by multiples and reduce costs for the ecosystem. No data has been provided suggesting it has any meaningful impact on price. Would Builder Grants be Better? TLDR: No. Velodrome grants have brought 30+ new builders to the ecosystem by reducing their incentive costs by 20% - 70% while less accountable direct builder grants offered by other protocols have yet to demonstrate their efficacy. Is Velodrome Really Competitive with Curve and Uniswap? TLDR: Yes. Velodrome is more efficient in TVL/Volume / $ spent in incentives (lowering costs ecosystem wide). It also attracts similar levels of volume per dollar in TVL while simultaneously hosting 3.2x more ecosystem projects tokens than Uniswap and Curve combined. Should Velodrome Be Forced to Operate Without OP Incentives? TLDR: Velodrome has demonstrated the highest ROI in terms of ecosystem growth of any governance or partner fund grant to date. The primary impact of pulling back on incentives would be to slow or reverse that ecosystem growth while simultaneously continuing the flow of incentives to less effective programs on other DEXs making comparative evaluations of different programs more challenging. Incentives already represent a declining proportion of our total activity and we expect that to continue to shrink over the course of this grant. Does Granting Velodrome Harm Other DEXs? TLDR: Ecosystem native DEXs and multi-chain DEXs have different goals and incentives when it comes to growing Optimism and cannot be easily compared. Overall though, all should be evaluated / granted equally in terms of the growth multiple they can return and growing ecosystem activity will benefit all. Summary We hope you’ve found this summary helpful and will continue to add it if/when new topics are raised to make the overall thread a bit easier to navigate as we move into the voting page. Thank you for reading!
• OPGovWatch - No Role

  Oct. 21, 2022, 11:13 a.m.
  Hello Tao - I enjoyed reading your proposal. It answered many of my questions before I asked them a… Hello Tao - I enjoyed reading your proposal. It answered many of my questions before I asked them and I appreciated all the data. I wanted to check DEX stats one way you did not mention, looking at how many projects they each support. My filter is they must have at least $ 100 , 000 in liquidity on tokens be valid. Here is what I found: Uniswap: 9 projects, 6 if you filter out ETH/OP/USDC Beethoven: 7 projects, 4 if you filter out ETH/USDC/USDT Curve: 6 projects, 4 if you filter out USDC/USDT Velodrome: 29 projects, 26 if you filter out OP/USDC/ETH This does seem to validate your claim that you have a unique claim on growing and supporting the ecosystem. I was actually quite surprised how limited an impact the others have. I did have one question. If Velodrome is more efficient as you claim, then why is liquidity deeper on tokens like Lyra and Thales on Uniswap and sUSD and sETH on Curve? Doesn’t that suggest it is less efficient for those tokens?
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  • tao: Hi OPGovWatch, Great analysis on the number of pools. We see onboarding protocols as our bread and butter. Regarding incentive efficiency, the protocols are deploying much higher incentives on Uni and Curve to attract that TVL than on Velodrome. When you compare TVL per $ of incentives, you get some remarkable results. Thales is getting 2.8x TVL per $ of incentives on Velodrome vs Uni and 6.6x the volume per $ incentive! While Lyra is basically getting all their liquidity for free using the airdropped veVELO we gave them at launch: Note that Thales, Lyra, and Synthetix all have veVELO votepower we airdropped to them, which they’ve been using to vote on their pools and automatically get a rebate for any bribes they deposit. For sETH and sUSD liquidity, the results also speak for themselves:
• tao - No Role

  Oct. 21, 2022, 12:15 p.m.
  Appreciate the compliments. We’ve prepared a comprehensive overview, backed by data, and would appr… Appreciate the compliments. We’ve prepared a comprehensive overview, backed by data, and would appreciate to see data to back counterpoints as well. If metrics such as TVL, transaction volume, and users lead to “normal” dominance by dexes, which other metrics would you propose we look into? How do proposed alternative metrics benefit the Optimism ecosystem? Velodrome has gained significant traction in a tough market environment. Losing momentum now will predictably lead to lower liquidity and activity, especially against competing ecosystems with upcoming grant programs such as Arbitrum. Why is waiting for a second stage of grants preferable to continuing the current program? Stopping and restarting incentives is measurably less efficient than extending a program. We specifically included data and a visual representation on efficiency of OP incentives and Velodrome is a clear leader. Would you propose an alternative grant size for a protocol attracting ~ 15 % of the ecosystems transaction volume and ~ 10 % of TVL?
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• Netrim - No Role

  Oct. 21, 2022, 12:35 p.m.
  I am comparing ratio to ratio. It doesn’t matter where it’s happening since it’s a measure of usage… I am comparing ratio to ratio. It doesn’t matter where it’s happening since it’s a measure of usage and by being a percentage I can actually compare it against the other pairs
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• Netrim - No Role

  Oct. 21, 2022, 1:08 p.m.
  First, very well written and researched proposal with an incredible data set. From my own research … First, very well written and researched proposal with an incredible data set. From my own research and understanding of dexes, you generally want deep liquidity and volume in what I like to call the base pairs. Network Coin + Dominant Stable. For Optimism that is clearly ETH/USDC, on top of that I can understand OP/ETH AND OP/USDC since we all understand that deep liquidity on OP as a token can only be a good thing. But then some of the other pairs become a bit difficult, I added a column here of what I call ratio, the 24 H Volume divided by Liquidity. From my understanding this is the actual information we want to analyze pairs for since it’s what ultimately drives usage. Pair Current Liquidity 24 H Volume Ratio 7 D Volume Ratio OP - USDC $ 4 , 000 , 000 . 00 $ 850 , 000 . 00 21 . 25 % $ 10 , 359 , 358 . 00 258 . 98 % WETH - USDC $ 3 , 000 , 000 . 00 $ 700 , 000 . 00 23 . 33 % $ 6 , 577 , 178 . 00 219 . 24 % OP - WETH $ 500 , 000 . 00 $ 85 , 000 . 00 17 . 00 % $ 869 , 076 . 00 173 . 82 % MAI - USDC $ 7 , 100 , 000 . 00 $ 340 , 000 . 00 4 . 79 % $ 2 , 050 , 891 . 00 28 . 89 % sETH - WETH $ 8 , 000 , 000 . 00 $ 140 , 000 . 00 1 . 75 % $ 1 , 025 , 624 . 00 12 . 82 % sUSD - USDC $ 17 , 000 , 000 . 00 $ 240 , 000 . 00 1 . 41 % $ 1 , 935 , 689 . 00 11 . 39 % wstETH - WETH $ 12 , 000 , 000 . 00 $ 220 , 000 . 00 1 . 83 % $ 1 , 249 , 708 . 00 10 . 41 % LUSD - USDC $ 3 , 800 , 000 . 00 $ 18 , 000 . 00 0 . 47 % $ 285 , 555 . 00 7 . 51 % Edit: Added 7 D volume I reordered the information so it goes from biggest ratio to smallest. ETH/USDC + OP/USDC + OP/USDC have all impressive Ratio. MAI/USDC has a great ratio. wstETH/ETH I can understand is a new pair but liquidity depth on that is great, so clearly volume is lagging. After that the shown pairs are not impressive in regards to ratio. Outside of the declared pairs USDC/DAI boasts an impressive swap volume as do some VELO pairs like VELO/USDC and VELO/OP. (I am basing my information on this dune dashboard, Velodrome Finance On Optimism 4 ) To the questions: Both Synthetix and QiDAO have their own proposals and allocations for their tokens, and your proposal shows how the bribe economy is shaping up, but couldn’t the Velodrome incentives be directed to other uses, like a builders grant on top Velodrome? The bribe economy has shown itself to be very effective to attract TVL, looking at Defillama, Optimism holds a very different landscape if we see Volume/TVL metrics Optimism Volumes - DefiLlama 3 . How is the team thinking the competing dex landscape for Optimism specifically? Confirmation request, your proposal doesn’t include any provision for delegation and/or usage of the OP while it’s not being distributed. Would you consider any of them as possible? if so, please update the main post
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  • Ganc: These numbers for working out the ratio are misleading. 24hr volume varies massively on a day to day basis, for example if its a weekend, public holiday, and with market fluctations. The average daily volume over the last month for WETH/USDC for instance was $1,731,560. For OP/USDC it was $1,709,287. For LUSD/USDC it was $90,000 - which is 5x the number you are using. TVL per pair also varies on a day to day basis so to make a valid comparison you’d have to compare it with the average TVL. You can find historical TVL and volume data here: https://info.velodrome.finance/
  • alexcutlerdoteth: Netrim: Both Synthetix and QiDAO have their own proposals and allocations for their tokens, and your proposal shows how the bribe economy is shaping up, but couldn’t the Velodrome incentives be directed to other uses, like a builders grant on top Velodrome? A great question, ser. Because bribing on Velodrome helps to create a 30-70% reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant. It allows builders to save potentially millions a year in incentive costs, which they can reinvest in their own projects. And they can do this without having to go through some cumbersome process. It’s why we’ve been able to attract over 30 new projects to the network without builder grants (and most haven’t received OP grants either). Netrim: The bribe economy has shown itself to be very effective to attract TVL, looking at Defillama, Optimism holds a very different landscape if we see Volume/TVL metrics Optimism Volumes - DefiLlama. Volume comes with utility and activity. As of now, many of the projects that we’re helping to bootstrap are in their infancy on Optimism. They need some initial liquidity to support their operations, but they are not yet at sufficient maturity to expect their pairs to drive significant volume. That (of course) will come in time as their products are fully developed and more activity migrates to L2. Volume will come once these projects have matured and the ecosystem is booming. That is why it is so important for something like Velodrome to exist at this critical point in ecosystem development. Netrim: Confirmation request, your proposal doesn’t include any provision for delegation and/or usage of the OP while it’s not being distributed. Would you consider any of them as possible? if so, please update the main post We strongly believe protocols and builders need more representation in governance for the ecosystem to be successful. We are supportive of those who have suggested a consistent framework for self-delegation as a norm. That said, it has seemed like enough of a non-negotiable for some that we didn’t feel it was worth including. The most important thing to us at the moment is ensuring ecosystem growth can continue at pace and don’t want to distract from that.
• alexcutlerdoteth - No Role

  Oct. 21, 2022, 1:46 p.m.
  Jadmat: distributing $OP efficiently is the only way to generate organic and long-term growth … Jadmat: distributing $OP efficiently is the only way to generate organic and long-term growth This is exactly why we’ve documented just how overwhelming effective the distribution has been, returning to the broader ecosystem 2 x- 3 x the value of the grant itself while helping to onboard 30 + new projects, most of which haven’t received any funding through governance. Jadmat: seeing the performance of the rest before a second stage of grants is key; Given that demonstrated effectiveness, the only thing that delaying an extension of Velodrome incentives would achieve is massively slowing the current rate of ecosystem growth while making it harder for existing projects to operate. That is why we’ve got so much of the ecosystem, even those with long relationships with competitive DEX co-signing our proposal. Jadmat: Velodrome is in an ideal metric scenario in its sector; since Uniswap is just deciding how it will use the grant and Curve We have to keep in mind that battle isn’t between DEXs on Optimism, it is in their collective battle for attracting liquidity and builders from mainnet and alt L 1 s. We’ve been hugely successful in this. Incentives on Uniswap, Curve, Sushi, and Beethoven will have a role to play too, but the ecosystem shouldn’t wait on them to get the ball rolling – especially given they are not Optimism native and have competing priorities. Once all the programs are live, some comparative analysis would certainly be welcome, but I think that is all the more reason to keep the existing program running. Ending one before the others begin will not just make it harder for us to collectively attract liquidity from mainnet, but will make it harder to do 1 : 1 comparative analysis on efficacy.
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• Ganc - No Role

  Oct. 21, 2022, 1:54 p.m.
  These numbers for working out the ratio are misleading. 24 hr volume varies massively on a day to … These numbers for working out the ratio are misleading. 24 hr volume varies massively on a day to day basis, for example if its a weekend, public holiday, and with market fluctations. The average daily volume over the last month for WETH/USDC for instance was $ 1 , 731 , 560 . For OP/USDC it was $ 1 , 709 , 287 . For LUSD/USDC it was $ 90 , 000 - which is 5 x the number you are using. TVL per pair also varies on a day to day basis so to make a valid comparison you’d have to compare it with the average TVL. You can find historical TVL and volume data here: https://info.velodrome.finance/ 1
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• Netrim - No Role

  Oct. 21, 2022, 2:01 p.m.
  Hi Ganc, thanks for the internal page. I have updated the info and added 7 D volume, the proportio… Hi Ganc, thanks for the internal page. I have updated the info and added 7 D volume, the proportion and arguments stay the same even taking a longer time frame.
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• Ganc - No Role

  Oct. 21, 2022, 2:15 p.m.
  I do not understand your point really. If Optimism was a fully mature Layer 2 with high amounts o… I do not understand your point really. If Optimism was a fully mature Layer 2 with high amounts of pre-existing volume which Velodrome then plugged into, maybe it would be worthwhile looking at this ratio. However, when Optimism has zero existing volume or liquidity for these pairs, if not for the Velodrome pair existing, what are you comparing it with? Ethereum mainnet Dexes?
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  • Netrim: I am comparing ratio to ratio. It doesn’t matter where it’s happening since it’s a measure of usage and by being a percentage I can actually compare it against the other pairs
• alexcutlerdoteth - No Role

  Oct. 21, 2022, 2:22 p.m.
  Netrim: Both Synthetix and QiDAO have their own proposals and allocations for their tokens, an… Netrim: Both Synthetix and QiDAO have their own proposals and allocations for their tokens, and your proposal shows how the bribe economy is shaping up, but couldn’t the Velodrome incentives be directed to other uses, like a builders grant on top Velodrome? A great question, ser. Because bribing on Velodrome helps to create a 30 - 70 % reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant. It allows builders to save potentially millions a year in incentive costs, which they can reinvest in their own projects. And they can do this without having to go through some cumbersome process. It’s why we’ve been able to attract over 30 new projects to the network without builder grants (and most haven’t received OP grants either). Netrim: The bribe economy has shown itself to be very effective to attract TVL, looking at Defillama, Optimism holds a very different landscape if we see Volume/TVL metrics Optimism Volumes - DefiLlama. Volume comes with utility and activity. As of now, many of the projects that we’re helping to bootstrap are in their infancy on Optimism. They need some initial liquidity to support their operations, but they are not yet at sufficient maturity to expect their pairs to drive significant volume. That (of course) will come in time as their products are fully developed and more activity migrates to L 2 . Volume will come once these projects have matured and the ecosystem is booming. That is why it is so important for something like Velodrome to exist at this critical point in ecosystem development. Netrim: Confirmation request, your proposal doesn’t include any provision for delegation and/or usage of the OP while it’s not being distributed. Would you consider any of them as possible? if so, please update the main post We strongly believe protocols and builders need more representation in governance for the ecosystem to be successful. We are supportive of those who have suggested a consistent framework for self-delegation as a norm. That said, it has seemed like enough of a non-negotiable for some that we didn’t feel it was worth including. The most important thing to us at the moment is ensuring ecosystem growth can continue at pace and don’t want to distract from that.
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  • Netrim: As I have discussed with jack in some chats on the Optimism Discord, I feel like we need to move away from straight up liquidity mining incentives. alexcutlerdoteth: A great question, ser. Because bribing on Velodrome helps to create a 30-70% reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant. It allows builders to save potentially millions a year in incentive costs, which they can reinvest in their own projects. And they can do this without having to go through some cumbersome process. It’s why we’ve been able to attract over 30 new projects to the network without builder grants (and most haven’t received OP grants either). Having said that I feel like neither Synthetix nor QiDAO need the Velodrome bribes on top, since they have their own proposals and usage to be distributed. Couldn’t this part of bribes be directed to composability on top of Velodrome? A builder’s grant is much more than simply giving away incentives, for instance Interest Protocol had a solution for composability of OP that would let you keep your voting power even when using said OP. Having that sort of composability on top of Velodrome LPs would be great. alexcutlerdoteth: We strongly believe protocols and builders need more representation in governance for the ecosystem to be successful. We are supportive of those who have suggested a consistent framework for self-delegation as a norm. That said, it has seemed like enough of a non-negotiable for some that we didn’t feel it was worth including. The most important thing to us at the moment is ensuring ecosystem growth can continue at pace and don’t want to distract from that. I understand where you are coming from here and you guys need to pick your battles, but I still feel like it’s a missed opportunity to discuss this. As per the proposal this would run over 6 to 8 months, let’s settle on 6 months. 4M OP ~10% APY would give you ~1k OP per day, which could then be set aside to keep on growing even if the 4M start being distributed. On a very ideal scenario, Velodrome could amass their own self reliant OP stash to use and my own understand is that those could be used as the team/DAO (if applicable) see fit.
  • OPUser: alexcutlerdoteth: Because bribing on Velodrome helps to create a 30-70% reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant I want to understand your reply to Netrim’s comment, you are saying that bribing is effective which save money and hence could be consider as builders grant. right ? If that’s the case, would you consider allocating funds specifically to builders grant. tao: Regarding incentive efficiency, the protocols are deploying much higher incentives on Uni and Curve to attract that TVL than on Velodrome. Would it be possible to see this data on monthly basis too ? So far I am very skeptical of data presented here, I believe incentives are still going on which might be giving us artificial numbers, also would like to see the uses of veVelo lock(unfortunately, I am not comfortable with Dune query so I will ask around on dicord for help). If I remember correctly, only few protocol were able to sustain liquidity, I think Beefy is one of them, which is why I dont believe that spending again on LP reward would be a good use of fund. Few pairs I see on the list has their own incentives as pointed out by Netrim. One thing I would like to see is reward ratio, how much $OP was spend monthly with respect to revenue generated on the platform. tao: We’re a public good DEX I am really curious on this, how did you reach to this conclusion? do you have any literature or peer-reviewed journal to support your statement. Good to see the pro-activeness here in gathering early feedback.
  • alexcutlerdoteth: Good Morning Voting is coming up so we wanted to create a summary/guide of the discussion so far for those unable to parts through the record breaking 133 comments on the proposal. Overview Velodrome spent several weeks creating what is likely the detailed and evidenced proposal to be submitted to governance yet. If you have the time, please consider reading its in it’s entirety. Since it’s posting 12 days ago it has received 133 comments from 31 commentators: Positive Commentators: 17 (58%) Mixed Commentators: 5 (17%) Negative Commentators: 7 (24%) As you can see, there are more positive commentators than negative and mixed commentators combined. Though it may be hard to tell from differentials in the volume of post: 2.4x more commentators were positive than negative 100% of comments from builders were positive 43% of negative commentators were from new accounts Only 13% of positive comments were from new accounts Notable Positive Comments Since there are have been far more positive comments than negative ones on the proposal, we’ll start by highlighting a few positive ones that we think emphasize our impact well. You can also check out the testimonials we’ve collected from 10+ partners (and counting) on our Twitter. Aes: this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism. bebis: There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team. They’re on-boarding a ton of people the hard way - with actual customer/client services. They’re getting teams and users invested long-term in the ecosystem’s success. They’re the main Optimism point of contact if you’re a builder/developer. Their bribing system makes operations much lighter for small teams and startups. They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously. SethVdL: alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. I am not one for long winded governance debates and even knowingly sat out on the Overtime discussion even though I sit on the Thales Council … That being said, I feel compelled to point out this statement from Alex because I feel the Velodrome ROI is in a class of it’s own and I want voters to understand what’s at stake … the system is working and it’s currently providing multiple protocols the opportunity to have deep liquidity for a fraction of the cost elsewhere. An approved grant to velodrome is like granting the entire ecosystem imo… which is what we are set out to do. TokenBrice: We are currently leading various campaigns to sustain liquidity, whether on Curve, through Warden Bribes, or on Velodrome. In terms of the amount of liquidity sustained / $-invested, Velodrome is one to two orders of magnitude above the competition. …it is delivering beyond what was expected : the OP veVELO locking bonus is a key part of the equation - increasing the efficiency of the flywheel even further. Besides, it drives projects to lock VELO, which means they enter a long-term commitment with Velodrome and Optimism. states_of_nature1651: It seems like the main source of the criticisms is that the benefit for Optimism looks like this: Optimism should be looking to cultivate the presence of legacy mainnet protocols rather than supporting OP native upstarts with flashy marketing and distortive incentives. Supporting deep liquidity on known legacy protocols will be better for OP in the long run. Putting our thumb on the scale for Velodrome will prevent this needed development. I think this is a flawed argument based on the data provided and I don’t see how any other current ecosystem player will step in to fill the niche Velodrome is filling in the near term. This isn’t a knock on the legacy protocols. Onboarding a bunch of new protocols to Optimism makes no sense for them as a growth strategy. This shows up If you look at their grant proposals. They are looking to extend their current competitive advantage on mainnet to Optimism - not get into the business Velodrome is in. jornx: I’ve been a long time user of Optimism and I use it frequently since I do a lot of arbitrage and other trading strategies on here…Optimism was never that interesting because liquidity was very limited on the main DEX at that time (uniswap). When Velodrome was added and especially when the OP grant was liquidity boomed and there were a lot more projects with deep liquidity on Optimism.When I look at all the grants that have been given by OP in my opinion Velodrome must have been one of the most succesful, onboarding new users and creating more possibilities for the user on the network. Key Discussion Points While negative and mixed commenters have represented a minority of the total engagement on the proposal, questions and concerns they’ve raised have allowed us to discuss and clarify key points on our proposal. We provide a quick overview of some of the key questions raised and provide short summaries of our responses: Is Velodrome Asking for Too Large a Grant? TLDR: No. It is 90%+ smaller than the average grant by every KPI, offers a proven 2x-3x ROI, and comes with Velodrome offering $6.5mm in co-incentives (31x those of other DEXs combined). Likewise, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of grant funds. No alternative frameworks for grant size evaluation have been suggested or offered. Is The Lock Bonus An Appropriate Use of Funds? TLDR: Yes. The incentive flows to veTOKEN lockers consistent with other proposals such as Curve/Balancer and while drive similar second order effects that grow the ecosystem by multiples and reduce costs for the ecosystem. No data has been provided suggesting it has any meaningful impact on price. Would Builder Grants be Better? TLDR: No. Velodrome grants have brought 30+ new builders to the ecosystem by reducing their incentive costs by 20% - 70% while less accountable direct builder grants offered by other protocols have yet to demonstrate their efficacy. Is Velodrome Really Competitive with Curve and Uniswap? TLDR: Yes. Velodrome is more efficient in TVL/Volume / $ spent in incentives (lowering costs ecosystem wide). It also attracts similar levels of volume per dollar in TVL while simultaneously hosting 3.2x more ecosystem projects tokens than Uniswap and Curve combined. Should Velodrome Be Forced to Operate Without OP Incentives? TLDR: Velodrome has demonstrated the highest ROI in terms of ecosystem growth of any governance or partner fund grant to date. The primary impact of pulling back on incentives would be to slow or reverse that ecosystem growth while simultaneously continuing the flow of incentives to less effective programs on other DEXs making comparative evaluations of different programs more challenging. Incentives already represent a declining proportion of our total activity and we expect that to continue to shrink over the course of this grant. Does Granting Velodrome Harm Other DEXs? TLDR: Ecosystem native DEXs and multi-chain DEXs have different goals and incentives when it comes to growing Optimism and cannot be easily compared. Overall though, all should be evaluated / granted equally in terms of the growth multiple they can return and growing ecosystem activity will benefit all. Summary We hope you’ve found this summary helpful and will continue to add it if/when new topics are raised to make the overall thread a bit easier to navigate as we move into the voting page. Thank you for reading!
• OPUser - No Role

  Oct. 21, 2022, 2:34 p.m.
  Hi @tao , I am still going through couple of dashboard you have provided, do you have a dashboard w… Hi @tao , I am still going through couple of dashboard you have provided, do you have a dashboard where I can see total number of addresses participated in current/on-going veVelo lock reward program and number of $OP distributed to them ?
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  • tao: Yessir, you can find a historic breakdown here Velodrome $OP Airdrop ???
  • alexcutlerdoteth: This will also give you an idea of the growth in holders during the duration of the program. dune.com Velodrome Finance $VELO Holders Over Time Blockchain ecosystem analytics by and for the community. Explore and share data from Ethereum, xDai, Polygon, Optimism, BSC and Solana for free.
• tao - No Role

  Oct. 21, 2022, 2:35 p.m.
  Hi OPGovWatch, Great analysis on the number of pools. We see onboarding protocols as our bread and … Hi OPGovWatch, Great analysis on the number of pools. We see onboarding protocols as our bread and butter. Regarding incentive efficiency, the protocols are deploying much higher incentives on Uni and Curve to attract that TVL than on Velodrome. When you compare TVL per $ of incentives, you get some remarkable results. Thales is getting 2 . 8 x TVL per $ of incentives on Velodrome vs Uni and 6 . 6 x the volume per $ incentive! While Lyra is basically getting all their liquidity for free using the airdropped veVELO we gave them at launch: Screen Shot 2022 - 10 - 21 at 13 . 26 . 251920 × 612 86 . 7 KB Note that Thales, Lyra, and Synthetix all have veVELO votepower we airdropped to them, which they’ve been using to vote on their pools and automatically get a rebate for any bribes they deposit. For sETH and sUSD liquidity, the results also speak for themselves: Screen Shot 2022 - 10 - 21 at 13 . 26 . 061920 × 590 88 . 2 KB
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  • OPGovWatch: This data is quite interesting. Thank you. You are right that it appears it is just because they overpay. Can you tell me why you think the Solidly approach is working on Optimism? It seems most other versions have not been as successful.
  • OPUser: alexcutlerdoteth: Because bribing on Velodrome helps to create a 30-70% reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant I want to understand your reply to Netrim’s comment, you are saying that bribing is effective which save money and hence could be consider as builders grant. right ? If that’s the case, would you consider allocating funds specifically to builders grant. tao: Regarding incentive efficiency, the protocols are deploying much higher incentives on Uni and Curve to attract that TVL than on Velodrome. Would it be possible to see this data on monthly basis too ? So far I am very skeptical of data presented here, I believe incentives are still going on which might be giving us artificial numbers, also would like to see the uses of veVelo lock(unfortunately, I am not comfortable with Dune query so I will ask around on dicord for help). If I remember correctly, only few protocol were able to sustain liquidity, I think Beefy is one of them, which is why I dont believe that spending again on LP reward would be a good use of fund. Few pairs I see on the list has their own incentives as pointed out by Netrim. One thing I would like to see is reward ratio, how much $OP was spend monthly with respect to revenue generated on the platform. tao: We’re a public good DEX I am really curious on this, how did you reach to this conclusion? do you have any literature or peer-reviewed journal to support your statement. Good to see the pro-activeness here in gathering early feedback.
• tao - No Role

  Oct. 21, 2022, 2:38 p.m.
  Yessir, you can find a historic breakdown here Velodrome $OP Airdrop ??? Yessir, you can find a historic breakdown here Velodrome $OP Airdrop ???
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• alexcutlerdoteth - No Role

  Oct. 21, 2022, 2:39 p.m.
  This will also give you an idea of the growth in holders during the duration of the program. Scree… This will also give you an idea of the growth in holders during the duration of the program. Screen Shot 2022 - 10 - 21 at 1 . 37 . 00 PM 1146 × 724 114 KB Screen Shot 2022 - 10 - 21 at 1 . 37 . 09 PM 1142 × 754 115 KB dune.com Velodrome Finance $VELO Holders Over Time Blockchain ecosystem analytics by and for the community. Explore and share data from Ethereum, xDai, Polygon, Optimism, BSC and Solana for free.
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• OPGovWatch - No Role

  Oct. 21, 2022, 3:13 p.m.
  Hello Tao - I enjoyed reading your proposal. It answered many of my questions before I asked them a… Hello Tao - I enjoyed reading your proposal. It answered many of my questions before I asked them and I appreciated all the data. I wanted to check DEX stats one way you did not mention, looking at how many projects they each support. My filter is they must have at least $ 100 , 000 in liquidity on tokens be valid. Here is what I found: Uniswap: 9 projects, 6 if you filter out ETH/OP/USDC Beethoven: 7 projects, 4 if you filter out ETH/USDC/USDT Curve: 6 projects, 4 if you filter out USDC/USDT Velodrome: 29 projects, 26 if you filter out OP/USDC/ETH This does seem to validate your claim that you have a unique claim on growing and supporting the ecosystem. I was actually quite surprised how limited an impact the others have. I did have one question. If Velodrome is more efficient as you claim, then why is liquidity deeper on tokens like Lyra and Thales on Uniswap and sUSD and sETH on Curve? Doesn’t that suggest it is less efficient for those tokens?
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  • tao: Hi OPGovWatch, Great analysis on the number of pools. We see onboarding protocols as our bread and butter. Regarding incentive efficiency, the protocols are deploying much higher incentives on Uni and Curve to attract that TVL than on Velodrome. When you compare TVL per $ of incentives, you get some remarkable results. Thales is getting 2.8x TVL per $ of incentives on Velodrome vs Uni and 6.6x the volume per $ incentive! While Lyra is basically getting all their liquidity for free using the airdropped veVELO we gave them at launch: Note that Thales, Lyra, and Synthetix all have veVELO votepower we airdropped to them, which they’ve been using to vote on their pools and automatically get a rebate for any bribes they deposit. For sETH and sUSD liquidity, the results also speak for themselves:
• OPGovWatch - No Role

  Oct. 21, 2022, 3:58 p.m.
  This data is quite interesting. Thank you. You are right that it appears it is just because they ov… This data is quite interesting. Thank you. You are right that it appears it is just because they overpay. Can you tell me why you think the Solidly approach is working on Optimism? It seems most other versions have not been as successful.
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• Netrim - No Role

  Oct. 21, 2022, 4:35 p.m.
  I am comparing ratio to ratio. It doesn’t matter where it’s happening since it’s a measure of usage… I am comparing ratio to ratio. It doesn’t matter where it’s happening since it’s a measure of usage and by being a percentage I can actually compare it against the other pairs
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• Benjamin.lens - No Role

  Oct. 21, 2022, 5:48 p.m.
  very thorough proposal. Definitely appreciate the effort that went into creating this! Under curren… very thorough proposal. Definitely appreciate the effort that went into creating this! Under current market conditions, more OP is of course necessary to continuing a profitable bribing ecosystem. That’s just the market we’re in. And Optimism should support Velodrome, as it’s one of the most recognizable success stories of Optimism. I’m glad the Velodrome team is looking at volume/TVL in pairs while building their “key pairs”. Shows that they’re not leaning on preconceptions and are analyzing their DEX seriously. If I were a competitor DEX, I would perhaps have some reservations. Would love to see other DEXs comment on this proposal.
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• OPUser - No Role

  Oct. 21, 2022, 6:34 p.m.
  Hi @tao , I am still going through couple of dashboard you have provided, do you have a dashboard w… Hi @tao , I am still going through couple of dashboard you have provided, do you have a dashboard where I can see total number of addresses participated in current/on-going veVelo lock reward program and number of $OP distributed to them ?
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  • tao: Yessir, you can find a historic breakdown here Velodrome $OP Airdrop ???
  • alexcutlerdoteth: This will also give you an idea of the growth in holders during the duration of the program. dune.com Velodrome Finance $VELO Holders Over Time Blockchain ecosystem analytics by and for the community. Explore and share data from Ethereum, xDai, Polygon, Optimism, BSC and Solana for free.
• tao - No Role

  Oct. 21, 2022, 6:35 p.m.
  Hi OPGovWatch, Great analysis on the number of pools. We see onboarding protocols as our bread and … Hi OPGovWatch, Great analysis on the number of pools. We see onboarding protocols as our bread and butter. Regarding incentive efficiency, the protocols are deploying much higher incentives on Uni and Curve to attract that TVL than on Velodrome. When you compare TVL per $ of incentives, you get some remarkable results. Thales is getting 2 . 8 x TVL per $ of incentives on Velodrome vs Uni and 6 . 6 x the volume per $ incentive! While Lyra is basically getting all their liquidity for free using the airdropped veVELO we gave them at launch: Screen Shot 2022 - 10 - 21 at 13 . 26 . 251920 × 612 86 . 7 KB Note that Thales, Lyra, and Synthetix all have veVELO votepower we airdropped to them, which they’ve been using to vote on their pools and automatically get a rebate for any bribes they deposit. For sETH and sUSD liquidity, the results also speak for themselves: Screen Shot 2022 - 10 - 21 at 13 . 26 . 061920 × 590 88 . 2 KB
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  • OPGovWatch: This data is quite interesting. Thank you. You are right that it appears it is just because they overpay. Can you tell me why you think the Solidly approach is working on Optimism? It seems most other versions have not been as successful.
  • OPUser: alexcutlerdoteth: Because bribing on Velodrome helps to create a 30-70% reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant I want to understand your reply to Netrim’s comment, you are saying that bribing is effective which save money and hence could be consider as builders grant. right ? If that’s the case, would you consider allocating funds specifically to builders grant. tao: Regarding incentive efficiency, the protocols are deploying much higher incentives on Uni and Curve to attract that TVL than on Velodrome. Would it be possible to see this data on monthly basis too ? So far I am very skeptical of data presented here, I believe incentives are still going on which might be giving us artificial numbers, also would like to see the uses of veVelo lock(unfortunately, I am not comfortable with Dune query so I will ask around on dicord for help). If I remember correctly, only few protocol were able to sustain liquidity, I think Beefy is one of them, which is why I dont believe that spending again on LP reward would be a good use of fund. Few pairs I see on the list has their own incentives as pointed out by Netrim. One thing I would like to see is reward ratio, how much $OP was spend monthly with respect to revenue generated on the platform. tao: We’re a public good DEX I am really curious on this, how did you reach to this conclusion? do you have any literature or peer-reviewed journal to support your statement. Good to see the pro-activeness here in gathering early feedback.
• tao - No Role

  Oct. 21, 2022, 6:38 p.m.
  Yessir, you can find a historic breakdown here Velodrome $OP Airdrop ??? 9 Yessir, you can find a historic breakdown here Velodrome $OP Airdrop ??? 9
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• alexcutlerdoteth - No Role

  Oct. 21, 2022, 6:39 p.m.
  This will also give you an idea of the growth in holders during the duration of the program. Scree… This will also give you an idea of the growth in holders during the duration of the program. Screen Shot 2022 - 10 - 21 at 1 . 37 . 00 PM 1146 × 724 114 KB Screen Shot 2022 - 10 - 21 at 1 . 37 . 09 PM 1142 × 754 115 KB dune.com Velodrome Finance $VELO Holders Over Time 2 Blockchain ecosystem analytics by and for the community. Explore and share data from Ethereum, xDai, Polygon, Optimism, BSC and Solana for free.
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• Netrim - No Role

  Oct. 21, 2022, 7:42 p.m.
  As I have discussed with jack in some chats on the Optimism Discord, I feel like we need to move aw… As I have discussed with jack in some chats on the Optimism Discord, I feel like we need to move away from straight up liquidity mining incentives. alexcutlerdoteth: A great question, ser. Because bribing on Velodrome helps to create a 30 - 70 % reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant. It allows builders to save potentially millions a year in incentive costs, which they can reinvest in their own projects. And they can do this without having to go through some cumbersome process. It’s why we’ve been able to attract over 30 new projects to the network without builder grants (and most haven’t received OP grants either). Having said that I feel like neither Synthetix nor QiDAO need the Velodrome bribes on top, since they have their own proposals and usage to be distributed. Couldn’t this part of bribes be directed to composability on top of Velodrome? A builder’s grant is much more than simply giving away incentives, for instance Interest Protocol had a solution for composability of OP that would let you keep your voting power even when using said OP. Having that sort of composability on top of Velodrome LPs would be great. alexcutlerdoteth: We strongly believe protocols and builders need more representation in governance for the ecosystem to be successful. We are supportive of those who have suggested a consistent framework for self-delegation as a norm. That said, it has seemed like enough of a non-negotiable for some that we didn’t feel it was worth including. The most important thing to us at the moment is ensuring ecosystem growth can continue at pace and don’t want to distract from that. I understand where you are coming from here and you guys need to pick your battles, but I still feel like it’s a missed opportunity to discuss this. As per the proposal this would run over 6 to 8 months, let’s settle on 6 months. 4 M OP ~ 10 % APY would give you ~ 1 k OP per day, which could then be set aside to keep on growing even if the 4 M start being distributed. On a very ideal scenario, Velodrome could amass their own self reliant OP stash to use and my own understand is that those could be used as the team/DAO (if applicable) see fit.
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  • alexcutlerdoteth: Netrim: On a very ideal scenario, Velodrome could amass their own self reliant OP stash to use and my own understand is that those could be used as the team/DAO (if applicable) see fit. These are very interesting ideas, ser. I would love to explore them, but simply do not see any way to do so without putting the proposal at risk given the conversation around this topic so far. I think it’s probably best to discuss in the period between seasons (when no proposals will be live) to see if we can get guidance from the Foundation for a universal solution that can benefit all protocols equally. I hear they may be working on something already. Netrim: I feel like we need to move away from straight up liquidity mining incentives. Exactly right. VELO emissions to boosted pools will represent a 1.6x multiple on the underlying value of the grant alone. This will reduce the need to lean on direct OP grants alone to incentivize liquidity and help the grant programs sustain for a longer period. Netrim: Having said that I feel like neither Synthetix nor QiDAO need the Velodrome bribes on top, since they have their own proposals and usage to be distributed. Couldn’t this part of bribes be directed to composability on top of Velodrome? Are you talking about bribe matching in their cases or treating their pools as “public goods”? Netrim: Having that sort of composability on top of Velodrome LPs would be great. Again, I think we’re already seeing a ton of composability on Velodrome without needing to offer targeted grants to create it. Every incentive we offer is (in many ways) a builder grant. In fact, I would guess that after Synthetix we are probably the most built upon protocol on Optimism at the moment. My opinion is that it is much more equitable efficient to do this by reducing costs universally to protocols versus issuing prescriptive / restrictive grants. I’m also skeptical that we have seen any real results from any protocols who included “builder grants” as part of their requests, though maybe @jackanorak would know.
• OPGovWatch - No Role

  Oct. 21, 2022, 7:58 p.m.
  This data is quite interesting. Thank you. You are right that it appears it is just because they ov… This data is quite interesting. Thank you. You are right that it appears it is just because they overpay. Can you tell me why you think the Solidly approach is working on Optimism? It seems most other versions have not been as successful.
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• Benjamin.lens - No Role

  Oct. 21, 2022, 9:48 p.m.
  very thorough proposal. Definitely appreciate the effort that went into creating this! Under curren… very thorough proposal. Definitely appreciate the effort that went into creating this! Under current market conditions, more OP is of course necessary to continuing a profitable bribing ecosystem. That’s just the market we’re in. And Optimism should support Velodrome, as it’s one of the most recognizable success stories of Optimism. I’m glad the Velodrome team is looking at volume/TVL in pairs while building their “key pairs”. Shows that they’re not leaning on preconceptions and are analyzing their DEX seriously. If I were a competitor DEX, I would perhaps have some reservations. Would love to see other DEXs comment on this proposal.
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• Mingyue - No Role

  Oct. 21, 2022, 11:17 p.m.
  It is of great significance to grant more op to native optimism protocols(i.e.Velodrome) rather tha… It is of great significance to grant more op to native optimism protocols(i.e.Velodrome) rather than those mutichain projects such as uniswap and curve.Uniswap and curve’s boom will do very little help to optimism’s prosperous,and,their TVL is also not steady,that is to say when op grants over,those TVL would more probably move to other chains(Arbitrum,Zksync,and many other new chains) in lack of enough incentives.Only native protocol can help optimism’s big prosperous in bull market and grow up in bear market.
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  • 0xkmack.lens: Mingyue: It is of great significance to grant more op to native optimism protocols(i.e.Velodrome) rather than those mutichain projects such as uniswap and curve.Uniswap and curve’s boom will do very little help to optimism’s prosperous,and,their TVL is also not steady,that is to say when op grants over,those TVL would more probably move to other chains(Arbitrum,Zksync,and many other new chains) in lack of enough incentives.Only native protocol can help optimism’s big prosperous in bull market and grow up in bear market. I am with Revest Finance . This about sums up my thoughts on this as well ^^. Velodrome incentivizes liquidity to remain on Optimism as they have clearly shown throughout the first grant - on top of that they have provided sound data that shows the ROI back to the Optimism Chain. Outside of this, in my personal dealings with the Velo team, they are amazing ambassadors for the Optimism Chain - whether it be advice on Op Governance for their (many, many) partners or brainstorming very innovative and creative strategies to lock liquidity on Optimism for the long term. This proposal is well thought out and back up data provided - fundamentals are all there as well - should be a no brainer to pass this in my opinion - will definitely be keeping an eye on how this plays out!
  • OPGovWatch: Mingyue: It is of great significance to grant more op to native optimism protocols(i.e.Velodrome) rather than those mutichain projects such as uniswap and curve. I believe Optimism governance is right to support multiple DEXs for a healthy ecosystem early on. As I see it now, grants are going to Uniswap, Curve, Beethoven, Sushi, Zipswap, and Velodrome. They each have different strengths and weaknesses. Some are offering more investment in Optimism and some less. Everyone is proposing plans for incentives that are different in approach. This is a good thing. We should give them all a chance to grow the ecosystem so we can see what works best. Velodrome seems to be working well. If other DEX incentives work well too we can support the extension of them as well. This not zero sum, multiple strong DEXs on Optimism is good for all. More liquidity and volume is needed.
  • SonneFinance: There are too many valuable comments here, but as Sonne Finance, we want to add what we think about the proposal and Velodrome in general. While it’s very important to investigate as deep as possible, it sometimes might lead to missing the bigger picture. Firstly, Velodrome is the point of contact for new projects. There is no better place to launch a project, while incentivizing liquidity. One of the main reasons of our launch on Optimism was Velodrome. Mingyue: It is of great significance to grant more op to native optimism protocols(i.e.Velodrome) rather than those mutichain projects such as uniswap and curve.Uniswap and curve’s boom will do very little help to optimism’s prosperous,and,their TVL is also not steady,that is to say when op grants over,those TVL would more probably move to other chains(Arbitrum,Zksync,and many other new chains) in lack of enough incentives.Only native protocol can help optimism’s big prosperous in bull market and grow up in bear market. Secondly, Velodrome is one of the few native projects out there having success on Optimism. We saw what happened when OP incentives are gone from non-native protocol: People simply farmed OP rewards, dumped them and leave. Total market size of AAVE dropped from $1.4B to $400m in just under a week. But anything Velodrome spends, is almost guaranteed to stay in the ecosystem: Lock bonus: Users have to lock veVELO for 4 years in order to get an OP bonus. They have to stay 4 years in Optimism ecosystem. Bribe matches: Another project have to put skin in the game in order to have this boost. And for that, that project needs to focus and compete with others in Optimism ecosystem, which creates a positive feedback loop for whole ecosystem. It incentivizes both project launches on Optimism and having deeper liquidity. Key Pairs: That’s where we are skeptical at, we don’t believe further incentivization of key pairs should be there. And it creates unfair advantage to some projects. Or we can argue that Sonne should be a key pair too, but it would create unfair advantage for us as well. We believe that the success of Velodrome, will lead to success of Optimism ecosystem in general. Though we have some suggestions: Decrease 1.5M Locking incentives to 750k. While it might be helpful for new users to explore Optimism ecosystem through Velodrome, spending 1.5M OP to incentivize locking VELO is a bit too much. Key ecosystem pairs incentivization might not be fair for all. OP/USDC and wETH/USDC deep liquidity is important to have on-chain, but we believe other incentivizations are not necessary. Competition is what keeps action alive, and that suggestion is against fair competition. We believe that wBTC/USDC pair for example is far more important than other pairs right now. It might be decreased to 500k OP, and only for wETH, OP and wBTC against USDC or in between. Other than that, as Sonne Finance, we hope that the proposal passes. Velodrome is playing a huge part on Optimism’s success, and we believe that it will continue to do so in the future as well.
• Netrim - No Role

  Oct. 21, 2022, 11:42 p.m.
  As I have discussed with jack in some chats on the Optimism Discord, I feel like we need to move aw… As I have discussed with jack in some chats on the Optimism Discord, I feel like we need to move away from straight up liquidity mining incentives. alexcutlerdoteth: A great question, ser. Because bribing on Velodrome helps to create a 30 - 70 % reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant. It allows builders to save potentially millions a year in incentive costs, which they can reinvest in their own projects. And they can do this without having to go through some cumbersome process. It’s why we’ve been able to attract over 30 new projects to the network without builder grants (and most haven’t received OP grants either). Having said that I feel like neither Synthetix nor QiDAO need the Velodrome bribes on top, since they have their own proposals and usage to be distributed. Couldn’t this part of bribes be directed to composability on top of Velodrome? A builder’s grant is much more than simply giving away incentives, for instance Interest Protocol had a solution for composability of OP that would let you keep your voting power even when using said OP. Having that sort of composability on top of Velodrome LPs would be great. alexcutlerdoteth: We strongly believe protocols and builders need more representation in governance for the ecosystem to be successful. We are supportive of those who have suggested a consistent framework for self-delegation as a norm. That said, it has seemed like enough of a non-negotiable for some that we didn’t feel it was worth including. The most important thing to us at the moment is ensuring ecosystem growth can continue at pace and don’t want to distract from that. I understand where you are coming from here and you guys need to pick your battles, but I still feel like it’s a missed opportunity to discuss this. As per the proposal this would run over 6 to 8 months, let’s settle on 6 months. 4 M OP ~ 10 % APY would give you ~ 1 k OP per day, which could then be set aside to keep on growing even if the 4 M start being distributed. On a very ideal scenario, Velodrome could amass their own self reliant OP stash to use and my own understand is that those could be used as the team/DAO (if applicable) see fit.
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  • alexcutlerdoteth: Netrim: On a very ideal scenario, Velodrome could amass their own self reliant OP stash to use and my own understand is that those could be used as the team/DAO (if applicable) see fit. These are very interesting ideas, ser. I would love to explore them, but simply do not see any way to do so without putting the proposal at risk given the conversation around this topic so far. I think it’s probably best to discuss in the period between seasons (when no proposals will be live) to see if we can get guidance from the Foundation for a universal solution that can benefit all protocols equally. I hear they may be working on something already. Netrim: I feel like we need to move away from straight up liquidity mining incentives. Exactly right. VELO emissions to boosted pools will represent a 1.6x multiple on the underlying value of the grant alone. This will reduce the need to lean on direct OP grants alone to incentivize liquidity and help the grant programs sustain for a longer period. Netrim: Having said that I feel like neither Synthetix nor QiDAO need the Velodrome bribes on top, since they have their own proposals and usage to be distributed. Couldn’t this part of bribes be directed to composability on top of Velodrome? Are you talking about bribe matching in their cases or treating their pools as “public goods”? Netrim: Having that sort of composability on top of Velodrome LPs would be great. Again, I think we’re already seeing a ton of composability on Velodrome without needing to offer targeted grants to create it. Every incentive we offer is (in many ways) a builder grant. In fact, I would guess that after Synthetix we are probably the most built upon protocol on Optimism at the moment. My opinion is that it is much more equitable efficient to do this by reducing costs universally to protocols versus issuing prescriptive / restrictive grants. I’m also skeptical that we have seen any real results from any protocols who included “builder grants” as part of their requests, though maybe @jackanorak would know.
• Mingyue - No Role

  Oct. 22, 2022, 3:17 a.m.
  It is of great significance to grant more op to native optimism protocols(i.e.Velodrome) rather tha… It is of great significance to grant more op to native optimism protocols(i.e.Velodrome) rather than those mutichain projects such as uniswap and curve.Uniswap and curve’s boom will do very little help to optimism’s prosperous,and,their TVL is also not steady,that is to say when op grants over,those TVL would more probably move to other chains(Arbitrum,Zksync,and many other new chains) in lack of enough incentives.Only native protocol can help optimism’s big prosperous in bull market and grow up in bear market.
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  • 0xkmack.lens: Mingyue: It is of great significance to grant more op to native optimism protocols(i.e.Velodrome) rather than those mutichain projects such as uniswap and curve.Uniswap and curve’s boom will do very little help to optimism’s prosperous,and,their TVL is also not steady,that is to say when op grants over,those TVL would more probably move to other chains(Arbitrum,Zksync,and many other new chains) in lack of enough incentives.Only native protocol can help optimism’s big prosperous in bull market and grow up in bear market. I am with Revest Finance . This about sums up my thoughts on this as well ^^. Velodrome incentivizes liquidity to remain on Optimism as they have clearly shown throughout the first grant - on top of that they have provided sound data that shows the ROI back to the Optimism Chain. Outside of this, in my personal dealings with the Velo team, they are amazing ambassadors for the Optimism Chain - whether it be advice on Op Governance for their (many, many) partners or brainstorming very innovative and creative strategies to lock liquidity on Optimism for the long term. This proposal is well thought out and back up data provided - fundamentals are all there as well - should be a no brainer to pass this in my opinion - will definitely be keeping an eye on how this plays out!
  • OPGovWatch: Mingyue: It is of great significance to grant more op to native optimism protocols(i.e.Velodrome) rather than those mutichain projects such as uniswap and curve. I believe Optimism governance is right to support multiple DEXs for a healthy ecosystem early on. As I see it now, grants are going to Uniswap, Curve, Beethoven, Sushi, Zipswap, and Velodrome. They each have different strengths and weaknesses. Some are offering more investment in Optimism and some less. Everyone is proposing plans for incentives that are different in approach. This is a good thing. We should give them all a chance to grow the ecosystem so we can see what works best. Velodrome seems to be working well. If other DEX incentives work well too we can support the extension of them as well. This not zero sum, multiple strong DEXs on Optimism is good for all. More liquidity and volume is needed.
  • SonneFinance: There are too many valuable comments here, but as Sonne Finance, we want to add what we think about the proposal and Velodrome in general. While it’s very important to investigate as deep as possible, it sometimes might lead to missing the bigger picture. Firstly, Velodrome is the point of contact for new projects. There is no better place to launch a project, while incentivizing liquidity. One of the main reasons of our launch on Optimism was Velodrome. Mingyue: It is of great significance to grant more op to native optimism protocols(i.e.Velodrome) rather than those mutichain projects such as uniswap and curve.Uniswap and curve’s boom will do very little help to optimism’s prosperous,and,their TVL is also not steady,that is to say when op grants over,those TVL would more probably move to other chains(Arbitrum,Zksync,and many other new chains) in lack of enough incentives.Only native protocol can help optimism’s big prosperous in bull market and grow up in bear market. Secondly, Velodrome is one of the few native projects out there having success on Optimism. We saw what happened when OP incentives are gone from non-native protocol: People simply farmed OP rewards, dumped them and leave. Total market size of AAVE dropped from $1.4B to $400m in just under a week. But anything Velodrome spends, is almost guaranteed to stay in the ecosystem: Lock bonus: Users have to lock veVELO for 4 years in order to get an OP bonus. They have to stay 4 years in Optimism ecosystem. Bribe matches: Another project have to put skin in the game in order to have this boost. And for that, that project needs to focus and compete with others in Optimism ecosystem, which creates a positive feedback loop for whole ecosystem. It incentivizes both project launches on Optimism and having deeper liquidity. Key Pairs: That’s where we are skeptical at, we don’t believe further incentivization of key pairs should be there. And it creates unfair advantage to some projects. Or we can argue that Sonne should be a key pair too, but it would create unfair advantage for us as well. We believe that the success of Velodrome, will lead to success of Optimism ecosystem in general. Though we have some suggestions: Decrease 1.5M Locking incentives to 750k. While it might be helpful for new users to explore Optimism ecosystem through Velodrome, spending 1.5M OP to incentivize locking VELO is a bit too much. Key ecosystem pairs incentivization might not be fair for all. OP/USDC and wETH/USDC deep liquidity is important to have on-chain, but we believe other incentivizations are not necessary. Competition is what keeps action alive, and that suggestion is against fair competition. We believe that wBTC/USDC pair for example is far more important than other pairs right now. It might be decreased to 500k OP, and only for wETH, OP and wBTC against USDC or in between. Other than that, as Sonne Finance, we hope that the proposal passes. Velodrome is playing a huge part on Optimism’s success, and we believe that it will continue to do so in the future as well.
• Mingyue - No Role

  Oct. 22, 2022, 3:25 a.m.
  And I think,@Netrim looks like seeking fault on purpose :face_in_clouds: And I think,@Netrim looks like seeking fault on purpose :face_in_clouds:
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• Ngoc - No Role

  Oct. 22, 2022, 9:54 a.m.
  I agree @Mingyue . This 257 M Velo will diluted to market putting sell pressure on Velo. We need $… I agree @Mingyue . This 257 M Velo will diluted to market putting sell pressure on Velo. We need $OP to motivate protocol and users to buy and lock those token by giving them $OP incentives. Over the next 6 months, Velodrome will distribute ~ 257 M VELO 15 , 520 , 816 $VELO vesting for 12 months, 6 -month lock in a $veVELO followed by a linear 6 -month unlock period. 0 . 5 % of total emissions, taken from emissions to treasury, will be added to this bucket for dilution control. Velo is 6 months old now. As team token are started to dilute now, velo price going down is not good for Optimism ecosystem.
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• 0xkmack.lens - No Role

  Oct. 22, 2022, 11:27 a.m.
  Mingyue: It is of great significance to grant more op to native optimism protocols(i.e.Velodro… Mingyue: It is of great significance to grant more op to native optimism protocols(i.e.Velodrome) rather than those mutichain projects such as uniswap and curve.Uniswap and curve’s boom will do very little help to optimism’s prosperous,and,their TVL is also not steady,that is to say when op grants over,those TVL would more probably move to other chains(Arbitrum,Zksync,and many other new chains) in lack of enough incentives.Only native protocol can help optimism’s big prosperous in bull market and grow up in bear market. I am with Revest Finance . This about sums up my thoughts on this as well ^^. Velodrome incentivizes liquidity to remain on Optimism as they have clearly shown throughout the first grant - on top of that they have provided sound data that shows the ROI back to the Optimism Chain. Outside of this, in my personal dealings with the Velo team, they are amazing ambassadors for the Optimism Chain - whether it be advice on Op Governance for their (many, many) partners or brainstorming very innovative and creative strategies to lock liquidity on Optimism for the long term. This proposal is well thought out and back up data provided - fundamentals are all there as well - should be a no brainer to pass this in my opinion - will definitely be keeping an eye on how this plays out!
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  • FilterBySpam: Hey @0xkmack.lens @Mingyue , thank you productive response backed by on-chain data. Could not agree more with you, we should support Velodrome as an Optimism native project and not support those multichain projects. What they have to offer, nothing. For example. AAVE got 5M $OP as incentives and did not even force any user or protocol to buy their native token to get the $OP reward. Shame. What kind of marketing is this? And on top of that, they only manage to push their TVL to 600M and now its down to whopping 400M. And its seems their liquidity is not moving much. This is clear, we should not support AAVE as multichain project. Same with Uniswap, they didnt even start their incentives even after getting the fund, its been 4 months. This does not look good, we should ask why?. They are not trying to spend their incentives in hurry to bring liquidity. This raises a question on their long term vision. And you know what, they are also asking for community feedback on their funding distribution, why to do this when selected few team members are capable of deciding how to spend the incentives on behalf of “community” Uniswap Governance – 6 Oct 22 [RFC] The Optimism-Uniswap Protocol Liquidity Mining Program As part of Phase 0 of Optimism’s Governance Fund, the Uniswap Protocol received 1M $OP tokens to incentivize future growth within the Optimism ecosystem. On behalf of the Uniswap Grants Program, Ken Ng submitted a proposal to use 20% of the... Reading time: 6 mins ? Likes: 38 ❤ And look at their daily volume on Optimims. Just 36M, this in unacceptable from a multi-chain project. They dont deserve any OP incentives. https ://dune(dot)com/msilb7/Uniswap-v3-Usage-Comparison-on-Ethereum-vs-Optimism-(OVM-2.0) just look at their trade per day, 70K transaction. Totally unacceptable. and how can we forget Curve. Have you look at their logo, seems like a kindergarten drawing. While their TVL is close to 6B in this market, TVL on Optimism is very low. Without any incentives from Optimism, they are not able to move beyond 50M. I heard that reward for bribe will happen on Optimism chain with help of Votium, this is evident that they are not willing to work with Optimism. We dontneed time tested and widely used multichain protocol when we have a native forked protocol from another ghost chain. Thank you for your contribution. We need more un-biased opinion like yours. Appreciate it.
• Ardordo - No Role

  Oct. 22, 2022, 12:13 p.m.
  I have mostly just lurked around the OP governance, but wanted to comment/ask additional informatio… I have mostly just lurked around the OP governance, but wanted to comment/ask additional information about this proposal and thus I am a new user here. First, the data is great, but I feel some of it is a bit skewed. For example, do I understand correctly, that in the following paragraph Velodrome metrics are being mostly compared to projects without prior incentives? If so, then this comparison seems pretty unfair, since Velodrome’s metrics are obviously pumped up with the existing grant. "Number of OP Tokens Requested: 4 , 000 , 000 OP 98 % less than average OP granted per $ in TVL 80 % less than median OP granted per $ in TVL 98 % less than average OP granted per $ in Volume 65 % less than median OP granted per $ in Volume 98 % less than average OP granted per transaction 86 % less than the median OP granted per transaction 91 % less than the average OP granted per user 51 % less than the median OP granted per user" Additionally, I see great emphasis put on TVL, Volume and # of transactions. TVL is obviously buffed up with the first grant and Volume and # of transactions is pretty much an automatic product of the TVL and low fees of the protocol, but that does not describe how sustainable the model itself is. Maybe you are able to provide information such as protocol revenue (or fees earned) per OP used? Even better if that could be provided in comparison to other DEX projects that have had successful grants. That would be great information to show that what you are building is sustainable (or at least more sustainable than other DEX projects that are/have been applying for grants). All in all, I am wary that most of the data shown in this proposal and current success of the project is mostly based on the first grant and unsustainable in the long-run. Information that proves otherwise would be much appreciated and well received.
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  • Ardordo: I believe my post was somewhat buried due to the proposal having issues with being closed. Still very interested knowing an approximate value of average revenue Velodrome has earned in comparison of the value of the OP tokens used during the first grant. I understand the tokens were used in multiple different ways, but it would still give a rough estimate to figuring out how sustainable the model is.
  • alexcutlerdoteth: Apologies for missing this. @tao is pulling together more detailed numbers for you, but wanted to be clear on one point. Ardordo: do I understand correctly, that in the following paragraph Velodrome metrics are being mostly compared to projects without prior incentives? This analysis is based all projects that have received grants, with just a few included from the last cycle who are in the process of receiving grants. That means those incentives are controlled for in these numbers. The rather shocking disparity here is truly rooted in Velodrome driving massive output across every KPI.
  • alexcutlerdoteth: Ardordo: Maybe I am mistaken, but isn’t the price action of VELO actually heavily influenced by the locking bonuses via the airdrop campaign? Yes, the data I shared above would suggest you are indeed mistaken. But, here let’s take a look at it again with your frame. Ardordo: 08/7 – it was announced that Velodrome received the grant, start of the price increase 13/7 to 27/7 – heavy campaign of the OP airdrop 29/7 – hype from the campaign ended, followed by heavy price decrease Seems vaguely plausible right? The problem is that is the SNX chart, not VELO. And if you look at Thales, Lyra, or almost any ecosystem token you’ll see they follow almost the same trajectory. Suggesting the significant factors driving the price changes cannot reasonably be attributed to the ongoing lock bonus. The frame is also false because you are misrepresenting the nature of our communications around it, which have been as steady as the bonus itself. If you’d done us the kindness of checking your assertions before dropping them here, you would’ve seen us talking about it every week since it began. Ardordo: Not sure how it’s fair to conclude that lock bonuses do not affect the price It is fair because no one has provided a single data point to suggest there was any correlation between the lock bonus and Velodrome price. You cannot on one hand suggest it was a significant factor causing a 300% pump and while suggesting it’s claimed pumping ability was powerless against an 85% decline, especially when those same patterns were playing out on every single ecosystem token. We also have over a week of data after decreasing the bonus showing the exact opposite of your claimed effect, the lock bonus has gone down and the price has gone up. Ardordo: I have mostly just lurked around the OP governance, but wanted to comment/ask additional information about this proposal and thus I am a new user here. While the idea that you created an account last week to exclusively to comment on our proposal is certainly flattering, I do not get the sense that you are here in good faith. Now that you’ve made your voice heard on Velodrome, perhaps you can reallocate your time to any of the other 8+ proposals currently up for review and in need of feedback?
• alexcutlerdoteth - No Role

  Oct. 22, 2022, 1:31 p.m.
  Netrim: On a very ideal scenario, Velodrome could amass their own self reliant OP stash to use… Netrim: On a very ideal scenario, Velodrome could amass their own self reliant OP stash to use and my own understand is that those could be used as the team/DAO (if applicable) see fit. These are very interesting ideas, ser. I would love to explore them, but simply do not see any way to do so without putting the proposal at risk given the conversation around this topic 3 so far. I think it’s probably best to discuss in the period between seasons (when no proposals will be live) to see if we can get guidance from the Foundation for a universal solution that can benefit all protocols equally. I hear they may be working on something already. Netrim: I feel like we need to move away from straight up liquidity mining incentives. Exactly right. VELO emissions to boosted pools will represent a 1 . 6 x multiple on the underlying value of the grant alone. This will reduce the need to lean on direct OP grants alone to incentivize liquidity and help the grant programs sustain for a longer period. Netrim: Having said that I feel like neither Synthetix nor QiDAO need the Velodrome bribes on top, since they have their own proposals and usage to be distributed. Couldn’t this part of bribes be directed to composability on top of Velodrome? Are you talking about bribe matching in their cases or treating their pools as “public goods”? Netrim: Having that sort of composability on top of Velodrome LPs would be great. Again, I think we’re already seeing a ton of composability on Velodrome without needing to offer targeted grants to create it. Every incentive we offer is (in many ways) a builder grant. In fact, I would guess that after Synthetix we are probably the most built upon protocol on Optimism at the moment. My opinion is that it is much more equitable efficient to do this by reducing costs universally to protocols versus issuing prescriptive / restrictive grants. I’m also skeptical that we have seen any real results from any protocols who included “builder grants” as part of their requests, though maybe @jackanorak would know.
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• FilterBySpam - No Role

  Oct. 22, 2022, 1:56 p.m.
  Hey @ 0 xkmack.lens @Mingyue , thank you productive response backed by on-chain data. Could not ag… Hey @ 0 xkmack.lens @Mingyue , thank you productive response backed by on-chain data. Could not agree more with you, we should support Velodrome as an Optimism native project and not support those multichain projects. What they have to offer, nothing. For example. AAVE got 5 M $OP as incentives and did not even force any user or protocol to buy their native token to get the $OP reward. Shame. What kind of marketing is this? And on top of that, they only manage to push their TVL to 600 M and now its down to whopping 400 M. And its seems their liquidity is not moving much. This is clear, we should not support AAVE as multichain project. Same with Uniswap, they didnt even start their incentives even after getting the fund, its been 4 months. This does not look good, we should ask why?. They are not trying to spend their incentives in hurry to bring liquidity. This raises a question on their long term vision. And you know what, they are also asking for community feedback on their funding distribution, why to do this when selected few team members are capable of deciding how to spend the incentives on behalf of “community” Uniswap Governance – 6 Oct 22 [RFC] The Optimism-Uniswap Protocol Liquidity Mining Program 2 As part of Phase 0 of Optimism’s Governance Fund, the Uniswap Protocol received 1 M $OP tokens to incentivize future growth within the Optimism ecosystem. On behalf of the Uniswap Grants Program, Ken Ng submitted a proposal to use 20 % of the... Reading time: 6 mins ? Likes: 38 ❤ And look at their daily volume on Optimims. Just 36 M, this in unacceptable from a multi-chain project. They dont deserve any OP incentives. https ://dune(dot)com/msilb 7 /Uniswap-v 3 -Usage-Comparison-on-Ethereum-vs-Optimism-(OVM- 2 . 0 ) image 1883 × 365 46 . 7 KB just look at their trade per day, 70 K transaction. Totally unacceptable. and how can we forget Curve. Have you look at their logo, seems like a kindergarten drawing. While their TVL is close to 6 B in this market, TVL on Optimism is very low. Without any incentives from Optimism, they are not able to move beyond 50 M. I heard that reward for bribe will happen on Optimism chain with help of Votium, this is evident that they are not willing to work with Optimism. We dontneed time tested and widely used multichain protocol when we have a native forked protocol from another ghost chain. Thank you for your contribution. We need more un-biased opinion like yours. Appreciate it.
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• alexcutlerdoteth - No Role

  Oct. 22, 2022, 2:07 p.m.
  gm ser When creating dummy accounts in an attempt to derail a civil and fruitful discussion, you’ll… gm ser When creating dummy accounts in an attempt to derail a civil and fruitful discussion, you’ll want to be sure to remember to change your name. Otherwise, it is very easy to spot bad faith a mile away. @lavande can we get some moderation in the house? :slight_smile: :pray: Screen Shot 2022 - 10 - 22 at 8 . 46 . 56 AM 1380 × 504 34 . 1 KB Screen Shot 2022 - 10 - 22 at 8 . 47 . 13 AM 1392 × 498 50 . 6 KB
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  Likers: netrim, opgovwatch, grunt, ganc, fierydev, velodromefi
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• OPGovWatch - No Role

  Oct. 22, 2022, 6:06 p.m.
  Mingyue: It is of great significance to grant more op to native optimism protocols(i.e.Velodro… Mingyue: It is of great significance to grant more op to native optimism protocols(i.e.Velodrome) rather than those mutichain projects such as uniswap and curve. I believe Optimism governance is right to support multiple DEXs for a healthy ecosystem early on. As I see it now, grants are going to Uniswap, Curve, Beethoven, Sushi, Zipswap, and Velodrome. They each have different strengths and weaknesses. Some are offering more investment in Optimism and some less. Everyone is proposing plans for incentives that are different in approach. This is a good thing. We should give them all a chance to grow the ecosystem so we can see what works best. Velodrome seems to be working well. If other DEX incentives work well too we can support the extension of them as well. This not zero sum, multiple strong DEXs on Optimism is good for all. More liquidity and volume is needed.
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  Likers: states_of_nature1651, filterbyspam, mingyue, grunt, ganc
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• Mingyue - No Role

  Oct. 23, 2022, 8:18 a.m.
  @FilterBySpam Friends,I’m just expressing my opinion,and one of my reply was also be hiddened. If y… @FilterBySpam Friends,I’m just expressing my opinion,and one of my reply was also be hiddened. If you have any different idea,you should post it and let me know my opinion probably wrong.However,your last reply seems sarcastically.
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• OPGovWatch - No Role

  Oct. 23, 2022, 4:41 p.m.
  Hello Friend - The issue is two new accounts who popped up with the same name around the same time … Hello Friend - The issue is two new accounts who popped up with the same name around the same time that have no real engagement elsewhere coming into this proposal and saying negative things is just too coincidental. It makes it difficult for the community to take seriously the things they say. I recommend spending time adding value to other proposals so you can build trust in the community over time. Then people will be more open when you post your thoughts here. For now it does not feel constructive.
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• GFXlabs - No Role

  Oct. 24, 2022, 1:54 p.m.
  tao: Number of OP Tokens Requested: 4 , 000 , 000 OP 98 % less than average OP granted per… tao: Number of OP Tokens Requested: 4 , 000 , 000 OP 98 % less than average OP granted per $ in TVL 80 % less than median OP granted per $ in TVL 98 % less than average OP granted per $ in Volume 65 % less than median OP granted per $ in Volume 98 % less than average OP granted per transaction 86 % less than the median OP granted per transaction 91 % less than the average OP granted per user 51 % less than the median OP granted per user Is there a way to trim this request? Your own metrics listed here could be used to argue Velodrome has hit “escape velocity” and does not need further grants. When speaking of millions of dollars’ worth of OP, perhaps it’s better to offer a proposal to sell VELO to governance rather than asking for a grant? Or break it into pieces so each area of large expense can be evaluated separately. This is just a really big price tag, and I think you’d have better luck either reducing it, or breaking it into pieces that are more digestible – since you have at least 3 parts that could easily be broken out. Alternatively, you could set it up so it’s delivered in monthly tranches after a required report, so governance has an opportunity to monitor the grant. The days of delivering large lump sum grants were not kind, so a sophisticated applicant like Velodrome can probably caress this into a package that sets a great example :slight_smile:
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  • alexcutlerdoteth: I appreciate the thoughtful response, ser! GFXlabs: Is there a way to trim this request? GFXlabs: This is just a really big price tag I guess in some sense, we already see the ask as being trimmed relative to every quantitive measure of grants distributed so far as well as the demonstrated 2x-3x ROI / ecosystem growth we’ve demonstrated the initial grant was able to help us deliver. Our request is also unique in that we’re pairing it with a commitment to match 1.6x the grant size ($6.5m) in incentives as well as requirement other projects to match 4x-9x the amounts to access the rewards. In other words, I think the ask only looks big in a vacuum. The ask is actually quite low relative to the matching investment, demonstrated 2x-3x ROI, and baselines from other grants distributed. GFXlabs: Your own metrics listed here could be used to argue Velodrome has hit “escape velocity” and does not need further grants. The goal of the grants are “to incentivize sustainable growth of projects and communities in the Optimism ecosystem.” The use of them on Velodrome creates a multiplier effect for all ecosystem participants as demonstrated by our onboarding of over 30 new protocols to the ecosystem as well as dropping the costs of liquidity across the ecosystem by 30%-70%. It’s less a question of “has Velodrome reached escape velocity” and more a question of “has the ecosystem reached escape velocity”… and if not, is extending incentives on Velodrome one of the most effective ways to get us there? I hope we’ve demonstrated that. GFXlabs: When speaking of millions of dollars’ worth of OP, perhaps it’s better to offer a proposal to sell VELO to governance rather than asking for a grant? This is an interesting idea that may very well be worth exploring, but I don’t see how it would lead to the same kind of growth multiple for the ecosystem we’ve shown incentives can drive. GFXlabs: Alternatively, you could set it up so it’s delivered in monthly tranches after a required report, so governance has an opportunity to monitor the grant. The days of delivering large lump sum grants were not kind, so a sophisticated applicant like Velodrome can probably caress this into a package that sets a great example This I believe we would be quite open to! My only note would be that we perhaps do it in three month increments to ensure we’re able to gather enough data and control for all the other variables that I’m sure will come our way over a few crazy months in crypto. I think one of the big differentiators here over the original large lump sum grants is that we now have a demonstrated track record as well as results on the programs we’re asking to extend. In many ways, we hope our initiatives being extended will be inspiration for the other big reciepants to start documenting their own efficacy so they have the same chance when it comes time. What do you think?
  • forrest: Thanks for the really informative proposal. It’s clear the team translated the Grant from the Partner Fund into an awesome amount of growth. alexcutlerdoteth: In other words, I think the ask only looks big in a vacuum. To date, 47.7 million OP was distributed through grants, and 4 million OP is 1.72% of the entire Governance Fund. With that context, the amount is large. GFXlabs: Your own metrics listed here could be used to argue Velodrome has hit “escape velocity” and does not need further grants. That’s where I agree with this from @GFXlabs, although not with the solution they propose. The revision with some of the grant amount unlocked later is a good improvement, but it’s not clear to me that Velodrome now needs more OP incentives than it received when it was getting started. I would have the same hesitation if Aave drafted a proposal requesting more than the 5 million OP they received from the Partner Fund, despite their program’s massive success for the entire Optimism ecosystem.
• OPUser - No Role

  Oct. 24, 2022, 2:03 p.m.
  Good to see this thread is open now. This is not specifically to you @FilterBySpam as I see many ne… Good to see this thread is open now. This is not specifically to you @FilterBySpam as I see many new account focused on selected proposal but your sarcasm is defintly not adding value of this thread. Please read our code of conduct and contribute here to push this gov in right direction. @tao I DM’d you and also requested on discord thread 1 but did not hear any feedback. Could you provide a dashboard where I can find all the addresses from past epoch too.
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  • tao: Yessir, you can simply adjust the parameters in this query Velodrome $OP Airdrop to pull any epoch you’d like. Our first lock bonus distribution was July 14, 2022.
• alexcutlerdoteth - No Role

  Oct. 24, 2022, 3:04 p.m.
  I appreciate the thoughtful response, ser! GFXlabs: Is there a way to trim this request? … I appreciate the thoughtful response, ser! GFXlabs: Is there a way to trim this request? GFXlabs: This is just a really big price tag I guess in some sense, we already see the ask as being trimmed relative to every quantitive measure of grants distributed so far as well as the demonstrated 2 x- 3 x ROI / ecosystem growth we’ve demonstrated the initial grant was able to help us deliver. Our request is also unique in that we’re pairing it with a commitment to match 1 . 6 x the grant size ($ 6 . 5 m) in incentives as well as requirement other projects to match 4 x- 9 x the amounts to access the rewards. In other words, I think the ask only looks big in a vacuum. The ask is actually quite low relative to the matching investment, demonstrated 2 x- 3 x ROI, and baselines from other grants distributed. GFXlabs: Your own metrics listed here could be used to argue Velodrome has hit “escape velocity” and does not need further grants. The goal of the grants are “to incentivize sustainable growth of projects and communities in the Optimism ecosystem.” The use of them on Velodrome creates a multiplier effect for all ecosystem participants as demonstrated by our onboarding of over 30 new protocols to the ecosystem as well as dropping the costs of liquidity across the ecosystem by 30 %- 70 %. It’s less a question of “has Velodrome reached escape velocity” and more a question of “has the ecosystem reached escape velocity”… and if not, is extending incentives on Velodrome one of the most effective ways to get us there? I hope we’ve demonstrated that. GFXlabs: When speaking of millions of dollars’ worth of OP, perhaps it’s better to offer a proposal to sell VELO to governance rather than asking for a grant? This is an interesting idea that may very well be worth exploring, but I don’t see how it would lead to the same kind of growth multiple for the ecosystem we’ve shown incentives can drive. GFXlabs: Alternatively, you could set it up so it’s delivered in monthly tranches after a required report, so governance has an opportunity to monitor the grant. The days of delivering large lump sum grants were not kind, so a sophisticated applicant like Velodrome can probably caress this into a package that sets a great example :slight_smile: This I believe we would be quite open to! My only note would be that we perhaps do it in three month increments to ensure we’re able to gather enough data and control for all the other variables that I’m sure will come our way over a few crazy months in crypto. I think one of the big differentiators here over the original large lump sum grants is that we now have a demonstrated track record as well as results on the programs we’re asking to extend. In many ways, we hope our initiatives being extended will be inspiration for the other big reciepants to start documenting their own efficacy so they have the same chance when it comes time. What do you think?
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  • forrest: Thanks for the really informative proposal. It’s clear the team translated the Grant from the Partner Fund into an awesome amount of growth. alexcutlerdoteth: In other words, I think the ask only looks big in a vacuum. To date, 47.7 million OP was distributed through grants, and 4 million OP is 1.72% of the entire Governance Fund. With that context, the amount is large. GFXlabs: Your own metrics listed here could be used to argue Velodrome has hit “escape velocity” and does not need further grants. That’s where I agree with this from @GFXlabs, although not with the solution they propose. The revision with some of the grant amount unlocked later is a good improvement, but it’s not clear to me that Velodrome now needs more OP incentives than it received when it was getting started. I would have the same hesitation if Aave drafted a proposal requesting more than the 5 million OP they received from the Partner Fund, despite their program’s massive success for the entire Optimism ecosystem.
  • forrest: I voted Against this proposal. I tried to follow this discussion closely after my initial comment but my concerns remain the same. This Grant would be 1.72% of Optimism’s Governance Fund and would grow the circulating supply of the OP token by 1.86%. This is significant, and I do not appreciate Velodrome team members trying to say otherwise. We are talking about millions of $ here: alexcutlerdoteth: In other words, I think the ask only looks big in a vacuum. Velodrome’s current traction is great but if anything proves to me that they have already achieved a network effect and do not require millions more from the Optimism Treasury to establish themselves, it seems they can accomplish all of the goals outlined in this proposal without the grant: polynya: I’m sure the project will continue to thrive even without the subsidies; arguably also reach a self-sustainable state sooner. Separately, I am not sure what kind of message it sends that the DeFi Committee decided to Abstain in a Recommendation on a ~$5.5 million grant. This is a pretty significant treasury move. Disclosure: I co-founded a different Optimism DEX so consider me biased
• tao - No Role

  Oct. 24, 2022, 3:50 p.m.
  Yessir, you can simply adjust the parameters in this query Velodrome $OP Airdrop 5 to pull any ep… Yessir, you can simply adjust the parameters in this query Velodrome $OP Airdrop 5 to pull any epoch you’d like. Our first lock bonus distribution was July 14 , 2022 .
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• alexcutlerdoteth - No Role

  Oct. 24, 2022, 6:44 p.m.
  I wanted to proactively solicit the feedback of more the DeFi Committees so we might have a chance … I wanted to proactively solicit the feedback of more the DeFi Committees so we might have a chance to incorporate any feedback ahead of the committee review period knowing this is the last cycle of this season. :pray: @fig, @Bobbay_StableLab @linda @Katie @mastermojo @MattL @MoneyManDoug @MinimalGravitas @Joxes @Gonna.eth ScaleWeb 3 .
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  • katie: Hey Alex, thanks for a well written proposal with impressive data. It’s great to see what an impact Velo is having on the ecosystem. Only speaking on behalf of myself, not Defi Committee A, I would feel more comfortable seeing this proposal broken up into 2 or 3 separate proposals. I agree with @GFXlabs that there has been issues with accountability for use of grants thus far, and personally believe that approving proposals in smaller batches is a solution for this issue. The amount requested here is the most I’ve seen so far, and I would prefer to distribute the funds based on a shorter timeline and amount requested in order to ensure KPIs are met.
• Ardordo - No Role

  Oct. 24, 2022, 7:13 p.m.
  I believe my post was somewhat buried due to the proposal having issues with being closed. Still ve… I believe my post was somewhat buried due to the proposal having issues with being closed. Still very interested knowing an approximate value of average revenue Velodrome has earned in comparison of the value of the OP tokens used during the first grant. I understand the tokens were used in multiple different ways, but it would still give a rough estimate to figuring out how sustainable the model is.
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• OPUser - No Role

  Oct. 24, 2022, 8:03 p.m.
  alexcutlerdoteth: Because bribing on Velodrome helps to create a 30 - 70 % reduction in liqui… alexcutlerdoteth: Because bribing on Velodrome helps to create a 30 - 70 % reduction in liquidity incentive costs for projects, supporting that efficiency is in essence a builder grant I want to understand your reply to Netrim’s comment, you are saying that bribing is effective which save money and hence could be consider as builders grant. right ? If that’s the case, would you consider allocating funds specifically to builders grant. tao: Regarding incentive efficiency, the protocols are deploying much higher incentives on Uni and Curve to attract that TVL than on Velodrome. Would it be possible to see this data on monthly basis too ? So far I am very skeptical of data presented here, I believe incentives are still going on which might be giving us artificial numbers, also would like to see the uses of veVelo lock(unfortunately, I am not comfortable with Dune query so I will ask around on dicord for help). If I remember correctly, only few protocol were able to sustain liquidity, I think Beefy is one of them, which is why I dont believe that spending again on LP reward would be a good use of fund. Few pairs I see on the list has their own incentives as pointed out by Netrim. One thing I would like to see is reward ratio, how much $OP was spend monthly with respect to revenue generated on the platform. tao: We’re a public good DEX I am really curious on this, how did you reach to this conclusion? do you have any literature or peer-reviewed journal to support your statement. Good to see the pro-activeness here in gathering early feedback.
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  • alexcutlerdoteth: OPUser: you are saying that bribing is effective which save money and hence could be consider as builders grant. right ? Yes, we are saying we have dropped liquidity costs by 30%-70% for the 30+ protocols building on top of us. A functional grant to those builders. OPUser: If that’s the case, would you consider allocating funds specifically to builders grant. Let’s put it this way, you could either cut costs for all projects in a consistent, fair, and permissionless way and allow them to choose how to reinvest those funds (or) you could create yet another grant layer (redundant to this one) that gives us a bunch of power to pick and choose what projects should get funding. Why would anyone choose the latter? Additionally, our program has overwhelming data supporting it’s efficacy with over 30 net new projects onboarded to Optimism and building on top of Velodrome (most of which who have not gotten grants from the foundation). Can you point me to a single data point that any project that included builder grants in their proposals are having comparable impact? You want our team focused on the business development that is driving massive growth, not duplicating the work of governance. OPUser: So far I am very skeptical of data presented here With due respect ser, we’ve laid out an unbelievable amount of data / evidence and had 20 protocols co-sign it. If you are going try imply that there is something off with the data, at least do us the dignity of investigating it before you cast aspersions. OPUser: If I remember correctly, only few protocol were able to sustain liquidity, I think Beefy is one of them, Can you clarify this? I’m not following. OPUser: I dont believe that spending again on LP reward would be a good use of fund. Nowhere in our proposal are we using OP to directly incentivize LPs. OPUser: Few pairs I see on the list has their own incentives as pointed out by Netrim. Again, can you clarify? OPUser: One thing I would like to see is reward ratio, how much $OP was spend monthly with respect to revenue generated on the platform. I’ll let @tao weigh in here, but will reiterate that about 2.5M OP was allocated over a period where Velodrome produced: • $6M+ VELO liquidity incentives • $1M+ in protocol revenue • $5M+ liquidity of OP token pairs • $10M+ value locked as veVELO • 30-70% reduction in liquidity incentive costs There is no way to frame the existing grant as anything other than returning multiples on the underlying investment. OPUser: I am really curious on this, how did you reach to this conclusion? do you have any literature or peer-reviewed journal to support your statement. Peer reviewed journals? Are you pulling our leg here, ser? It is a public good because it is essential infrastructure that returns 100% of the revenue generated by it back to the ecosystem. Control of the protocol was distributed to not only the Foundation, but every top protocol in the ecosystem (representing millions in value). It has no outside investors or stakeholders, leaks no value to other chains, and serves as Optimism’s only currently active native liquidity solution. If you are looking for peer review of our public good status, kindly consider the 20+ protocols who have reviewed and cosigned our proposal or the Foundation who bootstrapped us as such.
• alexcutlerdoteth - No Role

  Oct. 25, 2022, 1:31 a.m.
  OPUser: you are saying that bribing is effective which save money and hence could be consider … OPUser: you are saying that bribing is effective which save money and hence could be consider as builders grant. right ? Yes, we are saying we have dropped liquidity costs by 30 %- 70 % for the 30 + protocols building on top of us. A functional grant to those builders. OPUser: If that’s the case, would you consider allocating funds specifically to builders grant. Let’s put it this way, you could either cut costs for all projects in a consistent, fair, and permissionless way and allow them to choose how to reinvest those funds (or) you could create yet another grant layer (redundant to this one) that gives us a bunch of power to pick and choose what projects should get funding. Why would anyone choose the latter? Additionally, our program has overwhelming data supporting it’s efficacy with over 30 net new projects onboarded to Optimism and building on top of Velodrome (most of which who have not gotten grants from the foundation). Can you point me to a single data point that any project that included builder grants in their proposals are having comparable impact? You want our team focused on the business development that is driving massive growth, not duplicating the work of governance. OPUser: So far I am very skeptical of data presented here With due respect ser, we’ve laid out an unbelievable amount of data / evidence and had 20 protocols co-sign it. If you are going try imply that there is something off with the data, at least do us the dignity of investigating it before you cast aspersions. OPUser: If I remember correctly, only few protocol were able to sustain liquidity, I think Beefy is one of them, Can you clarify this? I’m not following. OPUser: I dont believe that spending again on LP reward would be a good use of fund. Nowhere in our proposal are we using OP to directly incentivize LPs. OPUser: Few pairs I see on the list has their own incentives as pointed out by Netrim. Again, can you clarify? OPUser: One thing I would like to see is reward ratio, how much $OP was spend monthly with respect to revenue generated on the platform. I’ll let @tao weigh in here, but will reiterate that about 2 . 5 M OP was allocated over a period where Velodrome produced: • $ 6 M+ VELO liquidity incentives • $ 1 M+ in protocol revenue • $ 5 M+ liquidity of OP token pairs • $ 10 M+ value locked as veVELO • 30 - 70 % reduction in liquidity incentive costs There is no way to frame the existing grant as anything other than returning multiples on the underlying investment. OPUser: I am really curious on this, how did you reach to this conclusion? do you have any literature or peer-reviewed journal to support your statement. Peer reviewed journals? Are you pulling our leg here, ser? It is a public good because it is essential infrastructure that returns 100 % of the revenue generated by it back to the ecosystem. Control of the protocol was distributed to not only the Foundation, but every top protocol in the ecosystem (representing millions in value). It has no outside investors or stakeholders, leaks no value to other chains, and serves as Optimism’s only currently active native liquidity solution. If you are looking for peer review of our public good status, kindly consider the 20 + protocols who have reviewed and cosigned our proposal or the Foundation who bootstrapped us as such.
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• alexcutlerdoteth - No Role

  Oct. 25, 2022, 2:12 a.m.
  Apologies for missing this. @tao is pulling together more detailed numbers for you, but wanted to b… Apologies for missing this. @tao is pulling together more detailed numbers for you, but wanted to be clear on one point. Ardordo: do I understand correctly, that in the following paragraph Velodrome metrics are being mostly compared to projects without prior incentives? This analysis is based all projects that have received grants, with just a few included from the last cycle who are in the process of receiving grants. That means those incentives are controlled for in these numbers. The rather shocking disparity here is truly rooted in Velodrome driving massive output across every KPI.
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• katie - No Role

  Oct. 25, 2022, 2:38 a.m.
  Hey Alex, thanks for a well written proposal with impressive data. It’s great to see what an impac… Hey Alex, thanks for a well written proposal with impressive data. It’s great to see what an impact Velo is having on the ecosystem. Only speaking on behalf of myself, not Defi Committee A, I would feel more comfortable seeing this proposal broken up into 2 or 3 separate proposals. I agree with @GFXlabs that there has been issues with accountability for use of grants thus far, and personally believe that approving proposals in smaller batches is a solution for this issue. The amount requested here is the most I’ve seen so far, and I would prefer to distribute the funds based on a shorter timeline and amount requested in order to ensure KPIs are met.
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• alexcutlerdoteth - No Role

  Oct. 25, 2022, 3:06 a.m.
  Hey Katie - Appreciate your thoughts! Can you give us a better idea of what 2 - 3 different propo… Hey Katie - Appreciate your thoughts! Can you give us a better idea of what 2 - 3 different proposals would look like practically in the context of this request? Are you thinking something like just breaking it into a 3 month ask or did you have another framework in mind? Just want to be sure we’re understanding the request. :pray:
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• katie - No Role

  Oct. 25, 2022, 3:27 a.m.
  Exactly, I was thinking cut the timeline and amount requested in half and report back on progress, … Exactly, I was thinking cut the timeline and amount requested in half and report back on progress, then submit the next round, similar to what you’ve done here :slightly_smiling_face: It’s really great to see your metrics reporting and would like to see more of this going forward from other projects as well. This adds a component of accountability rather than granting massive funds up front.
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• Minhng83 - No Role

  Oct. 25, 2022, 4:28 a.m.
  I have used Velorome Finance app and really impressive with it. I totally agree with this proposal. I have used Velorome Finance app and really impressive with it. I totally agree with this proposal.
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• ScaleWeb3 - No Role

  Oct. 25, 2022, 12:14 p.m.
  Thank you for this extensive proposal. Below, we’ll dive into different aspects of the proposal but… Thank you for this extensive proposal. Below, we’ll dive into different aspects of the proposal but first we’d love to know what’s the Optimism Foundation‘s evaluation of the 1 st grant? @lavande @bobby why do you ask the Op gov house for the 2 nd grant? @jackanorak @tao @alexcutlerdoteth 1 . Grant Goals tao: This grant had three primary objectives: Lowering barriers to entry with locking incentives Boosting ecosystem efficiency with bribe matching Building deep liquidity on key ecosystem pairs These goals are reasonable for Velo. For the overall DEX ecosystem on Optimism they should be Lowering barriers to entry Boosting ecosystem efficiency Building deep liquidity on key ecosystem pairs ( → $ in the right place to achieve xyz; openness & support for projects to join & contribute to Op) Velodrome had an especially positive impact on the following 3 OP ecosystem goals: Velodrome has been a key player in onboarding new protocols through personal contact. Velodrome helped bootstrapping pools for projects with locking & strong co-bribing incentives. Establish liquidity for Op & some stablecoins ( 1 inch examples → trades routed through Velo & Uni) 100 Weth-Op trade 853 × 501 36 . 6 KB → Why is it that larger trades are routed more through Uni v 3 ? Despite that, Velodrome achieved other project-specific goals: Large TVL growth veVelo locking from partners (+individuals) User attention & activity Things that we criticially look at: Deep liquidity on key ecosystem pairs & ecosystem efficiency Uniswap has been more important for key ecosystem pairs so far without incentives. (Check routing from 1 inch for USDC/ETH/WBTC, Op pair somewhat split between Velo & Uni v 3 ) High amount of incentives & TVL compared to trade volume (market share) image 909 × 462 28 KB 2 . The Ask As mentioned by @GFXlabs @katie, the Ask is very large - especially given in a lump sum. Locking Incentives: 1 . 5 M Op ( 40 K Op per week) This incentive can help with onboarding projects to Optimism (+) Requiring projects to invest into Velo instead of Op is not optimal in our opinion. We would look at this more postive if projects were to lock Op or an 80 / 20 position that helps with effective liquidity (±) You mention competiting incentives: Do you mean within or outside of Optimism? What kind of impact do you expect from full deployments of Curve and the upcoming start of incentives on Uniswap, Curve, Sushi + Velodrome on Velo bribing, efficiency, market share? tao: To onboard new protocols to the Optimism ecosystem during uncertain times and in the face of competing incentives, we must ensure that they are able to bootstrap their liquidity in the most cost-effective method possible. tao: KPIs: Exceeding and maintaining 70 % VELO total supply locked Doubling share of OP protocols locking VELO among those with native tokens Attracting additional new protocols to the ecosystem that meaningfully improve layer-wide economic activity Boosting ecosystem efficiency with Bribe Matching: 1 . 5 M Op ( 40 K Op per week) This could further help with onboarding additional projects & bootstrapping liquidity on Optimism You state that liquidity cost from bribing is cheaper than direct incentives. Do you compare the same incentives on uni v 2 or uni v 3 as uni v 3 might make up for the “extra cost of direct incentives”? tao: It’s no surprise, then, that bribing for emissions has been massively popular on Velodrome for both new and existing protocols, allowing them to draw significant liquidity at roughly 1 / 3 the cost of doing so with direct LP incentives. tao: KPIs: Increasing the total numbers of protocols bribing Increasing number of total pools bribed Increasing the total value bribed in $ / ETH terms Building deep liquidity on key ecosystem pairs: 1 M Op ( 30 K Op per week) Higher liquidity in top pairs is important for Optimism (IF liquidity is utilized/effective) Would it not be a better idea to incentivize top pairs on Uni v 3 and for example new projects on Velo considering ecosystem efficiency? Do you believe it makes sense to incentivize the same pairs on different DEXs? Despite “slow” market share growth of DEX aggregators on l 2 s, we strongly believe in abstraction over time & that users move towards wallets with built-in meta-aggregators in low-cost environments. Hence, we’d recommend a focus on protocol efficiency metrics (Slippage, trades (volume) routed, effective liquidity) over adoption KPIs (TVL, direct users, transactions). tao: KPIs: Increasing TVL for ecosystem pairs High number of transactions Low slippage for high volume trades 3 . General Ask Justification Probably this doesn’t need to be stated. 4 Mio Op ( 110 K OP per week!) is definitely a huge Ask. We appreciate the depth of the proposal and data provided, some of the “comparable metrics” are flawed though (apples & oranges) and should at most be used as small indicator in a comprehensive review. Obviously, we should not justify new Asks with previous grant amounts or Op granted/TVL but with value-added from the new proposal. Maybe, this helps anyways to stimulate a discussion which KPIs we should look at to evaluate all the different grants until today. Potentially good KPIs (for long-term sustainable growth initiatives) Op granted per unique user onboarded Op granted per top project/team onboarded Op granted per new liquidity on Optimism (+ retention, + effectivity, + network effects, + user activity, - user clusters, etc.) tao: Number of OP Tokens Requested: 4 , 000 , 000 OP 98 % less than average OP granted per $ in TVL 80 % less than median OP granted per $ in TVL 98 % less than average OP granted per $ in Volume 65 % less than median OP granted per $ in Volume 98 % less than average OP granted per transaction 86 % less than the median OP granted per transaction 91 % less than the average OP granted per user 51 % less than the median OP granted per user 4 . Overall: It’s great to see a native DEX on Optimism with a team that contributes significantly to project onboarding. As many delegates such as @polynya @jackanorak have previously mentioned, it is really important that we finally have some serious evaluation of the first rounds of grants before doubling down on top initiatives. Despite that, we can only restate, that it would be very important for Optimism to have an ecosystem-wide liquidity, DeFi, NFT plan to incentivize the right partners or at least run short-term experiments that help Optimism come up with a competitive ecosystem strategy. As mentioned above, we should very deeply look at incentivizing what’s best for the ecosystem (lowering entry barriers, improving efficiency & liquidity), and not waste incentives on conflicting incentive programs or pick pre-maturely favorites & lock-ins. In that regard, thank you for the data provided. That helps already significantly in reviewing your new grant request. We believe a 2 nd grant to Velo could be well-reasoned to further grow the Optimism ecosystem - esp. in regards to project onboarding & kickstarting liquidity for new projects on Optimism. Looking forward especially to your takes re: key ecosystem pairs & competiting incentive campaigns! And, we’d love to hear the evaluation from the Foundation too as mentioned in the beginning.
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  • alexcutlerdoteth: ScaleWeb3: Why do you ask the Op gov house for the 2nd grant? The partner fund is not currently accepting grant requests and more details will be coming soon. But, regardless the plan was always to pursue grants through governance. ScaleWeb3: Why is it that larger trades are routed more through Uni v3? First, we should note that most pairs actually don’t trade through Uniswap at all. As @OPGovWatch pointed out above, Velodrome supports liquidity for 29 separate projects to Uniswaps 9. For most of the ecosystem, no trades route through UniV3 at all because it has no significant liquidity for their pairs. Second, concentrated liquidity will certainly be more optimal for key pairs and it will always be an important portion of the ecosystem DEX landscape. That is why we’re exploring adding it to Velodrome. But, concentrated liquidity is not without it’s own issues. It is inaccessible to the retail LPs and there is plenty of research to suggest huge % of LPs lose money on Univ3. It is not as capable as Velodrome is at providing fast, accessible liquidity/onboarding and it cannot be relied on alone to power an ecosystem. ScaleWeb3: Uniswap has been more important for key ecosystem pairs so far without incentives. (Check routing from 1inch for USDC/ETH/WBTC, Op pair somewhat split between Velo & Uni v3) Looking at snapshots of routing will never give you an accurate picture of routing in the aggregate. I’d recommend pulling comparative volume numbers for specific pairs over 30 to 90 day periods for that kind of analysis. That said, you are correct that the vast majority of UniV3s volume on Optimism is through just a few key pairs (also Perps variable pairs inflate volume numbers as well and need to be controlled for). It is not accurate however to say that they are not incentivized. Projects are incentivizing heavily on UniV3. Just less efficiently. ScaleWeb3: As mentioned by @GFXlabs @katie, the Ask is very large - especially given in a lump sum. It only looks very large if you look at it without applying any comparative analysis to other grants that have gone out (as high as 9M OP) relative to size and performance of the grantee protocols. That is why we took care to lay this out above. Indeed, it is actual significantly less in $ value terms that the original grant given to us by OP Labs. You have to also take into consideration that the matching investment of incentives ($6m+) from Velodrome here is unprecedented and we’re the only project that has partner add their own matches on top of that to access the incentives, increasing the multiplier effect It is critical for the effectiveness of these programs that Governance evaluate large asks in their broader context. I would ask that if we continue to call the ask “large” we get specific in relative to what. ScaleWeb3: Requiring projects to invest into Velo instead of Op is not optimal in our opinion. We would look at this more postive if projects were to lock Op or an 80/20 position that helps with effective liquidity (±) I’m not sure I follow here. When projects lock VELO they gain the ability to direct emissions to build liquidity and their share of the 100% of protocol that is directed to lockers. The token has both functional and financial utility to the protocols, allowing them to create revenue positive liquidity programs. The procuring and locking of it also supports a virtuous cycle that benefits the ecosystem at large. It is what has helped to drop ecosystem liquidity costs by 30%-70%. Why isn’t this a behavior we’d want to incentivize? OP tokens at this time only utility is governance. I’m not sure why Velodrome would be the best place to force the locking of $OP tokens. This seems like something better undertaken by governance. For example, perhaps in the future locking/staking it required for voting. That said, we do care a lot about bringing more utility to the OP token. That is part of why the Optimism Foundation received the largest partner veNFT to support their ability to vote for incentives (in perpetuity) for OP pairs. It is why we’ve raised possible solutions like increasing the number of OP token pairs and making it possible to delegate your OP while in LPs. ScaleWeb3: You mention competiting incentives: Do you mean within or outside of Optimism? Yes, competing incentives coming from other chains such as Arbitrum, Metis, etc. [quote=“ScaleWeb3, post:49, topic:3736”] What kind of impact do you expect from full deployments of Curve and the upcoming start of incentives on Uniswap, Curve, Sushi + Velodrome on Velo bribing, efficiency, market share? [/quote] As I understand things, Curve has no plans for a full deployment on Optimism. Staking will remain on mainnet, governance will remain on mainnet, and fees will continue to be sent to mainnet indefinitely. It sounds as if native bribing may eventually come, but there are no immediate plans outside of the stopgap solution they’ve presented for the purposes of receiving a grant. As for incentives on those other platforms, our hope would be that the combined power of them helps to attract more liquidity and volume from mainnet and alt L1s, growing the total amount of TVL, volume, and economic activity on Optimism as a whole. The goal for all of us needs to be to reach that tipping point where Optimism can compete for the largest trades and liquidity providers, which creates a flywheel effect attracting even more activity to the network. ScaleWeb3: You state that liquidity cost from bribing is cheaper than direct incentives. Do you compare the same incentives on uni v2 or uni v3 as uni v3 might make up for the “extra cost of direct incentives”? Bribe for emissions models such as Curve and Velodrome have been demonstrated to be more efficient than direct incentives on UniV2 or UniV3. We have plenty of direct 1:1 examples comparing incentives on UniV3 vs Velodrome as @tao outlined above. It is why there are 20+ protocols incentivizing on Velodrome and like 3 on Uniswap. It is also why projects like Aelin shifted all of their incentives to Velodrome from Uniswap saving millions in the process. ScaleWeb3: Do you believe it makes sense to incentivize the same pairs on different DEXs? Yes, it certainly could make sense to push every DEX to co-incentivize key ecosystem public good pairs as part their proposals. I actually advocated for this on Curve’s proposal, but it didn’t seem like there was any appetite for it there. ScaleWeb3: Despite “slow” market share growth of DEX aggregators on l2s, we strongly believe in abstraction over time & that users move towards wallets with built-in meta-aggregators in low-cost environments. Hence, we’d recommend a focus on protocol efficiency metrics (Slippage, trades (volume) routed, effective liquidity) over adoption KPIs (TVL, direct users, transactions). We stand up great on these metrics too, more data coming. ScaleWeb3: Probably this doesn’t need to be stated. 4 Mio Op (110K OP per week!) is definitely a huge Ask. We appreciate the depth of the proposal and data provided, some of the “comparable metrics” are flawed though (apples & oranges) and should at most be used as small indicator in a comprehensive review. Good ser. Out of respect for us and the 20+ protocols who have co-signed the proposal, can you please demonstrate the flaw or suggest a better framework before implying ours is flawed in some way. As stated above, the ask is not huge relative to objective measures or the matching investment. Additionally, no other proposal has ever been paired as simply with a proven 2x-3x return on the grant value or a promise to match 1.6x the underlying value in incentives. It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. I have a feeling that if governance doesn’t show a capacity to process large deeply evidenced grant requests at a similar level to OP Labs that the power to allocate them may be shifted away. More to come.
• Ardordo - No Role

  Oct. 25, 2022, 1:05 p.m.
  Specified it with @alexcutlerdoteth in Discord. Based on what I understood, the percentages provide… Specified it with @alexcutlerdoteth in Discord. Based on what I understood, the percentages provided under “Number of OP Tokens Requested: 4 , 000 , 000 OP” have been calculated by dividing the metrics by the total number of OP tokens other protocols have received. While this is more fair than comparing Velodrome metrics to pre-grant metrics of other projects (which I mistakenly understood before), then I would still be wary of using these metrics for justifying the size of the new grant since it’s based on total number of tokens received and does not actually account for how much of the grants have been used till now. This means Velodrome has inherently higher statistics compared to projects that have not used their OP grant yet or are using it up in a slower pace. I understand Velodrome has put great effort into working with other protocols. In this proposal the grant would be also used for supporting other projects by “Lowering Barriers to Entry with Locking Incentives” and “Boosting Ecosystem Efficiency with Bribe Matching”. But doesn’t that somewhat force other projects to work with Velodrome to maximize their funds and thus create unfair conditions for Velodromes competitors? Wouldn’t it be more fair to instead direct those funds to other projects directly (based on their own grant proposals), so they would be free to choose with who and how to partner with?
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  • alexcutlerdoteth: Ardordo: then I would still be wary of using these metrics for justifying the size of the new grant We’ve provided (insofar as I know) the only objective framework for evaluating a request of this size that takes into account ALL prior grants. Unless you are suggesting delegates should just go on their gut intuition, which is in part which has led to the vast disparity in grant performance to date, please suggest an alternative model that feels more reasonable than the one we’ve offered here. Or, just ignore it and note that we’re the first proposal to ever cover more than the full grant amount in co-incentives. Ardordo: But doesn’t that somewhat force other projects to work with Velodrome to maximize their funds and thus create unfair conditions for Velodromes competitors? Every DEX on Optimism has submitted their grant requests of their own design, all of them contained incentives, all but one has approved to date with minimal edits. Each has largely been given what they have asked for to incentivize users and now have a chance to demonstrate the effectiveness of the programs they designed. Your suggestion that anyone is being “forced” to do anything makes me think you’re not engaging in good faith here. If they can drive similar growth, I expect them to do exactly what we’re doing. Come back with results and ask for additional to support it. But mostly, this is the absolute wrong way to think about DEXs on Optimism. The goal of grants is to grow the entire ecosystem. DEXs on Optimism are less in competition with one another than we are collectively in a competition to attract liquidity from other layers and chains (although some are less incentivized to focus on attracting it away from their own platforms on other networks) . Deeper liquidity across all of us will drive more volume across of us and drive economic growth across the network. Turning it into a zero-sum marketshare on the network is absolutely missing the forrest for the trees and misunderstands the entire purpose of the grants.
• alexcutlerdoteth - No Role

  Oct. 25, 2022, 2:28 p.m.
  ScaleWeb 3 : Why do you ask the Op gov house for the 2 nd grant? The partner fund is not cu… ScaleWeb 3 : Why do you ask the Op gov house for the 2 nd grant? The partner fund is not currently accepting grant requests and more details will be coming soon. But, regardless the plan was always to pursue grants through governance. ScaleWeb 3 : Why is it that larger trades are routed more through Uni v 3 ? First, we should note that most pairs actually don’t trade through Uniswap at all. As @OPGovWatch pointed out above, Velodrome supports liquidity for 29 separate projects to Uniswaps 9 . For most of the ecosystem, no trades route through UniV 3 at all because it has no significant liquidity for their pairs. Second, concentrated liquidity will certainly be more optimal for key pairs and it will always be an important portion of the ecosystem DEX landscape. That is why we’re exploring adding it to Velodrome. But, concentrated liquidity is not without it’s own issues. It is inaccessible to the retail LPs and there is plenty of research to suggest huge % of LPs lose money on Univ 3 . It is not as capable as Velodrome is at providing fast, accessible liquidity/onboarding and it cannot be relied on alone to power an ecosystem. ScaleWeb 3 : Uniswap has been more important for key ecosystem pairs so far without incentives. (Check routing from 1 inch for USDC/ETH/WBTC, Op pair somewhat split between Velo & Uni v 3 ) Looking at snapshots of routing will never give you an accurate picture of routing in the aggregate. I’d recommend pulling comparative volume numbers for specific pairs over 30 to 90 day periods for that kind of analysis. That said, you are correct that the vast majority of UniV 3 s volume on Optimism is through just a few key pairs (also Perps variable pairs inflate volume numbers as well and need to be controlled for). It is not accurate however to say that they are not incentivized. Projects are incentivizing heavily on UniV 3 . Just less efficiently. ScaleWeb 3 : As mentioned by @GFXlabs @katie, the Ask is very large - especially given in a lump sum. It only looks very large if you look at it without applying any comparative analysis to other grants that have gone out (as high as 9 M OP) relative to size and performance of the grantee protocols. That is why we took care to lay this out above. Indeed, it is actual significantly less in $ value terms that the original grant given to us by OP Labs. You have to also take into consideration that the matching investment of incentives ($ 6 m+) from Velodrome here is unprecedented and we’re the only project that has partner add their own matches on top of that to access the incentives, increasing the multiplier effect It is critical for the effectiveness of these programs that Governance evaluate large asks in their broader context. I would ask that if we continue to call the ask “large” we get specific in relative to what. ScaleWeb 3 : Requiring projects to invest into Velo instead of Op is not optimal in our opinion. We would look at this more postive if projects were to lock Op or an 80 / 20 position that helps with effective liquidity (±) I’m not sure I follow here. When projects lock VELO they gain the ability to direct emissions to build liquidity and their share of the 100 % of protocol that is directed to lockers. The token has both functional and financial utility to the protocols, allowing them to create revenue positive liquidity programs. The procuring and locking of it also supports a virtuous cycle that benefits the ecosystem at large. It is what has helped to drop ecosystem liquidity costs by 30 %- 70 %. Why isn’t this a behavior we’d want to incentivize? OP tokens at this time only utility is governance. I’m not sure why Velodrome would be the best place to force the locking of $OP tokens. This seems like something better undertaken by governance. For example, perhaps in the future locking/staking it required for voting. That said, we do care a lot about bringing more utility to the OP token 1 . That is part of why the Optimism Foundation received the largest partner veNFT to support their ability to vote for incentives (in perpetuity) for OP pairs. It is why we’ve raised possible solutions like increasing the number of OP token pairs and making it possible to delegate your OP while in LPs. ScaleWeb 3 : You mention competiting incentives: Do you mean within or outside of Optimism? Yes, competing incentives coming from other chains such as Arbitrum, Metis, etc. [quote=“ScaleWeb 3 , post: 49 , topic: 3736 ”] What kind of impact do you expect from full deployments of Curve and the upcoming start of incentives on Uniswap, Curve, Sushi + Velodrome on Velo bribing, efficiency, market share? [/quote] As I understand things, Curve has no plans for a full deployment on Optimism. Staking will remain on mainnet, governance will remain on mainnet, and fees will continue to be sent to mainnet indefinitely. It sounds as if native bribing may eventually come, but there are no immediate plans outside of the stopgap solution they’ve presented for the purposes of receiving a grant. As for incentives on those other platforms, our hope would be that the combined power of them helps to attract more liquidity and volume from mainnet and alt L 1 s, growing the total amount of TVL, volume, and economic activity on Optimism as a whole. The goal for all of us needs to be to reach that tipping point where Optimism can compete for the largest trades and liquidity providers, which creates a flywheel effect attracting even more activity to the network. ScaleWeb 3 : You state that liquidity cost from bribing is cheaper than direct incentives. Do you compare the same incentives on uni v 2 or uni v 3 as uni v 3 might make up for the “extra cost of direct incentives”? Bribe for emissions models such as Curve and Velodrome have been demonstrated to be more efficient than direct incentives on UniV 2 or UniV 3 . We have plenty of direct 1 : 1 examples comparing incentives on UniV 3 vs Velodrome as @tao outlined above. It is why there are 20 + protocols incentivizing on Velodrome and like 3 on Uniswap. It is also why projects like Aelin shifted all of their incentives to Velodrome from Uniswap saving millions in the process. ScaleWeb 3 : Do you believe it makes sense to incentivize the same pairs on different DEXs? Yes, it certainly could make sense to push every DEX to co-incentivize key ecosystem public good pairs as part their proposals. I actually advocated for this on Curve’s proposal, but it didn’t seem like there was any appetite for it there. ScaleWeb 3 : Despite “slow” market share growth of DEX aggregators on l 2 s, we strongly believe in abstraction over time & that users move towards wallets with built-in meta-aggregators in low-cost environments. Hence, we’d recommend a focus on protocol efficiency metrics (Slippage, trades (volume) routed, effective liquidity) over adoption KPIs (TVL, direct users, transactions). We stand up great on these metrics too, more data coming. ScaleWeb 3 : Probably this doesn’t need to be stated. 4 Mio Op ( 110 K OP per week!) is definitely a huge Ask. We appreciate the depth of the proposal and data provided, some of the “comparable metrics” are flawed though (apples & oranges) and should at most be used as small indicator in a comprehensive review. Good ser. Out of respect for us and the 20 + protocols who have co-signed the proposal, can you please demonstrate the flaw or suggest a better framework before implying ours is flawed in some way. As stated above, the ask is not huge relative to objective measures or the matching investment. Additionally, no other proposal has ever been paired as simply with a proven 2 x- 3 x return on the grant value or a promise to match 1 . 6 x the underlying value in incentives. It would behoove us not to think of it in terms of this will cost $ 3 . 8 m. But rather, it will return at least $ 7 . 6 m to $ 11 . 4 m in value based on the demonstrated performance of the original grant. I have a feeling that if governance doesn’t show a capacity to process large deeply evidenced grant requests at a similar level to OP Labs that the power to allocate them may be shifted away. More to come.
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  • SethVdL: alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. I am not one for long winded governance debates and even knowingly sat out on the Overtime discussion even though I sit on the Thales Council. To me, the less said the better and many people smarter than I am perfectly argued the details of that proposal for a successful outcome. That being said, I feel compelled to point out this statement from Alex because I feel the Velodrome ROI is in a class of it’s own and I want voters to understand what’s at stake. I get the hesitance towards a relatively new bribing system that brands itself as a “public good”. However, the system is working and it’s currently providing multiple protocols the opportunity to have deep liquidity for a fraction of the cost elsewhere. An approved grant to velodrome is like granting the entire ecosystem imo… which is what we are set out to do. Is the flywheel sustainable? Idk. But the potential reward (with data to back projections) certainly seems worth the risk. That’s why I feel the proposed staging option that Alex proposed (w/ Katie’s support) is the best way to go about this proposal. My stance on this topic is only my personal opinion and does not reflect anyone else.
  • alexcutlerdoteth: Good Morning Voting is coming up so we wanted to create a summary/guide of the discussion so far for those unable to parts through the record breaking 133 comments on the proposal. Overview Velodrome spent several weeks creating what is likely the detailed and evidenced proposal to be submitted to governance yet. If you have the time, please consider reading its in it’s entirety. Since it’s posting 12 days ago it has received 133 comments from 31 commentators: Positive Commentators: 17 (58%) Mixed Commentators: 5 (17%) Negative Commentators: 7 (24%) As you can see, there are more positive commentators than negative and mixed commentators combined. Though it may be hard to tell from differentials in the volume of post: 2.4x more commentators were positive than negative 100% of comments from builders were positive 43% of negative commentators were from new accounts Only 13% of positive comments were from new accounts Notable Positive Comments Since there are have been far more positive comments than negative ones on the proposal, we’ll start by highlighting a few positive ones that we think emphasize our impact well. You can also check out the testimonials we’ve collected from 10+ partners (and counting) on our Twitter. Aes: this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism. bebis: There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team. They’re on-boarding a ton of people the hard way - with actual customer/client services. They’re getting teams and users invested long-term in the ecosystem’s success. They’re the main Optimism point of contact if you’re a builder/developer. Their bribing system makes operations much lighter for small teams and startups. They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously. SethVdL: alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. I am not one for long winded governance debates and even knowingly sat out on the Overtime discussion even though I sit on the Thales Council … That being said, I feel compelled to point out this statement from Alex because I feel the Velodrome ROI is in a class of it’s own and I want voters to understand what’s at stake … the system is working and it’s currently providing multiple protocols the opportunity to have deep liquidity for a fraction of the cost elsewhere. An approved grant to velodrome is like granting the entire ecosystem imo… which is what we are set out to do. TokenBrice: We are currently leading various campaigns to sustain liquidity, whether on Curve, through Warden Bribes, or on Velodrome. In terms of the amount of liquidity sustained / $-invested, Velodrome is one to two orders of magnitude above the competition. …it is delivering beyond what was expected : the OP veVELO locking bonus is a key part of the equation - increasing the efficiency of the flywheel even further. Besides, it drives projects to lock VELO, which means they enter a long-term commitment with Velodrome and Optimism. states_of_nature1651: It seems like the main source of the criticisms is that the benefit for Optimism looks like this: Optimism should be looking to cultivate the presence of legacy mainnet protocols rather than supporting OP native upstarts with flashy marketing and distortive incentives. Supporting deep liquidity on known legacy protocols will be better for OP in the long run. Putting our thumb on the scale for Velodrome will prevent this needed development. I think this is a flawed argument based on the data provided and I don’t see how any other current ecosystem player will step in to fill the niche Velodrome is filling in the near term. This isn’t a knock on the legacy protocols. Onboarding a bunch of new protocols to Optimism makes no sense for them as a growth strategy. This shows up If you look at their grant proposals. They are looking to extend their current competitive advantage on mainnet to Optimism - not get into the business Velodrome is in. jornx: I’ve been a long time user of Optimism and I use it frequently since I do a lot of arbitrage and other trading strategies on here…Optimism was never that interesting because liquidity was very limited on the main DEX at that time (uniswap). When Velodrome was added and especially when the OP grant was liquidity boomed and there were a lot more projects with deep liquidity on Optimism.When I look at all the grants that have been given by OP in my opinion Velodrome must have been one of the most succesful, onboarding new users and creating more possibilities for the user on the network. Key Discussion Points While negative and mixed commenters have represented a minority of the total engagement on the proposal, questions and concerns they’ve raised have allowed us to discuss and clarify key points on our proposal. We provide a quick overview of some of the key questions raised and provide short summaries of our responses: Is Velodrome Asking for Too Large a Grant? TLDR: No. It is 90%+ smaller than the average grant by every KPI, offers a proven 2x-3x ROI, and comes with Velodrome offering $6.5mm in co-incentives (31x those of other DEXs combined). Likewise, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of grant funds. No alternative frameworks for grant size evaluation have been suggested or offered. Is The Lock Bonus An Appropriate Use of Funds? TLDR: Yes. The incentive flows to veTOKEN lockers consistent with other proposals such as Curve/Balancer and while drive similar second order effects that grow the ecosystem by multiples and reduce costs for the ecosystem. No data has been provided suggesting it has any meaningful impact on price. Would Builder Grants be Better? TLDR: No. Velodrome grants have brought 30+ new builders to the ecosystem by reducing their incentive costs by 20% - 70% while less accountable direct builder grants offered by other protocols have yet to demonstrate their efficacy. Is Velodrome Really Competitive with Curve and Uniswap? TLDR: Yes. Velodrome is more efficient in TVL/Volume / $ spent in incentives (lowering costs ecosystem wide). It also attracts similar levels of volume per dollar in TVL while simultaneously hosting 3.2x more ecosystem projects tokens than Uniswap and Curve combined. Should Velodrome Be Forced to Operate Without OP Incentives? TLDR: Velodrome has demonstrated the highest ROI in terms of ecosystem growth of any governance or partner fund grant to date. The primary impact of pulling back on incentives would be to slow or reverse that ecosystem growth while simultaneously continuing the flow of incentives to less effective programs on other DEXs making comparative evaluations of different programs more challenging. Incentives already represent a declining proportion of our total activity and we expect that to continue to shrink over the course of this grant. Does Granting Velodrome Harm Other DEXs? TLDR: Ecosystem native DEXs and multi-chain DEXs have different goals and incentives when it comes to growing Optimism and cannot be easily compared. Overall though, all should be evaluated / granted equally in terms of the growth multiple they can return and growing ecosystem activity will benefit all. Summary We hope you’ve found this summary helpful and will continue to add it if/when new topics are raised to make the overall thread a bit easier to navigate as we move into the voting page. Thank you for reading!
  • alexcutlerdoteth: forrest: I voted Against this proposal. forrest: Disclosure: I co-founded a different Optimism DEX so consider me biased Fair enough. I actually didn’t realize you were a Rubicon founder. I think an abstention in that case might be more appropriate, but there is no rule that you can’t vote down a fellow DEX so that’s your call. For the record, if Rubicon can come back showing that they have delivered same kind of growth multiples on your 900,000 OP grant I promise we’ll be first in line to show support for your next proposal. forrest: This Grant would be 1.72% of Optimism’s Governance Fund and would grow the circulating supply of the OP token by 1.86%. This is significant, and I do not appreciate Velodrome team members trying to say otherwise. We are talking about millions of $ here: Since you raised this again, I’ll want to make sure reemphasize all our responses that put the size of our ask in proper context so people don’t the wrong idea. Our ask is significantly smaller than those distributed to date by the Governance Fund relative to key KPIs: tao: As a share of the Optimism ecosystem, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of the Governance Fund. tao: 98% less than average OP granted per $ in TVL 80% less than median OP granted per $ in TVL 98% less than average OP granted per $ in Volume 65% less than median OP granted per $ in Volume 98% less than average OP granted per transaction 86% less than the median OP granted per transaction 91% less than the average OP granted per user 51% less than the median OP granted per user Velodrome is offering 31x the co-incentives of other DEX projects combined while only asking for 1.6x larger grant. alexcutlerdoteth: Velodrome Total Grant: 7,000,000 OP Total Co-Incentives: $12,500,000 Total Projects Supported: 29 Total Projected ROI: 2x-3x (minimum) Other DEX Protocols: Total Grant: 4,240,000 OP Total Co-Incentives: $360,000 (estimated) Total Projects Supported: 9 Total Projected ROI: TBD Our grant request is oriented towards continuing activities that have a proven ability to return 2x-3x the underlying value of grant: tao: $6M+ VELO liquidity incentives distributed into the ecosystem (2-3x OP grant) 30+ new protocols onboarded and supported with liquidity growth in ecosystem 30-70% reduction in liquidity incentive costs per $ TVL for ecosystem partners $5M+ liquidity of OP token pairs, creating $1B in volume $1M+ in protocol revenue returned to veVELO lockers (primarily protocols) $10M+ value locked as veVELO (70% of total) locked into the Optimism for ~3.5ys $250k veVELO airdrop for OP Team, $2M veVELO airdrop to ecosystem partners alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. Our grant is dramatically over performing Governance Fund grants to date: alexcutlerdoteth: According to the Foundations analysis of grants to date, the 42.6M OP granted thus far has earned: A 100% increase in transactions at a cost of 676 OP per incremental transaction A 74% increase in TVL (60M) at a cost of about .3 OP per incremental dollar In contrast, Velodrome’s grant of 3M OP from OPLabs has thus far earned: A 100% increase in transactions, at a cost of 40 OP per incremental transaction A 400% increase in TVL ($65M), at a cost of .03 OP per incremental dollar alexcutlerdoteth: Indeed, Velodrome has actually onboarded more net-new protocols (20 for 3M OP) than the Governance Fund itself (18 for 7.4M OP) and did so at a fraction of the cost. In short, the grant only looks large if you ignore baselines in terms of KPIs, massive co-investment, or demonstrated ROI multiples it has delivered. It remains significantly smaller in actual dollar terms than the one originally given to us by OPLabs. Repeatedly suggesting “it is too big” without directly engaging in this context isn’t constructive, especially from someone who received their own incredibly generous grant but has yet to produce evidence of similar returns.
• alexcutlerdoteth - No Role

  Oct. 25, 2022, 2:56 p.m.
  Ardordo: then I would still be wary of using these metrics for justifying the size of the new … Ardordo: then I would still be wary of using these metrics for justifying the size of the new grant We’ve provided (insofar as I know) the only objective framework for evaluating a request of this size that takes into account ALL prior grants. Unless you are suggesting delegates should just go on their gut intuition, which is in part which has led to the vast disparity in grant performance to date, please suggest an alternative model that feels more reasonable than the one we’ve offered here. Or, just ignore it and note that we’re the first proposal to ever cover more than the full grant amount in co-incentives. Ardordo: But doesn’t that somewhat force other projects to work with Velodrome to maximize their funds and thus create unfair conditions for Velodromes competitors? Every DEX on Optimism has submitted their grant requests of their own design, all of them contained incentives, all but one has approved to date with minimal edits. Each has largely been given what they have asked for to incentivize users and now have a chance to demonstrate the effectiveness of the programs they designed. Your suggestion that anyone is being “forced” to do anything makes me think you’re not engaging in good faith here. If they can drive similar growth, I expect them to do exactly what we’re doing. Come back with results and ask for additional to support it. But mostly, this is the absolute wrong way to think about DEXs on Optimism. The goal of grants is to grow the entire ecosystem. DEXs on Optimism are less in competition with one another than we are collectively in a competition to attract liquidity from other layers and chains (although some are less incentivized to focus on attracting it away from their own platforms on other networks) . Deeper liquidity across all of us will drive more volume across of us and drive economic growth across the network. Turning it into a zero-sum marketshare on the network is absolutely missing the forrest for the trees and misunderstands the entire purpose of the grants.
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  • Ardordo: alexcutlerdoteth: We’ve provided (insofar as I know) the only objective framework for evaluating a request of this size that takes into account ALL prior grants. Unless you are suggesting delegates should just go on their gut intuition, which is in part which has led to the vast disparity in grant performance to date, please suggest an alternative model that feels more reasonable than the one we’ve offered here. Or, just ignore it and note that we’re the first proposal to ever cover more than the full grant amount in co-incentives. Even if the approach is novel and there’s maybe not an alternative model that feels more reasonable, then I was only pointing out that the provided data (in this case the percentages that justify the size of the grant) should still be looked at critically. The information in that section is skewed due to not all projects being in comparable stages of using their grants. alexcutlerdoteth: Your suggestion that anyone is being “forced” to do anything makes me think you’re not engaging in good faith here. I am an Optimism user that wishes the best for the network. But you are right in the sense that I do have my concerns about the feasibility of Velodrome’s low-fee model for all pairs generating enough revenue to be sustainable in the long-term when extra incentives (such as OP grants) stop. In my opinion different assets with different volatilities and liquidities should have different fees to be serve the market. But this is not the point of this discussion, I just want the possibility for other models to also thrive on the network. alexcutlerdoteth: DEXs on Optimism are less in competition with one another than we are collectively in a competition to attract liquidity from other layers and chains (although some are less incentivized to focus on attracting it away from their own platforms on other networks). I have not objected the fact that the priority is on growing the entire ecosystem and attracting liquidity into the network. We all probably also agree that healthy competition between different projects only strengthens and livens the network. I believe this could be potentially hindered by one of the competitors receiving substantially larger grants in comparison.
• jornx - No Role

  Oct. 25, 2022, 3:03 p.m.
  Long time reader, first time poster here on the forums. I’ve been a long time user of Optimism and … Long time reader, first time poster here on the forums. I’ve been a long time user of Optimism and I use it frequently since I do a lot of arbitrage and other trading strategies on here. From my own experience Optimism was never that interesting because liquidity was very limited on the main DEX at that time (uniswap). When Velodrome was added and especially when the OP grant was liquidity boomed and there were a lot more projects with deep liquidity on Optimism. When I look at all the grants that have been given by OP in my opinion Velodrome must have been one of the most succesful, onboarding new users and creating more possibilities for the user on the network. In my mind this grant to Velodrome would be an easy yes and I will certainly vote for the proposal. Keep it up and keep making it easy for protocols to come to Optimism and provide liquidity.
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  • alexcutlerdoteth: Good Morning Voting is coming up so we wanted to create a summary/guide of the discussion so far for those unable to parts through the record breaking 133 comments on the proposal. Overview Velodrome spent several weeks creating what is likely the detailed and evidenced proposal to be submitted to governance yet. If you have the time, please consider reading its in it’s entirety. Since it’s posting 12 days ago it has received 133 comments from 31 commentators: Positive Commentators: 17 (58%) Mixed Commentators: 5 (17%) Negative Commentators: 7 (24%) As you can see, there are more positive commentators than negative and mixed commentators combined. Though it may be hard to tell from differentials in the volume of post: 2.4x more commentators were positive than negative 100% of comments from builders were positive 43% of negative commentators were from new accounts Only 13% of positive comments were from new accounts Notable Positive Comments Since there are have been far more positive comments than negative ones on the proposal, we’ll start by highlighting a few positive ones that we think emphasize our impact well. You can also check out the testimonials we’ve collected from 10+ partners (and counting) on our Twitter. Aes: this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism. bebis: There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team. They’re on-boarding a ton of people the hard way - with actual customer/client services. They’re getting teams and users invested long-term in the ecosystem’s success. They’re the main Optimism point of contact if you’re a builder/developer. Their bribing system makes operations much lighter for small teams and startups. They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously. SethVdL: alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. I am not one for long winded governance debates and even knowingly sat out on the Overtime discussion even though I sit on the Thales Council … That being said, I feel compelled to point out this statement from Alex because I feel the Velodrome ROI is in a class of it’s own and I want voters to understand what’s at stake … the system is working and it’s currently providing multiple protocols the opportunity to have deep liquidity for a fraction of the cost elsewhere. An approved grant to velodrome is like granting the entire ecosystem imo… which is what we are set out to do. TokenBrice: We are currently leading various campaigns to sustain liquidity, whether on Curve, through Warden Bribes, or on Velodrome. In terms of the amount of liquidity sustained / $-invested, Velodrome is one to two orders of magnitude above the competition. …it is delivering beyond what was expected : the OP veVELO locking bonus is a key part of the equation - increasing the efficiency of the flywheel even further. Besides, it drives projects to lock VELO, which means they enter a long-term commitment with Velodrome and Optimism. states_of_nature1651: It seems like the main source of the criticisms is that the benefit for Optimism looks like this: Optimism should be looking to cultivate the presence of legacy mainnet protocols rather than supporting OP native upstarts with flashy marketing and distortive incentives. Supporting deep liquidity on known legacy protocols will be better for OP in the long run. Putting our thumb on the scale for Velodrome will prevent this needed development. I think this is a flawed argument based on the data provided and I don’t see how any other current ecosystem player will step in to fill the niche Velodrome is filling in the near term. This isn’t a knock on the legacy protocols. Onboarding a bunch of new protocols to Optimism makes no sense for them as a growth strategy. This shows up If you look at their grant proposals. They are looking to extend their current competitive advantage on mainnet to Optimism - not get into the business Velodrome is in. jornx: I’ve been a long time user of Optimism and I use it frequently since I do a lot of arbitrage and other trading strategies on here…Optimism was never that interesting because liquidity was very limited on the main DEX at that time (uniswap). When Velodrome was added and especially when the OP grant was liquidity boomed and there were a lot more projects with deep liquidity on Optimism.When I look at all the grants that have been given by OP in my opinion Velodrome must have been one of the most succesful, onboarding new users and creating more possibilities for the user on the network. Key Discussion Points While negative and mixed commenters have represented a minority of the total engagement on the proposal, questions and concerns they’ve raised have allowed us to discuss and clarify key points on our proposal. We provide a quick overview of some of the key questions raised and provide short summaries of our responses: Is Velodrome Asking for Too Large a Grant? TLDR: No. It is 90%+ smaller than the average grant by every KPI, offers a proven 2x-3x ROI, and comes with Velodrome offering $6.5mm in co-incentives (31x those of other DEXs combined). Likewise, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of grant funds. No alternative frameworks for grant size evaluation have been suggested or offered. Is The Lock Bonus An Appropriate Use of Funds? TLDR: Yes. The incentive flows to veTOKEN lockers consistent with other proposals such as Curve/Balancer and while drive similar second order effects that grow the ecosystem by multiples and reduce costs for the ecosystem. No data has been provided suggesting it has any meaningful impact on price. Would Builder Grants be Better? TLDR: No. Velodrome grants have brought 30+ new builders to the ecosystem by reducing their incentive costs by 20% - 70% while less accountable direct builder grants offered by other protocols have yet to demonstrate their efficacy. Is Velodrome Really Competitive with Curve and Uniswap? TLDR: Yes. Velodrome is more efficient in TVL/Volume / $ spent in incentives (lowering costs ecosystem wide). It also attracts similar levels of volume per dollar in TVL while simultaneously hosting 3.2x more ecosystem projects tokens than Uniswap and Curve combined. Should Velodrome Be Forced to Operate Without OP Incentives? TLDR: Velodrome has demonstrated the highest ROI in terms of ecosystem growth of any governance or partner fund grant to date. The primary impact of pulling back on incentives would be to slow or reverse that ecosystem growth while simultaneously continuing the flow of incentives to less effective programs on other DEXs making comparative evaluations of different programs more challenging. Incentives already represent a declining proportion of our total activity and we expect that to continue to shrink over the course of this grant. Does Granting Velodrome Harm Other DEXs? TLDR: Ecosystem native DEXs and multi-chain DEXs have different goals and incentives when it comes to growing Optimism and cannot be easily compared. Overall though, all should be evaluated / granted equally in terms of the growth multiple they can return and growing ecosystem activity will benefit all. Summary We hope you’ve found this summary helpful and will continue to add it if/when new topics are raised to make the overall thread a bit easier to navigate as we move into the voting page. Thank you for reading!
• mastermojo - No Role

  Oct. 25, 2022, 3:15 p.m.
  I am one of the Synthetix Ambassadors and a member of the Defi Shadow Committee. I am an Optimism d… I am one of the Synthetix Ambassadors and a member of the Defi Shadow Committee. I am an Optimism delegate [Delegate Commitments - # 65 by mastermojo 1 ] with sufficient voting power, and I believe this proposal is ready to move to a vote.
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• alexcutlerdoteth - No Role

  Oct. 25, 2022, 3:18 p.m.
  Thank you kind ser! We may still make an adjustment or two so will circle back with you to re-appro… Thank you kind ser! We may still make an adjustment or two so will circle back with you to re-approve if so. :slight_smile:
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• alexcutlerdoteth - No Role

  Oct. 25, 2022, 3:30 p.m.
  @GFXlabs @katie So on the note of creating some sort of staging for the grant, we’ve got an idea fo… @GFXlabs @katie So on the note of creating some sort of staging for the grant, we’ve got an idea for you that if successful could potentially serve a good model for future large grants as well. Option 1 : Keep grant amount the same, but only deliver half the funds up front Add requirement for a full report on efficacy at the 2 . 5 month mark to be submitted directly to governance Upon delivery of that report, open a 2 w window where anyone in governance can raise a proposal that upon two delegate approvals can proceed direct to snapshot to suspend further grant payments If none are submitted, funding continues (or) Keep grant amount the same, but only deliver half the funds up front Add requirement for a full report on efficacy at the 2 . 5 month mark to be submitted directly to governance The committee overseeing defi grants is given is given an opportunity to approve or deny the next payment Approval does not require a snapshot confirmation, but denying it does Overall, what we’re trying to get at here is a way to limit the rather intensive work required with a full new grant application (we’ve spent a lot of time on this that might be better focused elsewhere :wink: ) while still giving governance the power to exercise more oversight. It also has the benefit to conveying to partners a more sustained incentive plan is likely so they can plan accordingly, but makes clear to them what would result in it’s being not being continued.
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  • katie: Thank you for the thoughtful compromise. Speaking on behalf of myself, not Defi Committee A, I really like the first option you outlined. This is a great way to monitor grant performance and still include governance in the decision making process. This same model could also be used for projects requesting large grants in the future.
• Ardordo - No Role

  Oct. 25, 2022, 4:45 p.m.
  alexcutlerdoteth: We’ve provided (insofar as I know) the only objective framework for evaluati… alexcutlerdoteth: We’ve provided (insofar as I know) the only objective framework for evaluating a request of this size that takes into account ALL prior grants. Unless you are suggesting delegates should just go on their gut intuition, which is in part which has led to the vast disparity in grant performance to date, please suggest an alternative model that feels more reasonable than the one we’ve offered here. Or, just ignore it and note that we’re the first proposal to ever cover more than the full grant amount in co-incentives. Even if the approach is novel and there’s maybe not an alternative model that feels more reasonable, then I was only pointing out that the provided data (in this case the percentages that justify the size of the grant) should still be looked at critically. The information in that section is skewed due to not all projects being in comparable stages of using their grants. alexcutlerdoteth: Your suggestion that anyone is being “forced” to do anything makes me think you’re not engaging in good faith here. I am an Optimism user that wishes the best for the network. But you are right in the sense that I do have my concerns about the feasibility of Velodrome’s low-fee model for all pairs generating enough revenue to be sustainable in the long-term when extra incentives (such as OP grants) stop. In my opinion different assets with different volatilities and liquidities should have different fees to be serve the market. But this is not the point of this discussion, I just want the possibility for other models to also thrive on the network. alexcutlerdoteth: DEXs on Optimism are less in competition with one another than we are collectively in a competition to attract liquidity from other layers and chains (although some are less incentivized to focus on attracting it away from their own platforms on other networks). I have not objected the fact that the priority is on growing the entire ecosystem and attracting liquidity into the network. We all probably also agree that healthy competition between different projects only strengthens and livens the network. I believe this could be potentially hindered by one of the competitors receiving substantially larger grants in comparison.
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  • alexcutlerdoteth: Ardordo: there’s maybe not an alternative model that feels more reasonable It sounds like we agree we’ve presented the most “reasonable” model for evaluating the relative grant sizes. Ardordo: The information in that section is skewed due to not all projects being in comparable stages of using their grants. This presumes the impact of grants is cumulative, which is not something we’ve seen born out consistently in the data. If you have data that suggests they are, please share it. The data is not skewed, it presents the most comprehensive view of grants relative to KPIs to date and helps us in beginning to use a more consistent and quantitative approach when evaluating asks. Ardordo: I believe this could be potentially hindered by one of the competitors receiving substantially larger grants in comparison. If any other DEX approaches governance with $6.5 million in co-incentives and a demonstrated track record of delivering 2x-3x return the investment of previous grants they should get grants that reflect that. If not, they should be lower proportionally to what they are offering and have demonstrated. Governance isn’t here dole out equal grants to every project in a category, they are here to drive exponential ecosystem growth. We’ve shown we can do that. Other protocols have the same opportunity.
• katie - No Role

  Oct. 25, 2022, 4:45 p.m.
  Thank you for the thoughtful compromise. Speaking on behalf of myself, not Defi Committee A, I rea… Thank you for the thoughtful compromise. Speaking on behalf of myself, not Defi Committee A, I really like the first option you outlined. This is a great way to monitor grant performance and still include governance in the decision making process. This same model could also be used for projects requesting large grants in the future.
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• TigrisOfGaul - No Role

  Oct. 25, 2022, 5:22 p.m.
  The Velodrome team has masterfully and thoughtfully built out what has quickly become the lodestone… The Velodrome team has masterfully and thoughtfully built out what has quickly become the lodestone of liquidity infrastructure on Optimism. In the face of monumental growth, they continue to demonstrate attention to the individual needs of dozens of disparate protocols on Optimism. This proposal reflects their deep understanding of capital efficiency and cross-protocol dynamics as it relates to ecosystem growth.
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• jackanorak - No Role

  Oct. 25, 2022, 5:55 p.m.
  I’m a delegate with enough voting power Delegate Commitments - # 136 by jackanorak 2 and i think… I’m a delegate with enough voting power Delegate Commitments - # 136 by jackanorak 2 and i think this is ready for a vote EDIT: not sure, this could be against the rules – we’ll find someone else
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• alexcutlerdoteth - No Role

  Oct. 25, 2022, 6:34 p.m.
  @Katie @mastermojo We’ve added the section on staging the grant. Would you be willing to approve to… @Katie @mastermojo We’ve added the section on staging the grant. Would you be willing to approve to move to the review phase?
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  • katie: I am an Optimism delegate [Delegate Commitments - #18 by katie] with sufficient voting power and I believe this proposal is ready to move to a vote.
• katie - No Role

  Oct. 25, 2022, 6:39 p.m.
  I am an Optimism delegate [Delegate Commitments - # 18 by katie 3 ] with sufficient voting power … I am an Optimism delegate [Delegate Commitments - # 18 by katie 3 ] with sufficient voting power and I believe this proposal is ready to move to a vote.
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• mastermojo - No Role

  Oct. 25, 2022, 6:53 p.m.
  I am one of the Synthetix Ambassadors and a member of the Defi Shadow Committee. I am an Optimism d… I am one of the Synthetix Ambassadors and a member of the Defi Shadow Committee. I am an Optimism delegate [Delegate Commitments - # 65 by mastermojo ] with sufficient voting power, and I believe this proposal is ready to move to a vote. Reposting encase I need to.
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• alexcutlerdoteth - No Role

  Oct. 25, 2022, 7:31 p.m.
  Ardordo: there’s maybe not an alternative model that feels more reasonable It sounds like we… Ardordo: there’s maybe not an alternative model that feels more reasonable It sounds like we agree we’ve presented the most “reasonable” model for evaluating the relative grant sizes. Ardordo: The information in that section is skewed due to not all projects being in comparable stages of using their grants. This presumes the impact of grants is cumulative, which is not something we’ve seen born out consistently in the data. If you have data that suggests they are, please share it. The data is not skewed, it presents the most comprehensive view of grants relative to KPIs to date and helps us in beginning to use a more consistent and quantitative approach when evaluating asks. Ardordo: I believe this could be potentially hindered by one of the competitors receiving substantially larger grants in comparison. If any other DEX approaches governance with $ 6 . 5 million in co-incentives and a demonstrated track record of delivering 2 x- 3 x return the investment of previous grants they should get grants that reflect that. If not, they should be lower proportionally to what they are offering and have demonstrated. Governance isn’t here dole out equal grants to every project in a category, they are here to drive exponential ecosystem growth. We’ve shown we can do that. Other protocols have the same opportunity.
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• forrest - No Role

  Oct. 25, 2022, 8:25 p.m.
  Thanks for the really informative proposal. It’s clear the team translated the Grant from the Partn… Thanks for the really informative proposal. It’s clear the team translated the Grant from the Partner Fund into an awesome amount of growth. alexcutlerdoteth: In other words, I think the ask only looks big in a vacuum. To date, 47 . 7 million OP was distributed through grants, and 4 million OP is 1 . 72 % of the entire Governance Fund. With that context, the amount is large. GFXlabs: Your own metrics listed here could be used to argue Velodrome has hit “escape velocity” and does not need further grants. That’s where I agree with this from @GFXlabs, although not with the solution they propose. The revision with some of the grant amount unlocked later is a good improvement, but it’s not clear to me that Velodrome now needs more OP incentives than it received when it was getting started. I would have the same hesitation if Aave drafted a proposal requesting more than the 5 million OP they received from the Partner Fund, despite their program’s massive success for the entire Optimism ecosystem.
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• alexcutlerdoteth - No Role

  Oct. 26, 2022, 2:36 a.m.
  forrest: To date, 47 . 7 million OP was distributed through grants, and 4 million OP is 1… forrest: To date, 47 . 7 million OP was distributed through grants, and 4 million OP is 1 . 72 % of the entire Governance Fund. With that context, the amount is large. Why is 1 . 72 % of the entire Governance Fund too large in your mind? Of grantee protocols we represent protocols about 10 % of TVL, 12 % of volume, 16 % of transactions, and 13 % of users. What feels like a appropriate ask to you? forrest: it’s not clear to me that Velodrome now needs more OP incentives than it received when it was getting started. The underlying value of the incentives is actually pretty much equal to the prior grant and is focused on extending the incentive programs that have driven a 2 x- 3 x ROI, reduced ecosystem costs by 30 %- 70 %, and onboarded 30 new protocols. It isn’t so much a question of “does Velodrome need the grant”, it is a matter of “does the ecosystem need to continue to grow at this pace and are incentives on Velodrome one of the best ways to do it?” I think the answer to both of those questions is clearly yes.
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• sogipec - No Role

  Oct. 26, 2022, 4:36 p.m.
  Pablo from Angle Protocol here! Just want to praise the quality of the Velodrome team and say that … Pablo from Angle Protocol here! Just want to praise the quality of the Velodrome team and say that they’ve literally been the facilitators of the growth of Angle on Optimism. Goes without saying that I fully support this proposal
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• SethVdL - No Role

  Oct. 26, 2022, 10:20 p.m.
  alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $ 3 . 8 m.… alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $ 3 . 8 m. But rather, it will return at least $ 7 . 6 m to $ 11 . 4 m in value based on the demonstrated performance of the original grant. I am not one for long winded governance debates and even knowingly sat out on the Overtime discussion even though I sit on the Thales Council. To me, the less said the better and many people smarter than I am perfectly argued the details of that proposal for a successful outcome. That being said, I feel compelled to point out this statement from Alex because I feel the Velodrome ROI is in a class of it’s own and I want voters to understand what’s at stake. I get the hesitance towards a relatively new bribing system that brands itself as a “public good”. However, the system is working and it’s currently providing multiple protocols the opportunity to have deep liquidity for a fraction of the cost elsewhere. An approved grant to velodrome is like granting the entire ecosystem imo… which is what we are set out to do. Is the flywheel sustainable? Idk. But the potential reward (with data to back projections) certainly seems worth the risk. That’s why I feel the proposed staging option that Alex proposed (w/ Katie’s support) is the best way to go about this proposal. My stance on this topic is only my personal opinion and does not reflect anyone else.
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  • alexcutlerdoteth: Good Morning Voting is coming up so we wanted to create a summary/guide of the discussion so far for those unable to parts through the record breaking 133 comments on the proposal. Overview Velodrome spent several weeks creating what is likely the detailed and evidenced proposal to be submitted to governance yet. If you have the time, please consider reading its in it’s entirety. Since it’s posting 12 days ago it has received 133 comments from 31 commentators: Positive Commentators: 17 (58%) Mixed Commentators: 5 (17%) Negative Commentators: 7 (24%) As you can see, there are more positive commentators than negative and mixed commentators combined. Though it may be hard to tell from differentials in the volume of post: 2.4x more commentators were positive than negative 100% of comments from builders were positive 43% of negative commentators were from new accounts Only 13% of positive comments were from new accounts Notable Positive Comments Since there are have been far more positive comments than negative ones on the proposal, we’ll start by highlighting a few positive ones that we think emphasize our impact well. You can also check out the testimonials we’ve collected from 10+ partners (and counting) on our Twitter. Aes: this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism. bebis: There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team. They’re on-boarding a ton of people the hard way - with actual customer/client services. They’re getting teams and users invested long-term in the ecosystem’s success. They’re the main Optimism point of contact if you’re a builder/developer. Their bribing system makes operations much lighter for small teams and startups. They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously. SethVdL: alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. I am not one for long winded governance debates and even knowingly sat out on the Overtime discussion even though I sit on the Thales Council … That being said, I feel compelled to point out this statement from Alex because I feel the Velodrome ROI is in a class of it’s own and I want voters to understand what’s at stake … the system is working and it’s currently providing multiple protocols the opportunity to have deep liquidity for a fraction of the cost elsewhere. An approved grant to velodrome is like granting the entire ecosystem imo… which is what we are set out to do. TokenBrice: We are currently leading various campaigns to sustain liquidity, whether on Curve, through Warden Bribes, or on Velodrome. In terms of the amount of liquidity sustained / $-invested, Velodrome is one to two orders of magnitude above the competition. …it is delivering beyond what was expected : the OP veVELO locking bonus is a key part of the equation - increasing the efficiency of the flywheel even further. Besides, it drives projects to lock VELO, which means they enter a long-term commitment with Velodrome and Optimism. states_of_nature1651: It seems like the main source of the criticisms is that the benefit for Optimism looks like this: Optimism should be looking to cultivate the presence of legacy mainnet protocols rather than supporting OP native upstarts with flashy marketing and distortive incentives. Supporting deep liquidity on known legacy protocols will be better for OP in the long run. Putting our thumb on the scale for Velodrome will prevent this needed development. I think this is a flawed argument based on the data provided and I don’t see how any other current ecosystem player will step in to fill the niche Velodrome is filling in the near term. This isn’t a knock on the legacy protocols. Onboarding a bunch of new protocols to Optimism makes no sense for them as a growth strategy. This shows up If you look at their grant proposals. They are looking to extend their current competitive advantage on mainnet to Optimism - not get into the business Velodrome is in. jornx: I’ve been a long time user of Optimism and I use it frequently since I do a lot of arbitrage and other trading strategies on here…Optimism was never that interesting because liquidity was very limited on the main DEX at that time (uniswap). When Velodrome was added and especially when the OP grant was liquidity boomed and there were a lot more projects with deep liquidity on Optimism.When I look at all the grants that have been given by OP in my opinion Velodrome must have been one of the most succesful, onboarding new users and creating more possibilities for the user on the network. Key Discussion Points While negative and mixed commenters have represented a minority of the total engagement on the proposal, questions and concerns they’ve raised have allowed us to discuss and clarify key points on our proposal. We provide a quick overview of some of the key questions raised and provide short summaries of our responses: Is Velodrome Asking for Too Large a Grant? TLDR: No. It is 90%+ smaller than the average grant by every KPI, offers a proven 2x-3x ROI, and comes with Velodrome offering $6.5mm in co-incentives (31x those of other DEXs combined). Likewise, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of grant funds. No alternative frameworks for grant size evaluation have been suggested or offered. Is The Lock Bonus An Appropriate Use of Funds? TLDR: Yes. The incentive flows to veTOKEN lockers consistent with other proposals such as Curve/Balancer and while drive similar second order effects that grow the ecosystem by multiples and reduce costs for the ecosystem. No data has been provided suggesting it has any meaningful impact on price. Would Builder Grants be Better? TLDR: No. Velodrome grants have brought 30+ new builders to the ecosystem by reducing their incentive costs by 20% - 70% while less accountable direct builder grants offered by other protocols have yet to demonstrate their efficacy. Is Velodrome Really Competitive with Curve and Uniswap? TLDR: Yes. Velodrome is more efficient in TVL/Volume / $ spent in incentives (lowering costs ecosystem wide). It also attracts similar levels of volume per dollar in TVL while simultaneously hosting 3.2x more ecosystem projects tokens than Uniswap and Curve combined. Should Velodrome Be Forced to Operate Without OP Incentives? TLDR: Velodrome has demonstrated the highest ROI in terms of ecosystem growth of any governance or partner fund grant to date. The primary impact of pulling back on incentives would be to slow or reverse that ecosystem growth while simultaneously continuing the flow of incentives to less effective programs on other DEXs making comparative evaluations of different programs more challenging. Incentives already represent a declining proportion of our total activity and we expect that to continue to shrink over the course of this grant. Does Granting Velodrome Harm Other DEXs? TLDR: Ecosystem native DEXs and multi-chain DEXs have different goals and incentives when it comes to growing Optimism and cannot be easily compared. Overall though, all should be evaluated / granted equally in terms of the growth multiple they can return and growing ecosystem activity will benefit all. Summary We hope you’ve found this summary helpful and will continue to add it if/when new topics are raised to make the overall thread a bit easier to navigate as we move into the voting page. Thank you for reading!
• Butterbum - No Role

  Oct. 26, 2022, 11:25 p.m.
  Hey there, Personally I would like to see Velodrome survive without incentives. tao: Delivery:… Hey there, Personally I would like to see Velodrome survive without incentives. tao: Delivery: 40 K OP incentives per week over 6 months, distributed to veVELO lockers My understanding is, the 1 . 5 Million allocation is for locked up velo. Which seems like the incentive is designed for buy pressure on your token ‘velo’. This is not what this fund is for and previous proposals were slammed for an incentive mechanism like this. Do you agree that this incentive will directly increase the price of Velo?
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  • alexcutlerdoteth: Butterbum: I would like to see Velodrome survive without incentives. Why? Velodrome would survive just fine without incentives. It is the rate of ecosystem growth that would suffer. The cost of liquidity incentives would increase, putting strain on ecosystem treasuries. Projects would need to increase the rate at which they are spending their granted OP to close the gap, depleting governance funds faster and increasing OP sell pressure. And it’d make it harder for new projects to bootstrap and onboard, slowing the growth in economic activity and losing builders to other networks. It would also put Governance in an awkward position where it is directing millions in incentives to multi-chain DEXs worth billions of dollars that are offering somewhere between $0 to a few hundred thousand in co-incentives, while passing on their only homegrown public good DEX’s offer to pump another $6.5mm in stimulus into the ecosystem. According to the data shared by the Foundation on the Governance Grants to date, Velodrome actually attracted more TVL growth ($66mm) than all the governance grants combined ($60mm). Velodrome did this with a grant of 3mm in OP compared to the 40mm OP distributed by governance. You are essentially suggesting ending the most successful ecosystem growth program funded to date. Butterbum: My understanding is, the 1.5 Million allocation is for locked up velo. Which seems like the incentive is designed for buy pressure on your token ‘velo’. You are referring to the “lock bonus” here. The purpose of it is made explicit in the proposal, namely to lower barriers of entry for protocols seeking to invest and build in the Optimism ecosystem. From the proposal: To onboard new protocols to the Optimism ecosystem during uncertain times and in the face of competing incentives, we must ensure that they are able to bootstrap their liquidity in the most cost-effective method possible. At the same time, these incentives should be paired with mechanisms that require protocols to meaningfully invest in the ecosystem for the long term and thus discourage mercenary and exploitative behaviors. Incentivizing the acquisition and locking of veVELO is an ideal strategy in this regard, as it requires a multi-year lock of capital in the ecosystem to receive the lock bonus and access Velodrome’s voting and revenue generation capabilities. It is to our knowledge the only currently running incentive program that requires the locking of capital in the Optimism ecosystem. Incentivizing locking lowers the underlying costs of building an initial veVELO position (by an average of ~25% ) while simultaneously giving any protocol the power to direct emissions and attract liquidity for the long term. Whereas other incentives programs, particularly proposed by DEXs, focus on direct rewards to liquidity providers who have demonstrated a willingness to quickly exit ecosystems when they taper, this locking incentive requires protocols to lock their investment into ecosystem for four years to access the bonus. Indeed, it has already helped lead to $11.2mm (70% of all supply) being locked in the ecosystem for an average of 3.6 years, a feat we have not seen repeated by any other ecosystem incentive program and that isn’t currently possible for protocols like Curve who require you stake on mainnet. These locked positions further increase the capital efficiency of their incentive programs, reduce the need for protocols to rely on external incentives (such as OP) long term, and actually drive revenue back to them (at a pace of over $10M a year returned to lockers atm). https://twitter.com/VelodromeFi/status/1578744476117663745 If there are indeed second order positive effects on token price, it only would only serve to accelerate a flywheel designed to support the ecosystem: further lowering costs, deepening liquidity, increasing volume, attracting users, delivering more revenue to protocols. In short, the more protocols locking value into the ecosystem the better off the ecosystem will be.
  • Butterbum: Thanks for the response @alexcutlerdoteth this wall of text as a response is not necessary I take it this was the response for my Question Butterbum: Do you agree that this incentive will directly increase the price of Velo? alexcutlerdoteth: If there are indeed second order positive effects on token price, it only would only serve to accelerate a flywheel designed to support the ecosystem: further lowering costs, deepening liquidity, increasing volume, attracting users, delivering more revenue to protocols. I feel I should ask it again… but I digress It is Obviously going to have a direct impact on the price of your token. alexcutlerdoteth: Why? I fear Velo would end up relying too heavily on this Fund creating an even bigger problem in the future. whereby without additional funding would lead to a collapse that would hurt the whole Optimism ecosystem, effectively holding us ransom. In my view this is not sustainable growth Grant Proposal Template [OLD] The purpose of the Governance Fund is to incentivize sustainable growth of projects and communities in the Optimism ecosystem. Definition of sustainable growth refers to “the maximum growth rate that a company can sustain without having to increase financial leverage.” alexcutlerdoteth: It would also put Governance in an awkward position where it is directing millions in incentives to multi-chain DEXs worth billions of dollars that are offering somewhere between $0 to a few hundred thousand in co-incentives, while passing on their only homegrown public good DEX’s offer to pump another $6.5mm in stimulus into the ecosystem. This is my point we can’t be expected to " pump another $Xmm in stimulus into the ecosystem" every time the incentives dry up It’s just not sustainable…
• FantomFunhouse - No Role

  Oct. 26, 2022, 11:47 p.m.
  Very well written proposal with substantial data to support the ask. I think it goes without saying… Very well written proposal with substantial data to support the ask. I think it goes without saying that Velodrome has been a critical contributor to Optimism’s growth. They seem to be continuously engaged with protocols not yet on Optimism, and are the only grant recipient I know of that have taken on the voluntary burden of being an unofficial ambassador for the ecosystem. I think this deserves recognition. Several of these protocols who moved to Optimism are posting in this thread in support of the proposal. While this thread has clearly not avoided standard online forum shenanigans, I urge any voters to not miss the forest for the trees. At the current time Velodrome is the very definition of critical infrastructure to Optimism, and the way the $OP incentives flow, both from the prior grant and as proposed, support the whole ecosystem of participants. I am in agreement with @SethVdL’s comments. I believe the ask amount is appropriate and I like the two-phase compromise.
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• Roflmauer - No Role

  Oct. 27, 2022, 3:04 a.m.
  Glad to see this proposal from Velodrome Finance. Clearly one of the main contributors of growth fo… Glad to see this proposal from Velodrome Finance. Clearly one of the main contributors of growth for the Optimism ecosystem, which is demonstrated throughout different data points. From the voice of a regular Optimism user, I would like to see this proposal move forward to a vote.
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• alexcutlerdoteth - No Role

  Oct. 27, 2022, 1:19 p.m.
  Butterbum: I would like to see Velodrome survive without incentives. Why? Velodrome would su… Butterbum: I would like to see Velodrome survive without incentives. Why? Velodrome would survive just fine without incentives. It is the rate of ecosystem growth that would suffer. The cost of liquidity incentives would increase, putting strain on ecosystem treasuries. Projects would need to increase the rate at which they are spending their granted OP to close the gap, depleting governance funds faster and increasing OP sell pressure. And it’d make it harder for new projects to bootstrap and onboard, slowing the growth in economic activity and losing builders to other networks. It would also put Governance in an awkward position where it is directing millions in incentives to multi-chain DEXs worth billions of dollars that are offering somewhere between $ 0 to a few hundred thousand in co-incentives, while passing on their only homegrown public good DEX’s offer to pump another $ 6 . 5 mm in stimulus into the ecosystem. According to the data shared by the Foundation on the Governance Grants to date, Velodrome actually attracted more TVL growth ($ 66 mm) than all the governance grants combined ($ 60 mm). Velodrome did this with a grant of 3 mm in OP compared to the 40 mm OP distributed by governance. You are essentially suggesting ending the most successful ecosystem growth program funded to date. Butterbum: My understanding is, the 1 . 5 Million allocation is for locked up velo. Which seems like the incentive is designed for buy pressure on your token ‘velo’. You are referring to the “lock bonus” here. The purpose of it is made explicit in the proposal, namely to lower barriers of entry for protocols seeking to invest and build in the Optimism ecosystem. From the proposal: To onboard new protocols to the Optimism ecosystem during uncertain times and in the face of competing incentives, we must ensure that they are able to bootstrap their liquidity in the most cost-effective method possible. At the same time, these incentives should be paired with mechanisms that require protocols to meaningfully invest in the ecosystem for the long term and thus discourage mercenary and exploitative behaviors. Incentivizing the acquisition and locking of veVELO is an ideal strategy in this regard, as it requires a multi-year lock of capital in the ecosystem to receive the lock bonus and access Velodrome’s voting and revenue generation capabilities. It is to our knowledge the only currently running incentive program that requires the locking of capital in the Optimism ecosystem. Incentivizing locking lowers the underlying costs of building an initial veVELO position (by an average of ~ 25 % ) while simultaneously giving any protocol the power to direct emissions and attract liquidity for the long term. Whereas other incentives programs, particularly proposed by DEXs, focus on direct rewards to liquidity providers who have demonstrated a willingness to quickly exit ecosystems when they taper, this locking incentive requires protocols to lock their investment into ecosystem for four years to access the bonus. Indeed, it has already helped lead to $ 11 . 2 mm ( 70 % of all supply) being locked in the ecosystem for an average of 3 . 6 years, a feat we have not seen repeated by any other ecosystem incentive program and that isn’t currently possible for protocols like Curve who require you stake on mainnet. These locked positions further increase the capital efficiency of their incentive programs, reduce the need for protocols to rely on external incentives (such as OP) long term, and actually drive revenue back to them (at a pace of over $ 10 M a year returned to lockers atm). https://twitter.com/VelodromeFi/status/ 1578744476117663745 1 If there are indeed second order positive effects on token price, it only would only serve to accelerate a flywheel designed to support the ecosystem: further lowering costs, deepening liquidity, increasing volume, attracting users, delivering more revenue to protocols. In short, the more protocols locking value into the ecosystem the better off the ecosystem will be.
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  • StrategicReserve: alexcutlerdoteth: It would also put Governance in an awkward position where it is directing millions in incentives to multi-chain DEXs worth billions of dollars that are offering somewhere between $0 to a few hundred thousand in co-incentives, while passing on their only homegrown public good DEX’s offer to pump another $6.5mm in stimulus into the ecosystem. I think it would be helpful to evaluate what Velodrome’s “competitors” have received vs. what Velodrome has received. That could help people put in perspective the ask. I don’t have a complete list, but this is what I came up with off the top of my head. Can (edit) if needed. Approved: Uniswap - 1m OP - Partner Fund xToken/Gamma/Uni v3 Staker - 1m OP - Governance Fund Revert - 240k OP - Governance Fund Pending: Curve - 1m OP Arrakis - 500k OP
  • Butterbum: Thanks for the response @alexcutlerdoteth this wall of text as a response is not necessary I take it this was the response for my Question Butterbum: Do you agree that this incentive will directly increase the price of Velo? alexcutlerdoteth: If there are indeed second order positive effects on token price, it only would only serve to accelerate a flywheel designed to support the ecosystem: further lowering costs, deepening liquidity, increasing volume, attracting users, delivering more revenue to protocols. I feel I should ask it again… but I digress It is Obviously going to have a direct impact on the price of your token. alexcutlerdoteth: Why? I fear Velo would end up relying too heavily on this Fund creating an even bigger problem in the future. whereby without additional funding would lead to a collapse that would hurt the whole Optimism ecosystem, effectively holding us ransom. In my view this is not sustainable growth Grant Proposal Template [OLD] The purpose of the Governance Fund is to incentivize sustainable growth of projects and communities in the Optimism ecosystem. Definition of sustainable growth refers to “the maximum growth rate that a company can sustain without having to increase financial leverage.” alexcutlerdoteth: It would also put Governance in an awkward position where it is directing millions in incentives to multi-chain DEXs worth billions of dollars that are offering somewhere between $0 to a few hundred thousand in co-incentives, while passing on their only homegrown public good DEX’s offer to pump another $6.5mm in stimulus into the ecosystem. This is my point we can’t be expected to " pump another $Xmm in stimulus into the ecosystem" every time the incentives dry up It’s just not sustainable…
• StrategicReserve - No Role

  Oct. 27, 2022, 3:11 p.m.
  alexcutlerdoteth: It would also put Governance in an awkward position where it is directing mi… alexcutlerdoteth: It would also put Governance in an awkward position where it is directing millions in incentives to multi-chain DEXs worth billions of dollars that are offering somewhere between $ 0 to a few hundred thousand in co-incentives, while passing on their only homegrown public good DEX’s offer to pump another $ 6 . 5 mm in stimulus into the ecosystem. I think it would be helpful to evaluate what Velodrome’s “competitors” have received vs. what Velodrome has received. That could help people put in perspective the ask. I don’t have a complete list, but this is what I came up with off the top of my head. Can (edit) if needed. Approved: Uniswap - 1 m OP - Partner Fund xToken/Gamma/Uni v 3 Staker - 1 m OP - Governance Fund Revert - 240 k OP - Governance Fund Pending: Curve - 1 m OP Arrakis - 500 k OP
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  • alexcutlerdoteth: Sure, happy to pull some numbers for you. Added to them and corrected a few data points. You’ll see that Velodrome on average between our two proposals is offering 1.7x its grant request in co-incentives and is supporting 3.2x the number of projects as the others combined. For the most part, the other projects have offered zero in co-incentives, with the few that have representing an estimated $400,000 or so (difficult to estimate precisely). That means Velodrome is offering 31x the co-incentives as the other 7 projects combined while only asking for 1.6x the grant size. Most of the other proposals are a mix between haven’t started yet, still waiting on approval, or currently in a progress so as of the moment there is no way to measure if they are achieving a similar 2x-3x ROI on their underlying grant value, though we’d suspect that is unlikely due to most of them using direct incentives (a 1:1 return) and lack of meaningful co-incentives. However if they do, we’d expect them to do exactly what we are doing upon the conclusion of their programs: come back with results and ask for support in continuing the programs if there is still an ecosystem growth case to be made. We’d reiterate that we do not think of incentivizing DEXs as some sort of zero-sum game where investing in one harms the others. The goal of governance is to maximize growth and it absolutely should invest more heavily where co-investment is higher and results are proven. We pulled the numbers quick so definitely let us know if we got any wrong. TOPLINES Velodrome Total Grant: 7,000,000 OP Total Co-Incentives: $12,500,000 Total Projects Supported: 29 Total Projected ROI: 2x-3x (minimum) Other Protocols: Total Grant: 4,240,000 OP Total Co-Incentives: $360,000 (estimated) Total Projects Supported: 9 Total Projected ROI: TBD DETAILS Velodrome (OG Grant) Grant Received: 3,000,000 OP Grant Source: OP Labs Distribution Date: 7/15/2022 Distributed to Date: ~2.5mm OP Co-Incentives: $6mm Projects Supported: 29 Demonstrated ROI: 2x-3x Velodrome (New Request) Grant Received: 4,000,000 OP Grant Source: Governance Distribution Date: TBD Distributed to Date: TBD Co-Incentives: $6.5mm Projects Supported: TBD Estimated ROI: 2x-3x Uniswap Grant Received: 1,000,000 $OP Grant Source: Governance (not partner fund) Distribution Date: 9/7/2022 ( ~2 months ago) Distributed to Date: 0 $OP (not active) Co-Incentives: $0 Projects Supported: 9 (overlapping between protocols #s below) Estimated ROI: TBD Curve Grant Requested: 504,828 $OP Grant Source: Governance Distribution Date: TBD Distributed to Date: 0 $OP (not active) Co-Incentives: TBD ($90,000 average previous 2 months) Projects Supported: 7 Estimated ROI: TBD Beethoven Grant Received: 500,000 Grant Source: Governance Distribution Date: 8/8/2022 (3 months ago) Distributed to Date: Unknown Co-Incentives: ~$20,000 to date Projects Supported: 9 Estimated ROI: TBD Sushiswap Grant Received: 500,000 $OP Grant Source: Governance Distribution Date: 9/7/2022 ( ~2 months ago) Distributed to Date: 0 $OP (not active) Co-Incentives: $250,000 Projects Supported: 0 Estimated ROI: TBD xToken/Gamma Grant Received: 900,000 Grant Source: Governance Distribution Date: 9/13/22 Distributed to Date: 60,000 OP (xToken) Co-Incentives: $0 Projects Supported: 2 (?) Estimated ROI: TBD Revert Grant Requested: 240,000 OP Grant Source: Governance Distribution Date: TBD Distributed to Date: 0 $OP (not active) Co-Incentives: $0 Projects Supported: TBD Estimated ROI: TBD Arrakis Grant Requested: 500,000 $OP Grant Source: Governance Distribution Date: TBD Distributed to Date: 0 $OP (not active) Co-Incentives: $0 Projects Supported: 6 (currently) Estimated ROI: TBD
• Butterbum - No Role

  Oct. 27, 2022, 3:27 p.m.
  Thanks for the response @alexcutlerdoteth this wall of text as a response is not necessary I take i… Thanks for the response @alexcutlerdoteth this wall of text as a response is not necessary I take it this was the response for my Question Butterbum: Do you agree that this incentive will directly increase the price of Velo? alexcutlerdoteth: If there are indeed second order positive effects on token price, it only would only serve to accelerate a flywheel designed to support the ecosystem: further lowering costs, deepening liquidity, increasing volume, attracting users, delivering more revenue to protocols. I feel I should ask it again… but I digress It is Obviously going to have a direct impact on the price of your token. alexcutlerdoteth: Why? I fear Velo would end up relying too heavily on this Fund creating an even bigger problem in the future. whereby without additional funding would lead to a collapse that would hurt the whole Optimism ecosystem, effectively holding us ransom. In my view this is not sustainable growth Grant Proposal Template [OLD] The purpose of the Governance Fund is to incentivize sustainable growth of projects and communities in the Optimism ecosystem. Definition of sustainable growth refers to “the maximum growth rate that a company can sustain without having to increase financial leverage.” alexcutlerdoteth: It would also put Governance in an awkward position where it is directing millions in incentives to multi-chain DEXs worth billions of dollars that are offering somewhere between $ 0 to a few hundred thousand in co-incentives, while passing on their only homegrown public good DEX’s offer to pump another $ 6 . 5 mm in stimulus into the ecosystem. This is my point we can’t be expected to " pump another $Xmm in stimulus into the ecosystem" every time the incentives dry up It’s just not sustainable…
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  • Ganc: Hi @Butterbum It is not very nice to dismiss @alexcutlerdoteth 's thoughtful and well written reply as a wall of text, especially when your response contains only conjecture. If you are implying that the OP locking incentives are used to pump the token price, then you can look at the price history of the token thus far. The price of the VELO token has been in the same range since August despite ongoing locking incentives. There was an initial run up after the June market wide collapse once protocols had begun onboarding onto Optimism, which coincided with the initial OP bribe incentives. At this time VELO/USDC liquidity was a mere $500,000. This July run up also coincided with a 70% ETH run off the June lows. This is besides the point however, a second read of the wall of text in the initial proposal may be in order to refresh your understanding of the reasoning behind locking incentives.
  • alexcutlerdoteth: Butterbum: this wall of text as a response is not necessary I did my best to provide through answers to your questions, ser. Butterbum: Obviously going to have a direct impact on the price of your token. I actually do not believe it is obvious that it will have any kind of significant impact, but would welcome any analysis indicating otherwise. Incentives have actually remained consistent since July 15th or so and we’ve seen massive price movements both up and down. Indeed, we actually announced that we were decreasing the lock incentive on 10/19 and have seen the token go up by 15% since. Again, the primary purpose and impact of the incentive is reduce the costs to protocols looking to build long term revenue positive liquidity programs on Optimism and the 20+ net new protocols we’ve onboarded (even as price has gone up and down), the increasing number of protocol accumulators, and $11mm+ we’ve locked in the ecosystem should be evidence that it is working as intended. Butterbum: This is my point we can’t be expected to " pump another $Xmm in stimulus into the ecosystem" every time the incentives dry up It’s just not sustainable… I don’t think you’ve understood our proposal. We are the ones pumping 6.5mm in stimulus into the ecosystem. This not only represents over 1.6x the grant request size but also equals over half of all $OP incentives projected to be distributed via governance over the same period. The ecosystem needs to grow before it can become self-sustaining. Limiting stimulus in its prime growth phase or over-investing in inefficient incentives is recipe for ecosystem stagnation (especially when competitors come with their own programs). Once sufficient economic activity exists on the network (which we’re actively onboarding), organic revenue and retroactive public good funding will be more than enough to sustain it. This is how scaling works.
• Ganc - No Role

  Oct. 27, 2022, 5:07 p.m.
  Hi @Butterbum It is not very nice to dismiss @alexcutlerdoteth 's thoughtful and well written repl… Hi @Butterbum It is not very nice to dismiss @alexcutlerdoteth 's thoughtful and well written reply as a wall of text, especially when your response contains only conjecture. If you are implying that the OP locking incentives are used to pump the token price, then you can look at the price history of the token thus far. The price of the VELO token has been in the same range since August despite ongoing locking incentives. There was an initial run up after the June market wide collapse once protocols had begun onboarding onto Optimism, which coincided with the initial OP bribe incentives. At this time VELO/USDC liquidity was a mere $ 500 , 000 . This July run up also coincided with a 70 % ETH run off the June lows. This is besides the point however, a second read of the wall of text in the initial proposal may be in order to refresh your understanding of the reasoning behind locking incentives.
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• alexcutlerdoteth - No Role

  Oct. 27, 2022, 5:20 p.m.
  Butterbum: this wall of text as a response is not necessary I did my best to provide through… Butterbum: this wall of text as a response is not necessary I did my best to provide through answers to your questions, ser. Butterbum: Obviously going to have a direct impact on the price of your token. I actually do not believe it is obvious that it will have any kind of significant impact, but would welcome any analysis indicating otherwise. Incentives have actually remained consistent since July 15 th or so and we’ve seen massive price movements both up and down. Indeed, we actually announced that we were decreasing the lock incentive on 10 / 19 and have seen the token go up by 15 % since. Again, the primary purpose and impact of the incentive is reduce the costs to protocols looking to build long term revenue positive liquidity programs on Optimism and the 20 + net new protocols we’ve onboarded (even as price has gone up and down), the increasing number of protocol accumulators, and $ 11 mm+ we’ve locked in the ecosystem should be evidence that it is working as intended. image 2232 × 1177 139 KB Butterbum: This is my point we can’t be expected to " pump another $Xmm in stimulus into the ecosystem" every time the incentives dry up It’s just not sustainable… I don’t think you’ve understood our proposal. We are the ones pumping 6 . 5 mm in stimulus into the ecosystem. This not only represents over 1 . 6 x the grant request size but also equals over half of all $OP incentives projected to be distributed via governance over the same period. The ecosystem needs to grow before it can become self-sustaining. Limiting stimulus in its prime growth phase or over-investing in inefficient incentives is recipe for ecosystem stagnation (especially when competitors come with their own programs). Once sufficient economic activity exists on the network (which we’re actively onboarding), organic revenue and retroactive public good funding will be more than enough to sustain it. This is how scaling works.
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  • Butterbum: I apologize for my poor choice of words. I understand what you saying I like seeing more of organic growth. but I understand where you coming from Thanks again for the response.
  • Butterbum: I’m with you in saying building a strong ecosystem is the plan, this is also my intention but sustainability is key in building a safe ecosystem. And I disagree with your statement alexcutlerdoteth: I actually do not believe it is obvious that it will have any kind of significant impact the impact is evident in the chart My fear would be, that Velodrome will continuously demand incentive plans from the Fund to keep it going. I just want to avoid the risk, of the Fund being forced to perpetually support a protocol to avoid a scenario. So this is why I would like to see Velodrome grow more organically without OP incentives.
• Butterbum - No Role

  Oct. 27, 2022, 5:33 p.m.
  I apologize for my poor choice of words. :v: I understand what you saying I like seeing more of org… I apologize for my poor choice of words. :v: I understand what you saying I like seeing more of organic growth. but I understand where you coming from Thanks again for the response.
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• alexcutlerdoteth - No Role

  Oct. 27, 2022, 5:33 p.m.
  Sure, happy to pull some numbers for you. Added to them and corrected a few data points. You’ll see… Sure, happy to pull some numbers for you. Added to them and corrected a few data points. You’ll see that Velodrome on average between our two proposals is offering 1 . 7 x its grant request in co-incentives and is supporting 3 . 2 x the number of projects as the others combined. For the most part, the other projects have offered zero in co-incentives, with the few that have representing an estimated $ 400 , 000 or so (difficult to estimate precisely). That means Velodrome is offering 31 x the co-incentives as the other 7 projects combined while only asking for 1 . 6 x the grant size. Most of the other proposals are a mix between haven’t started yet, still waiting on approval, or currently in a progress so as of the moment there is no way to measure if they are achieving a similar 2 x- 3 x ROI on their underlying grant value, though we’d suspect that is unlikely due to most of them using direct incentives (a 1 : 1 return) and lack of meaningful co-incentives. However if they do, we’d expect them to do exactly what we are doing upon the conclusion of their programs: come back with results and ask for support in continuing the programs if there is still an ecosystem growth case to be made. We’d reiterate that we do not think of incentivizing DEXs as some sort of zero-sum game where investing in one harms the others. The goal of governance is to maximize growth and it absolutely should invest more heavily where co-investment is higher and results are proven. We pulled the numbers quick so definitely let us know if we got any wrong. TOPLINES Velodrome Total Grant: 7 , 000 , 000 OP Total Co-Incentives: $ 12 , 500 , 000 Total Projects Supported: 29 Total Projected ROI: 2 x- 3 x (minimum) Other Protocols: Total Grant: 4 , 240 , 000 OP Total Co-Incentives: $ 360 , 000 (estimated) Total Projects Supported: 9 Total Projected ROI: TBD DETAILS Velodrome (OG Grant) Grant Received: 3 , 000 , 000 OP Grant Source: OP Labs Distribution Date: 7 / 15 / 2022 Distributed to Date: ~ 2 . 5 mm OP Co-Incentives: $ 6 mm Projects Supported: 29 Demonstrated ROI: 2 x- 3 x Velodrome (New Request) Grant Received: 4 , 000 , 000 OP Grant Source: Governance Distribution Date: TBD Distributed to Date: TBD Co-Incentives: $ 6 . 5 mm Projects Supported: TBD Estimated ROI: 2 x- 3 x Uniswap Grant Received: 1 , 000 , 000 $OP Grant Source: Governance (not partner fund) Distribution Date: 9 / 7 / 2022 ( ~ 2 months ago) Distributed to Date: 0 $OP (not active) Co-Incentives: $ 0 Projects Supported: 9 (overlapping between protocols #s below) Estimated ROI: TBD Curve Grant Requested: 504 , 828 $OP Grant Source: Governance Distribution Date: TBD Distributed to Date: 0 $OP (not active) Co-Incentives: TBD ($ 90 , 000 average previous 2 months) Projects Supported: 7 Estimated ROI: TBD Beethoven Grant Received: 500 , 000 Grant Source: Governance Distribution Date: 8 / 8 / 2022 ( 3 months ago) Distributed to Date: Unknown Co-Incentives: ~$ 20 , 000 to date Projects Supported: 9 Estimated ROI: TBD Sushiswap Grant Received: 500 , 000 $OP Grant Source: Governance Distribution Date: 9 / 7 / 2022 ( ~ 2 months ago) Distributed to Date: 0 $OP (not active) Co-Incentives: $ 250 , 000 Projects Supported: 0 Estimated ROI: TBD xToken/Gamma Grant Received: 900 , 000 Grant Source: Governance Distribution Date: 9 / 13 / 22 Distributed to Date: 60 , 000 OP (xToken) Co-Incentives: $ 0 Projects Supported: 2 (?) Estimated ROI: TBD Revert Grant Requested: 240 , 000 OP Grant Source: Governance Distribution Date: TBD Distributed to Date: 0 $OP (not active) Co-Incentives: $ 0 Projects Supported: TBD Estimated ROI: TBD Arrakis Grant Requested: 500 , 000 $OP Grant Source: Governance Distribution Date: TBD Distributed to Date: 0 $OP (not active) Co-Incentives: $ 0 Projects Supported: 6 (currently) Estimated ROI: TBD
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  • StrategicReserve: I think the issue is not whether Velodrome has “earned” the additional incentives but rather pondering whether extensions (particularly liquidity incentives) should be granted at all. When we discussed the total OP incentives Velodrome had received compared to its competitors (Uniswap, Curve, etc.), you stated: alexcutlerdoteth: However if they do, we’d expect them to do exactly what we are doing upon the conclusion of their programs: come back with results and ask for support in continuing the programs if there is still an ecosystem growth case to be made. I am not sure anyone in the liquidity incentives class would be approved for another grant, even with outstanding performance. It’s really up to the whims of governance. I think you deserve credit for “going there” and asking for another round, particularly with the amount of data you’ve provided. But I’m not surprised such an ask brings up existential issues regarding OP governance. It’s impossible to detangle the issues.
  • alexcutlerdoteth: forrest: I voted Against this proposal. forrest: Disclosure: I co-founded a different Optimism DEX so consider me biased Fair enough. I actually didn’t realize you were a Rubicon founder. I think an abstention in that case might be more appropriate, but there is no rule that you can’t vote down a fellow DEX so that’s your call. For the record, if Rubicon can come back showing that they have delivered same kind of growth multiples on your 900,000 OP grant I promise we’ll be first in line to show support for your next proposal. forrest: This Grant would be 1.72% of Optimism’s Governance Fund and would grow the circulating supply of the OP token by 1.86%. This is significant, and I do not appreciate Velodrome team members trying to say otherwise. We are talking about millions of $ here: Since you raised this again, I’ll want to make sure reemphasize all our responses that put the size of our ask in proper context so people don’t the wrong idea. Our ask is significantly smaller than those distributed to date by the Governance Fund relative to key KPIs: tao: As a share of the Optimism ecosystem, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of the Governance Fund. tao: 98% less than average OP granted per $ in TVL 80% less than median OP granted per $ in TVL 98% less than average OP granted per $ in Volume 65% less than median OP granted per $ in Volume 98% less than average OP granted per transaction 86% less than the median OP granted per transaction 91% less than the average OP granted per user 51% less than the median OP granted per user Velodrome is offering 31x the co-incentives of other DEX projects combined while only asking for 1.6x larger grant. alexcutlerdoteth: Velodrome Total Grant: 7,000,000 OP Total Co-Incentives: $12,500,000 Total Projects Supported: 29 Total Projected ROI: 2x-3x (minimum) Other DEX Protocols: Total Grant: 4,240,000 OP Total Co-Incentives: $360,000 (estimated) Total Projects Supported: 9 Total Projected ROI: TBD Our grant request is oriented towards continuing activities that have a proven ability to return 2x-3x the underlying value of grant: tao: $6M+ VELO liquidity incentives distributed into the ecosystem (2-3x OP grant) 30+ new protocols onboarded and supported with liquidity growth in ecosystem 30-70% reduction in liquidity incentive costs per $ TVL for ecosystem partners $5M+ liquidity of OP token pairs, creating $1B in volume $1M+ in protocol revenue returned to veVELO lockers (primarily protocols) $10M+ value locked as veVELO (70% of total) locked into the Optimism for ~3.5ys $250k veVELO airdrop for OP Team, $2M veVELO airdrop to ecosystem partners alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. Our grant is dramatically over performing Governance Fund grants to date: alexcutlerdoteth: According to the Foundations analysis of grants to date, the 42.6M OP granted thus far has earned: A 100% increase in transactions at a cost of 676 OP per incremental transaction A 74% increase in TVL (60M) at a cost of about .3 OP per incremental dollar In contrast, Velodrome’s grant of 3M OP from OPLabs has thus far earned: A 100% increase in transactions, at a cost of 40 OP per incremental transaction A 400% increase in TVL ($65M), at a cost of .03 OP per incremental dollar alexcutlerdoteth: Indeed, Velodrome has actually onboarded more net-new protocols (20 for 3M OP) than the Governance Fund itself (18 for 7.4M OP) and did so at a fraction of the cost. In short, the grant only looks large if you ignore baselines in terms of KPIs, massive co-investment, or demonstrated ROI multiples it has delivered. It remains significantly smaller in actual dollar terms than the one originally given to us by OPLabs. Repeatedly suggesting “it is too big” without directly engaging in this context isn’t constructive, especially from someone who received their own incredibly generous grant but has yet to produce evidence of similar returns.
• alexcutlerdoteth - No Role

  Oct. 27, 2022, 5:34 p.m.
  No problem, ser. Appreciate the conversation. Our thought is if we build it (a strong ecosystem), t… No problem, ser. Appreciate the conversation. Our thought is if we build it (a strong ecosystem), they (users and growth) will come. :slight_smile:
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• OPUser - No Role

  Oct. 27, 2022, 9:32 p.m.
  image 2847 × 326 87 . 6 KB image 2847 × 326 87 . 6 KB
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• tao - No Role

  Oct. 27, 2022, 10:09 p.m.
  Hi all, I’d like to add a bit of structure to this comment section by addressing the key themes rai… Hi all, I’d like to add a bit of structure to this comment section by addressing the key themes raised so far. Follow-up comments are welcome. However, sourcing data asks takes meaningful time away from our daily work, so we’d appreciate if commenters could explicitly outline their “thesis” and offer data that could support it. This way, interactions can be additive and build the common understanding for all readers. For example: “Velodrome would be better off directing OP incentives to XXX, as it would drive higher transaction volume / user growth / user retention. Here’s my data to demonstrate why” Here are 5 themes we’ve identified so far: 1 ) Part of the data provided is based on a snapshot (e.g., 24 hr Volume) and may not be representative of recent performance We have now included 30 -day Avg Volume and 30 -day Avg TVL. There are slight differences in the figures but the overall results are directionally unchanged: Screen Shot 2022 - 10 - 25 at 16 . 27 . 451920 × 614 84 . 4 KB Screen Shot 2022 - 10 - 25 at 16 . 52 . 411226 × 548 115 KB 2 ) Velodrome attracts lower Volume per TVL than alternative DEXes When comparing same asset pairs (e.g., OP/USDC, ETH/USDC), Velodrome’s Volume per TVL is similar to that of both Uniswap and Curve (see charts below). We believe Uniswap and Curve are perhaps the top 2 DEXes in all crypto. Performing on par with them is a testament in itself. We acknowledge UniV 3 pools can offer very low slippage for large trades. Although Velodrome remains competitive for the majority of trades using pools with similar liquidity depth, we like the concentrated liquidity architecture and plan on implementing a similar model for our pools. Some Velodrome pools attract lower volume, as they serve different types of protocols. We welcome these pools, as supporting a wide variety of assets is part of our value proposition. Volume/TVL for pools with >$ 100 K TVL on Uniswap and Velodrome Screen Shot 2022 - 10 - 27 at 14 . 05 . 161604 × 910 185 KB Volume/TVL and Volume/$ 1 incentives for sETH and sUSD pools on Curve and Velodrome Screen Shot 2022 - 10 - 25 at 16 . 27 . 561920 × 580 84 . 1 KB 3 ) Grant ask is too large As a share of the Optimism ecosystem, Velodrome represents 10 % of TVL, 12 % of transaction volume, 16 % of transactions, and 13 % of users, while requesting 1 . 72 % of the Governance Fund. Using these metrics, the Governance Fund could distribute a similar ratio of OP tokens to ALL existing protocols and still keep 82 %- 89 % of funds to be used for other grants: Screen Shot 2022 - 10 - 27 at 16 . 00 . 571808 × 344 117 KB Even including Velodrome’s grant from OP Labs, the ratio of impact per grant size is extremely favorable Screen Shot 2022 - 10 - 27 at 16 . 01 . 031808 × 344 126 KB 4 ) What is Velodrome providing to the ecosystem / what about protocol revenue? For Liquidity Providers on Optimism, Velodrome has distributed over $ 7 M in VELO emissions, continuing at a pace of ~$ 300 K per week Yes OPUser, the emissions are part of the protocol. You can see details at https://velodrome-docs.pages.dev/tokenomics 1 For veVELO holders, Velodrome has delivered ~$ 450 K in fees from >$ 2 B in volume and ~$ 1 M in bribes from partner protocols (net of Velodrome’s OP incentive program) 5 ) Velodrome has hit escape velocity / Velodrome should prove itself without incentives Velodrome’s success is strongly correlated to the success of Optimism. We cannot consider the protocol to have “hit escape velocity” until Optimism itself is fully cemented as the go-to chain for the next generation of DeFi users. We believe eliminating incentives now will have predictable results (lower TVL, lower overall activity), and would hamper our ability as a protocol to compete with other L 2 s / alt-L 1 s planning to deploy incentives in their own ecosystems. Attracting liquidity and users back to an ecosystem is significantly more expensive than maintaining them, since incentives (e.g., APRs) must be attractive enough to drive actions such as bridging capital and LPing. Despite the attractive returns on Velodrome, we still notice a lack of confidence from DeFi players to participate in Velodrome’s model. For example, veVELO voters have received > 200 % APRs in bribes and fees consistently for the past 4 - 5 weeks, 3 - 5 x higher than other ve token protocols such as Curve, pointing to lower willingness to lock VELO. This grant would allow Velodrome to continue building confidence from interested players, while we focus on further developing the platform and onboarding new partners. The grant will effectively run longer than the time period Velodrome has been live to date. As outlined above, we’re happy to structure the grant in stages to measure ongoing results. We greatly appreciate your support.
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  • Jadmat: How can you know the weekly Curve $OP rewards that will go to each Pool??? This thread makes me think that subsidies are actually the product that is in demand here. tao: Velodrome ha alcanzado la velocidad de escape / Velodrome debería demostrar su valía sin incentivos Some of us have emphasized here, Sustainable Growth. This does not include the increase in metrics for constant subsidy/issuance; but what will happen when both end? The incentives generate tvl and volume, but when the incentives end, the liquidity disappears. Let’s focus on the concept of “Growth”, the goal of Optimism: Do you think that if it hadn’t received the first grant, Velodrome would hold metrics above other dexes today? Curve and Uniswap have not yet received/used the subsidy. If your answer is: Yes, it will continue to maintain metrics above these; Well, then the new scholarship is not necessary, , since no dex has applied for a second grant. Not, if you think Velodrome wouldn’t be the major Dex; (as I said in my first answer) we should wait to see how the Uni and Curve grants work out before continuing to subsidize Velodrome
  • tao: Seems like item “5) Velodrome should prove itself without incentives” is the main theme of comments challenging the proposal. Our stance is simple: given than Optimism has chosen to run a continuous program to incentivize growth and activity in the ecosystem – and created this Governance Fund specifically for it – , then Velodrome is an obvious protocol to continue incentivizing. We’ve shared plenty of data for why this is the case. We also welcome continuous incentives for other protocols demonstrating success in growing the ecosystem.
  • alexcutlerdoteth: forrest: I voted Against this proposal. forrest: Disclosure: I co-founded a different Optimism DEX so consider me biased Fair enough. I actually didn’t realize you were a Rubicon founder. I think an abstention in that case might be more appropriate, but there is no rule that you can’t vote down a fellow DEX so that’s your call. For the record, if Rubicon can come back showing that they have delivered same kind of growth multiples on your 900,000 OP grant I promise we’ll be first in line to show support for your next proposal. forrest: This Grant would be 1.72% of Optimism’s Governance Fund and would grow the circulating supply of the OP token by 1.86%. This is significant, and I do not appreciate Velodrome team members trying to say otherwise. We are talking about millions of $ here: Since you raised this again, I’ll want to make sure reemphasize all our responses that put the size of our ask in proper context so people don’t the wrong idea. Our ask is significantly smaller than those distributed to date by the Governance Fund relative to key KPIs: tao: As a share of the Optimism ecosystem, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of the Governance Fund. tao: 98% less than average OP granted per $ in TVL 80% less than median OP granted per $ in TVL 98% less than average OP granted per $ in Volume 65% less than median OP granted per $ in Volume 98% less than average OP granted per transaction 86% less than the median OP granted per transaction 91% less than the average OP granted per user 51% less than the median OP granted per user Velodrome is offering 31x the co-incentives of other DEX projects combined while only asking for 1.6x larger grant. alexcutlerdoteth: Velodrome Total Grant: 7,000,000 OP Total Co-Incentives: $12,500,000 Total Projects Supported: 29 Total Projected ROI: 2x-3x (minimum) Other DEX Protocols: Total Grant: 4,240,000 OP Total Co-Incentives: $360,000 (estimated) Total Projects Supported: 9 Total Projected ROI: TBD Our grant request is oriented towards continuing activities that have a proven ability to return 2x-3x the underlying value of grant: tao: $6M+ VELO liquidity incentives distributed into the ecosystem (2-3x OP grant) 30+ new protocols onboarded and supported with liquidity growth in ecosystem 30-70% reduction in liquidity incentive costs per $ TVL for ecosystem partners $5M+ liquidity of OP token pairs, creating $1B in volume $1M+ in protocol revenue returned to veVELO lockers (primarily protocols) $10M+ value locked as veVELO (70% of total) locked into the Optimism for ~3.5ys $250k veVELO airdrop for OP Team, $2M veVELO airdrop to ecosystem partners alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. Our grant is dramatically over performing Governance Fund grants to date: alexcutlerdoteth: According to the Foundations analysis of grants to date, the 42.6M OP granted thus far has earned: A 100% increase in transactions at a cost of 676 OP per incremental transaction A 74% increase in TVL (60M) at a cost of about .3 OP per incremental dollar In contrast, Velodrome’s grant of 3M OP from OPLabs has thus far earned: A 100% increase in transactions, at a cost of 40 OP per incremental transaction A 400% increase in TVL ($65M), at a cost of .03 OP per incremental dollar alexcutlerdoteth: Indeed, Velodrome has actually onboarded more net-new protocols (20 for 3M OP) than the Governance Fund itself (18 for 7.4M OP) and did so at a fraction of the cost. In short, the grant only looks large if you ignore baselines in terms of KPIs, massive co-investment, or demonstrated ROI multiples it has delivered. It remains significantly smaller in actual dollar terms than the one originally given to us by OPLabs. Repeatedly suggesting “it is too big” without directly engaging in this context isn’t constructive, especially from someone who received their own incredibly generous grant but has yet to produce evidence of similar returns.
• Butterbum - No Role

  Oct. 27, 2022, 11:47 p.m.
  I’m with you in saying building a strong ecosystem is the plan, this is also my intention but susta… I’m with you in saying building a strong ecosystem is the plan, this is also my intention but sustainability is key in building a safe ecosystem. And I disagree with your statement alexcutlerdoteth: I actually do not believe it is obvious that it will have any kind of significant impact the impact is evident in the chart My fear would be, that Velodrome will continuously demand incentive plans from the Fund to keep it going. I just want to avoid the risk, of the Fund being forced to perpetually support a protocol to avoid a scenario. So this is why I would like to see Velodrome grow more organically without OP incentives.
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• alexcutlerdoteth - No Role

  Oct. 28, 2022, 3:28 p.m.
  Butterbum: the impact is evident in the chart No ser, it is not. I have added a line to the … Butterbum: the impact is evident in the chart No ser, it is not. I have added a line to the chart that shows the pace of lock bonuses to demonstrate this. As you can see, the lock bonus rate has remained constant for months while the price of the token has had movements up as high as 300 % and down as low as 85 %. You can also see in the chart where the lock bonus was decreased by 20 % and price rose 15 %. The opposite effect you would expect if what you were claiming was true. Screenshot 2022 - 10 - 28 at 7 . 42 . 30 AM 1920 × 1012 40 . 3 KB So I’ll reiterate that there is no obvious significant correlation between the bonus and price. There are too many other variables that drive price more significantly. You can also see this in the fact that other ecosystem tokens pumped at the exact same time. image 1325 × 935 66 . 6 KB image 1322 × 647 52 . 9 KB Where there is a more clear relationship is in the weekly lock rate, which increased upon the start of the incentives and has maintained a steady rate, mostly exceeding weekly emissions. Exactly what we’d expect a bonus focused on reducing barriers to locking (not price pumping) to do. Screenshot 2022 - 10 - 28 at 7 . 57 . 25 AM 1464 × 682 40 . 5 KB Finally, I will just note again that even if there were a clear positive correlation with price, that still wouldn’t be a bad thing as it would only lead to better outcomes for the ecosystem. If VELO were to 3 x tomorrow, liquidity for the 30 + ecosystem projects we support would triple as well. There is no other token on the network that can have this kind of outsized impact. But to reiterate, that is not really what is important. What is important is relative value of locking vs bribing and the overall health of our liquidity economy as we’ve documented in our proposal. Butterbum: My fear would be, that Velodrome will continuously demand incentive plans from the Fund to keep it going. I just want to avoid the risk, of the Fund being forced to perpetually support a protocol to avoid a scenario. This is just not how investing to grow/scale works. Perhaps an analogy would help. Think of Optimism as new city that is trying to attract citizens and businesses to it. One day in that future, it will have a broad enough base of them that the economic activity they generate will sufficient to not only drive sustainable revenue t businesses but also it’s taxes (sequencer revenue) will be sufficient to support and maintain the City of Optimism’s essential infrastructure (public goods). But, we are not not there yet. We need to grow substantially more before the city’s economy is self-sustaining. That is why the grant programs exist. That is where Velodrome comes in. It is part of the city’s essential infrastructure. You can think of it as the roads and highways that people use to get to the City of Optimism and that businesses use to move their goods throughout it. It charges the lowest possible fees for its use and returns 100 % the value it generates back to the public, while simultaneously reducing liquidity costs ecosystem wide. Why is this important? Because investing in infrastructure is one of the best ways to drive economic growth 2 . It creates one of the best multiplier effects ( 2 x- 3 x in our case) on the underlying investment and drives growth in economic activity across the network. As @SethVdL put it, a “grant to velodrome is like granting the entire ecosystem”, but getting 2 x- 3 x the results of direct grants. As long as growth remains the focus of governance and we can demonstrate that we are one of the single best means of facilitating it, we will request grant funds (as anyone in a similar position should). But there will be a day where the city has attracted enough economic activity that investing heavily in growth will no longer be needed. That is when Optimism can pull back on economic stimulus and let public goods self-sustain through the taxes and fees they collect. Pulling back too early will only serve to slow or reverse the hard earned growth we’ve achieved so far, long before the city is in a position to sustain itself. (btw you could write a similar analogy for how startups scale here)
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  • Ardordo: alexcutlerdoteth: No ser, it is not. I have added a line to the chart that shows the pace of lock bonuses to demonstrate this. As you can see, the lock bonus rate has remained constant for months while the price of the token has had movements up as high as 300% and down as low as 85%. You can also see in the chart where the lock bonus was decreased by 20% and price rose 15%. Maybe I am mistaken, but isn’t the price action of VELO actually heavily influenced by the locking bonuses via the airdrop campaign? https://twitter.com/VelodromeFi/status/1548651423201730561 One could find the following points in the chart: 08/7 – it was announced that Velodrome received the grant, start of the price increase 13/7 to 27/7 – heavy campaign of the OP airdrop 29/7 – hype from the campaign ended, followed by heavy price decrease Not sure how it’s fair to conclude that lock bonuses do not affect the price – I would definitely count extra OP for locking as a version of a lock bonus.
  • Butterbum: Good day @alexcutlerdoteth I’m back. I am not denying the fact that more stimulus will have a positive impact on metrics all round for the short term. alexcutlerdoteth: This is just not how investing to grow/scale works. This is not an investment Fund It is a Grant Fund to help build a sustainable ecosystem. Not to make a protocol sustainable. Its the difference between growth and sustainable growth. Velodrome is a newish protocol an upgrade to Olympus DAO design with features that mitigate selling with the Vote Escrow system. I understand a collapse like OHM suffered is unlikely but such an event would be detrimental to Optimism, other protocols on Optimism and mostly the Optimism users. than rapidly on boarding in the near term. This is why I am concerned and would like to see sustainability in the for front of all protocols requesting funds.
• Ardordo - No Role

  Oct. 28, 2022, 8:44 p.m.
  alexcutlerdoteth: No ser, it is not. I have added a line to the chart that shows the pace of l… alexcutlerdoteth: No ser, it is not. I have added a line to the chart that shows the pace of lock bonuses to demonstrate this. As you can see, the lock bonus rate has remained constant for months while the price of the token has had movements up as high as 300 % and down as low as 85 %. You can also see in the chart where the lock bonus was decreased by 20 % and price rose 15 %. Maybe I am mistaken, but isn’t the price action of VELO actually heavily influenced by the locking bonuses via the airdrop campaign? https://twitter.com/VelodromeFi/status/ 1548651423201730561 One could find the following points in the chart: 08 / 7 – it was announced that Velodrome received the grant, start of the price increase 13 / 7 to 27 / 7 – heavy campaign of the OP airdrop 29 / 7 – hype from the campaign ended, followed by heavy price decrease Not sure how it’s fair to conclude that lock bonuses do not affect the price – I would definitely count extra OP for locking as a version of a lock bonus.
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• alexcutlerdoteth - No Role

  Oct. 28, 2022, 10:01 p.m.
  Ardordo: Maybe I am mistaken, but isn’t the price action of VELO actually heavily influenced b… Ardordo: Maybe I am mistaken, but isn’t the price action of VELO actually heavily influenced by the locking bonuses via the airdrop campaign? Yes, the data I shared above would suggest you are indeed mistaken. But, here let’s take a look at it again with your frame. Ardordo: 08 / 7 – it was announced that Velodrome received the grant, start of the price increase 13 / 7 to 27 / 7 – heavy campaign of the OP airdrop 29 / 7 – hype from the campaign ended, followed by heavy price decrease Screenshot 2022 - 10 - 28 at 4 . 29 . 01 PM 1502 × 884 133 KB Seems vaguely plausible right? The problem is that is the SNX chart, not VELO. And if you look at Thales, Lyra, or almost any ecosystem token you’ll see they follow almost the same trajectory. Suggesting the significant factors driving the price changes cannot reasonably be attributed to the ongoing lock bonus. The frame is also false because you are misrepresenting the nature of our communications around it, which have been as steady as the bonus itself. If you’d done us the kindness of checking your assertions before dropping them here, you would’ve seen us talking about it every week since it began. Ardordo: Not sure how it’s fair to conclude that lock bonuses do not affect the price It is fair because no one has provided a single data point to suggest there was any correlation between the lock bonus and Velodrome price. You cannot on one hand suggest it was a significant factor causing a 300 % pump and while suggesting it’s claimed pumping ability was powerless against an 85 % decline, especially when those same patterns were playing out on every single ecosystem token. We also have over a week of data after decreasing the bonus showing the exact opposite of your claimed effect, the lock bonus has gone down and the price has gone up. Ardordo: I have mostly just lurked around the OP governance, but wanted to comment/ask additional information about this proposal and thus I am a new user here. While the idea that you created an account last week to exclusively to comment on our proposal is certainly flattering, I do not get the sense that you are here in good faith. Now that you’ve made your voice heard on Velodrome, perhaps you can reallocate your time to any of the other 8 + proposals currently up for review and in need of feedback? :pray:
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  • StrategicReserve: alexcutlerdoteth: While the idea that you created an account last week to exclusively to comment on our proposal is certainly flattering, I do not get the sense that you are here in good faith. Now that you’ve made your voice heard on Velodrome, perhaps you can reallocate your time to any of the other 8+ proposals currently up for review and in need of feedback? I really don’t think these kinds of responses are constructive. You answered the question fine. Trying to discredit someone doesn’t make the grant application look professional. It’s defensive and adversarial.
  • Ardordo: alexcutlerdoteth: The problem is that is the SNX chart, not VELO. And if you look at Thales, Lyra, or almost any ecosystem token you’ll see they follow almost the same trajectory. Suggesting the significant factors driving the price changes cannot reasonably be attributed to the ongoing lock bonus. I was not expressing how the price was affected by the on-going lock bonus, I was expressing how the price was affected by the OP airdrop campaign for the VELO lockers, which I would also describe as a bonus for lockers. https://imgur.com/a/kkJ1h2L These are the SNX and VELO charts together, everyone is free to come to their own conclusions, but my personal take-away is that announcement of the OP grant and OP airdrop campaign definitely had a noticeable affect on the VELO price. I think it’s also fairly obvious from the fact that at some point for every $1 in VELO locked there would have been $1.3 OP airdropped as rewards. https://twitter.com/VelodromeFi/status/1548651423201730561 alexcutlerdoteth: While the idea that you created an account last week to exclusively to comment on our proposal is certainly flattering, I do not get the sense that you are here in good faith. Now that you’ve made your voice heard on Velodrome, perhaps you can reallocate your time to any of the other 8+ proposals currently up for review and in need of feedback? I have both expressed in this thread that: This grant proposal was the main reason why I felt the need to make an account and comment, since even though there was a lot of data provided, I didn’t feel it was completely fair (one could see my previous comments for the percentages provided). I am somewhat biased, since I have prior concerns about Velodrome not being sustainable in the long-term without OP incentives. If this discredits everything I have commented here and reflects that I am not here in good faith, then it is what it is. There is no denying that Velodrome’s team is great at marketing and making noise, which has definitely ended up with more people learning about Optimism and joining the ecosystem, but I believe the technology of Velodrome’s AMM is not that innovative and I am not sure how competitive it is in the long-term compared to the more sophisticated approaches of the competitors. I also believe that Velodrome price was heavily pumped up with the first grant and the current proposal does not reflect how substantial that effect was. Velodrome will continue growing/scaling while it is heavily reinforced with largest OP grants any project has received, but I am wary of what happens when the incentives stop and truthfully uncertain if best would be to experience it now or keep pushing it to the future with new continous grants.
• StrategicReserve - No Role

  Oct. 28, 2022, 11:53 p.m.
  alexcutlerdoteth: While the idea that you created an account last week to exclusively to comme… alexcutlerdoteth: While the idea that you created an account last week to exclusively to comment on our proposal is certainly flattering, I do not get the sense that you are here in good faith. Now that you’ve made your voice heard on Velodrome, perhaps you can reallocate your time to any of the other 8 + proposals currently up for review and in need of feedback? I really don’t think these kinds of responses are constructive. You answered the question fine. Trying to discredit someone doesn’t make the grant application look professional. It’s defensive and adversarial.
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• alexcutlerdoteth - No Role

  Oct. 29, 2022, 12:17 a.m.
  You know what? You’re actually right, I apologize. This process is intensive and at times it has fe… You know what? You’re actually right, I apologize. This process is intensive and at times it has felt like there has been an army of new accounts created with express purpose of kicking up dust with the goal of damaging our proposal. They even managed to get our post locked for a good 24 hours during the short feedback window which was frustrating. I don’t know @Ardordo’s intentions and shouldn’t presume. A genuinely good call. Can I ask that we both commit to doing better on that? Screenshot 2022 - 10 - 28 at 7 . 10 . 10 PM 692 × 370 55 KB
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  • StrategicReserve: Agreed. I think it’s a fine proposal with an excellent amount of supporting data. alexcutlerdoteth: This process is intensive and at times it has felt like there has been an army of new accounts created with express purpose of kicking up dust with the goal of damaging our proposal. They even managed to get our post locked for a good 24 hours during the short feedback window which was frustrating. It absolutely is frustrating to go through the process. Steve Brule - Kill 'em With Kindness
• jackanorak - No Role

  Oct. 29, 2022, 12:20 a.m.
  I think before this turns into a bare-knuckle fight, let’s all take a beat and focus on the proposa… I think before this turns into a bare-knuckle fight, let’s all take a beat and focus on the proposal at hand. (sorry alex)
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• alexcutlerdoteth - No Role

  Oct. 29, 2022, 12:21 a.m.
  Hear hear. Thanks @jackanorak. :raised_hands:t 2 : Hear hear. Thanks @jackanorak. :raised_hands:t 2 :
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• StrategicReserve - No Role

  Oct. 29, 2022, 1:30 a.m.
  Agreed. I think it’s a fine proposal with an excellent amount of supporting data. alexcutlerdot… Agreed. I think it’s a fine proposal with an excellent amount of supporting data. alexcutlerdoteth: This process is intensive and at times it has felt like there has been an army of new accounts created with express purpose of kicking up dust with the goal of damaging our proposal. They even managed to get our post locked for a good 24 hours during the short feedback window which was frustrating. It absolutely is frustrating to go through the process. Steve Brule - Kill 'em With Kindness
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• Ardordo - No Role

  Oct. 29, 2022, 6:25 a.m.
  alexcutlerdoteth: The problem is that is the SNX chart, not VELO. And if you look at Thales, L… alexcutlerdoteth: The problem is that is the SNX chart, not VELO. And if you look at Thales, Lyra, or almost any ecosystem token you’ll see they follow almost the same trajectory. Suggesting the significant factors driving the price changes cannot reasonably be attributed to the ongoing lock bonus. I was not expressing how the price was affected by the on-going lock bonus, I was expressing how the price was affected by the OP airdrop campaign for the VELO lockers, which I would also describe as a bonus for lockers. https://imgur.com/a/kkJ 1 h 2 L 6 These are the SNX and VELO charts together, everyone is free to come to their own conclusions, but my personal take-away is that announcement of the OP grant and OP airdrop campaign definitely had a noticeable affect on the VELO price. I think it’s also fairly obvious from the fact that at some point for every $ 1 in VELO locked there would have been $ 1 . 3 OP airdropped as rewards. https://twitter.com/VelodromeFi/status/ 1548651423201730561 2 alexcutlerdoteth: While the idea that you created an account last week to exclusively to comment on our proposal is certainly flattering, I do not get the sense that you are here in good faith. Now that you’ve made your voice heard on Velodrome, perhaps you can reallocate your time to any of the other 8 + proposals currently up for review and in need of feedback? I have both expressed in this thread that: This grant proposal was the main reason why I felt the need to make an account and comment, since even though there was a lot of data provided, I didn’t feel it was completely fair (one could see my previous comments for the percentages provided). I am somewhat biased, since I have prior concerns about Velodrome not being sustainable in the long-term without OP incentives. If this discredits everything I have commented here and reflects that I am not here in good faith, then it is what it is. There is no denying that Velodrome’s team is great at marketing and making noise, which has definitely ended up with more people learning about Optimism and joining the ecosystem, but I believe the technology of Velodrome’s AMM is not that innovative and I am not sure how competitive it is in the long-term compared to the more sophisticated approaches of the competitors. I also believe that Velodrome price was heavily pumped up with the first grant and the current proposal does not reflect how substantial that effect was. Velodrome will continue growing/scaling while it is heavily reinforced with largest OP grants any project has received, but I am wary of what happens when the incentives stop and truthfully uncertain if best would be to experience it now or keep pushing it to the future with new continous grants.
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  • alexcutlerdoteth: Ardordo: I was not expressing how the price was affected by the on-going lock bonus, I was expressing how the price was affected by the OP airdrop campaign for the VELO lockers I think you’ve just tried moved the goal posts a bit, but that is fine with me as our new proposal does not have any kind of front-loaded “OP airdrop campaign”. Only an extension of the ongoing lock bonus (at a lower rate). So it sounds like we agree that on an ongoing basis the significant factors driving the price changes cannot reasonably be attributed to a ongoing lock bonus such as the one contained within this proposal. Ardordo: I think it’s also fairly obvious from the fact that at some point for every $1 in VELO locked there would have been $1.3 OP airdropped as rewards. You could say this every single week as the the “eligible lockers” resets to 0 so the ratio of OP:VELO looks artificially high which is offset by a fairly predictable and consistent locking rate. This feels like you intentionally trying to misrepresent things. Ardordo: I am somewhat biased What is driving your biases? You’ve shared nothing about your background or experiences. It seems something in them has rendered Velodrome as the only topic of interest in Optimism governance. Perhaps you could share more about yourself so we could understand how your biases are shaping your perspective here? Which projects have you contributed to / are contributing to? We already have an sense of it, but might be good for you to share. Ardordo: I believe the technology of Velodrome’s AMM is not that innovative and I am not sure how competitive it is in the long-term compared to the more sophisticated approaches of the competitors Given how exhaustively we’ve documented our product performing incredibly well against both Curve, Uniswap, and Beethoven perhaps you could offer evidence to support this rather than stating it as fact? Ardordo: Velodrome will continue growing/scaling while it is heavily reinforced with largest OP grants any project has received This is not even remotely true. Why do you keep misrepresenting things? Multiple 9M OP grants have gone out to top projects Optimism, significantly larger than both of our requested grants combined. None of the grants to date have demonstrated the same kind of 2x-3x impact as our grant. According to Optimism’s own numbers our 3M OP grant brought more TVL than every grant distributed by governance to date combined. Ardordo: This grant proposal was the main reason why I felt the need to make an account and comment, since even though there was a lot of data provided, I didn’t feel it was completely fair Look, I continue to believe you should show some interest in other proposals if you mean for us to take your objections to ours as serious and principled. But, if you are going to continue exclusively here, I beg you to back up your thesis’s with data and evidence so we can have a constructive conversation. This team put literally weeks of work into all the research underpinning the that Velodrome has (perhaps) delivered the best ROI of any grant to date. This proposal may be the single most deeply researched and sourced one to be submitted to governance yet. It represents not just our voice, but the voices of is over 20 ecosystem builders/partners who signed on to support it. Perhaps you do indeed know better than people like @TokenBrice, but trying to undercut our collective perspectives with specious arguments and misrepresentations does them and us a substantial disservice.
• TokenBrice - No Role

  Oct. 29, 2022, 8:29 a.m.
  Hello here; glad to see a healthy discussion happening! I wanted to give some perspective on what t… Hello here; glad to see a healthy discussion happening! I wanted to give some perspective on what those OP lock bonuses achieve from the point of view of a project involved in the Velodrome races. I am TokenBrice 2 , DeFi Strategist at Liquity, leading the charge on topics related to LUSD/LQTY liquidity strategies and integrations of LUSD within DeFi. We are currently leading various campaigns to sustain liquidity, whether on Curve, through Warden Bribes, or on Velodrome. In terms of the amount of liquidity sustained / $-invested, Velodrome is one to two orders of magnitude above the competition. Thanks to an initial 3 . 4 M veVELO position (protocol airdrop), compounded weekly to now ~ 4 . 5 M veVELO, Liquity can sustain about ~$ 6 . 3 M on four different pools (LUSD/sUSD, LUSD/USDC, LUSD/MAI, LUSD/USD+). Adding the OP lock bonus drove us to adjust our strategy, increasing the weekly locks to enhance our gauge supporting power while maximizing the reward. To put some numbers in perspective: 4 . 5 M veVELO (~$ 120 K) locked enable to support ~$ 6 M of stablecoin liquidity on Velodrome. (+some bribes from projects we work with that are re-injected as bribes again the following round) To direct 1 % of CRV emissions, you’d need to bribe either ~ 25 K a week or a ~ 5 M veCRV position costing ~$ 4 . 8 M. 1 % of CRV-gauge votes is enough to draw a ~ 3 % base APY to a $ 25 M TVL pool. Translating back above into similar terms, it means that to sustain a > 3 % base APY on a 6 M TVL stable Curve Pool you’d need roughly either 6 . 2 K weekly bribes ( 0 . 25 % total gauge voting) or 1 . 25 M veCRV ($ 1 . 2 M) I think those napkin maths illustrate what I meant by “one or two orders of magnitude above” when it comes to Velodrome’s efficiency for a project. Of course, there are other things to consider, and the comparison should be based on various dimensions. However, one of Velodrome’s core value propositions is enabling projects to attract and sustain liquidity efficiently. In that regard, it is delivering beyond what was expected: the OP veVELO locking bonus is a key part of the equation - increasing the efficiency of the flywheel even further. Besides, it drives projects to lock VELO, which means they enter a long-term commitment with Velodrome and Optimism. Hope this helps fuel the discussion, I am available if there are more questions about the impact of the OP-bonuses on the strategies projects involved in the races harness.
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  • alexcutlerdoteth: Good Morning Voting is coming up so we wanted to create a summary/guide of the discussion so far for those unable to parts through the record breaking 133 comments on the proposal. Overview Velodrome spent several weeks creating what is likely the detailed and evidenced proposal to be submitted to governance yet. If you have the time, please consider reading its in it’s entirety. Since it’s posting 12 days ago it has received 133 comments from 31 commentators: Positive Commentators: 17 (58%) Mixed Commentators: 5 (17%) Negative Commentators: 7 (24%) As you can see, there are more positive commentators than negative and mixed commentators combined. Though it may be hard to tell from differentials in the volume of post: 2.4x more commentators were positive than negative 100% of comments from builders were positive 43% of negative commentators were from new accounts Only 13% of positive comments were from new accounts Notable Positive Comments Since there are have been far more positive comments than negative ones on the proposal, we’ll start by highlighting a few positive ones that we think emphasize our impact well. You can also check out the testimonials we’ve collected from 10+ partners (and counting) on our Twitter. Aes: this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism. bebis: There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team. They’re on-boarding a ton of people the hard way - with actual customer/client services. They’re getting teams and users invested long-term in the ecosystem’s success. They’re the main Optimism point of contact if you’re a builder/developer. Their bribing system makes operations much lighter for small teams and startups. They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously. SethVdL: alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. I am not one for long winded governance debates and even knowingly sat out on the Overtime discussion even though I sit on the Thales Council … That being said, I feel compelled to point out this statement from Alex because I feel the Velodrome ROI is in a class of it’s own and I want voters to understand what’s at stake … the system is working and it’s currently providing multiple protocols the opportunity to have deep liquidity for a fraction of the cost elsewhere. An approved grant to velodrome is like granting the entire ecosystem imo… which is what we are set out to do. TokenBrice: We are currently leading various campaigns to sustain liquidity, whether on Curve, through Warden Bribes, or on Velodrome. In terms of the amount of liquidity sustained / $-invested, Velodrome is one to two orders of magnitude above the competition. …it is delivering beyond what was expected : the OP veVELO locking bonus is a key part of the equation - increasing the efficiency of the flywheel even further. Besides, it drives projects to lock VELO, which means they enter a long-term commitment with Velodrome and Optimism. states_of_nature1651: It seems like the main source of the criticisms is that the benefit for Optimism looks like this: Optimism should be looking to cultivate the presence of legacy mainnet protocols rather than supporting OP native upstarts with flashy marketing and distortive incentives. Supporting deep liquidity on known legacy protocols will be better for OP in the long run. Putting our thumb on the scale for Velodrome will prevent this needed development. I think this is a flawed argument based on the data provided and I don’t see how any other current ecosystem player will step in to fill the niche Velodrome is filling in the near term. This isn’t a knock on the legacy protocols. Onboarding a bunch of new protocols to Optimism makes no sense for them as a growth strategy. This shows up If you look at their grant proposals. They are looking to extend their current competitive advantage on mainnet to Optimism - not get into the business Velodrome is in. jornx: I’ve been a long time user of Optimism and I use it frequently since I do a lot of arbitrage and other trading strategies on here…Optimism was never that interesting because liquidity was very limited on the main DEX at that time (uniswap). When Velodrome was added and especially when the OP grant was liquidity boomed and there were a lot more projects with deep liquidity on Optimism.When I look at all the grants that have been given by OP in my opinion Velodrome must have been one of the most succesful, onboarding new users and creating more possibilities for the user on the network. Key Discussion Points While negative and mixed commenters have represented a minority of the total engagement on the proposal, questions and concerns they’ve raised have allowed us to discuss and clarify key points on our proposal. We provide a quick overview of some of the key questions raised and provide short summaries of our responses: Is Velodrome Asking for Too Large a Grant? TLDR: No. It is 90%+ smaller than the average grant by every KPI, offers a proven 2x-3x ROI, and comes with Velodrome offering $6.5mm in co-incentives (31x those of other DEXs combined). Likewise, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of grant funds. No alternative frameworks for grant size evaluation have been suggested or offered. Is The Lock Bonus An Appropriate Use of Funds? TLDR: Yes. The incentive flows to veTOKEN lockers consistent with other proposals such as Curve/Balancer and while drive similar second order effects that grow the ecosystem by multiples and reduce costs for the ecosystem. No data has been provided suggesting it has any meaningful impact on price. Would Builder Grants be Better? TLDR: No. Velodrome grants have brought 30+ new builders to the ecosystem by reducing their incentive costs by 20% - 70% while less accountable direct builder grants offered by other protocols have yet to demonstrate their efficacy. Is Velodrome Really Competitive with Curve and Uniswap? TLDR: Yes. Velodrome is more efficient in TVL/Volume / $ spent in incentives (lowering costs ecosystem wide). It also attracts similar levels of volume per dollar in TVL while simultaneously hosting 3.2x more ecosystem projects tokens than Uniswap and Curve combined. Should Velodrome Be Forced to Operate Without OP Incentives? TLDR: Velodrome has demonstrated the highest ROI in terms of ecosystem growth of any governance or partner fund grant to date. The primary impact of pulling back on incentives would be to slow or reverse that ecosystem growth while simultaneously continuing the flow of incentives to less effective programs on other DEXs making comparative evaluations of different programs more challenging. Incentives already represent a declining proportion of our total activity and we expect that to continue to shrink over the course of this grant. Does Granting Velodrome Harm Other DEXs? TLDR: Ecosystem native DEXs and multi-chain DEXs have different goals and incentives when it comes to growing Optimism and cannot be easily compared. Overall though, all should be evaluated / granted equally in terms of the growth multiple they can return and growing ecosystem activity will benefit all. Summary We hope you’ve found this summary helpful and will continue to add it if/when new topics are raised to make the overall thread a bit easier to navigate as we move into the voting page. Thank you for reading!
• alexcutlerdoteth - No Role

  Oct. 29, 2022, 2:27 p.m.
  Ardordo: I was not expressing how the price was affected by the on-going lock bonus, I was exp… Ardordo: I was not expressing how the price was affected by the on-going lock bonus, I was expressing how the price was affected by the OP airdrop campaign for the VELO lockers I think you’ve just tried moved the goal posts a bit, but that is fine with me as our new proposal does not have any kind of front-loaded “OP airdrop campaign”. Only an extension of the ongoing lock bonus (at a lower rate). So it sounds like we agree that on an ongoing basis the significant factors driving the price changes cannot reasonably be attributed to a ongoing lock bonus such as the one contained within this proposal. :+ 1 : Ardordo: I think it’s also fairly obvious from the fact that at some point for every $ 1 in VELO locked there would have been $ 1 . 3 OP airdropped as rewards. You could say this every single week as the the “eligible lockers” resets to 0 so the ratio of OP:VELO looks artificially high which is offset by a fairly predictable and consistent locking rate. This feels like you intentionally trying to misrepresent things. Ardordo: I am somewhat biased What is driving your biases? You’ve shared nothing about your background or experiences. It seems something in them has rendered Velodrome as the only topic of interest in Optimism governance. Perhaps you could share more about yourself so we could understand how your biases are shaping your perspective here? Which projects have you contributed to / are contributing to? We already have an sense of it, but might be good for you to share. Ardordo: I believe the technology of Velodrome’s AMM is not that innovative and I am not sure how competitive it is in the long-term compared to the more sophisticated approaches of the competitors Given how exhaustively we’ve documented our product performing incredibly well against both Curve, Uniswap, and Beethoven perhaps you could offer evidence to support this rather than stating it as fact? Ardordo: Velodrome will continue growing/scaling while it is heavily reinforced with largest OP grants any project has received This is not even remotely true. Why do you keep misrepresenting things? Multiple 9 M OP grants have gone out to top projects Optimism, significantly larger than both of our requested grants combined. None of the grants to date have demonstrated the same kind of 2 x- 3 x impact as our grant. According to Optimism’s own numbers our 3 M OP grant brought more TVL than every grant distributed by governance to date combined. Ardordo: This grant proposal was the main reason why I felt the need to make an account and comment, since even though there was a lot of data provided, I didn’t feel it was completely fair Look, I continue to believe you should show some interest in other proposals if you mean for us to take your objections to ours as serious and principled. But, if you are going to continue exclusively here, I beg you to back up your thesis’s with data and evidence so we can have a constructive conversation. This team put literally weeks of work into all the research underpinning the that Velodrome has (perhaps) delivered the best ROI of any grant to date. This proposal may be the single most deeply researched and sourced one to be submitted to governance yet. It represents not just our voice, but the voices of is over 20 ecosystem builders/partners who signed on to support it. Perhaps you do indeed know better than people like @TokenBrice, but trying to undercut our collective perspectives with specious arguments and misrepresentations does them and us a substantial disservice.
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  • Butterbum: I feel @Ardordo r concerns are legitimate. Just cause they don’t agree with you doesn’t give you the right to discredit them. alexcutlerdoteth: Look, I continue to believe you should show some interest in other proposals if you mean for us to take your objections to ours as serious and principled. If they like I choose to comment only here on velodrome proposal is because they like I feel it is warranted. This is the second time Velodrome would be receiving Op form this grant fund, Yes some got more than you but none of them are already back for more, so you can expect exclusively form some community members here.
• Butterbum - No Role

  Oct. 29, 2022, 2:37 p.m.
  Good day @alexcutlerdoteth I’m back. I am not denying the fact that more stimulus will have a posit… Good day @alexcutlerdoteth I’m back. I am not denying the fact that more stimulus will have a positive impact on metrics all round for the short term. alexcutlerdoteth: This is just not how investing to grow/scale works. This is not an investment Fund It is a Grant Fund to help build a sustainable ecosystem. Not to make a protocol sustainable. Its the difference between growth and sustainable growth. Velodrome is a newish protocol an upgrade to Olympus DAO design with features that mitigate selling with the Vote Escrow system. I understand a collapse like OHM suffered is unlikely but such an event would be detrimental to Optimism, other protocols on Optimism and mostly the Optimism users. than rapidly on boarding in the near term. This is why I am concerned and would like to see sustainability in the for front of all protocols requesting funds.
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  • alexcutlerdoteth: Butterbum: I am not denying the fact that more stimulus will have a positive impact on metrics all round for the short term. Ser, I fear you are fundamentally misunderstanding the role that stimulus and infrastructure development plays in growing a sustainable economy. The whole point of it is to create “stimulate” long term growth and sustainability. I’ve tried to convey this idea to you through linking to resources and using metaphors and analogies. I think at this point it is clear that you are not persuaded and you’ve made that clear. Perhaps we leave the space for some perspectives rather than continuing to go in circles on this. Butterbum: This is not an investment Fund It is a Grant Fund to help build a sustainable ecosystem. Not to make a protocol sustainable. Agreed, which is why the bulk of our proposal is focused on demonstrating our ecosystem impact and is co-signed by a significant portion of it. Butterbum: Velodrome is a newish protocol an upgrade to Olympus DAO design with features that mitigate selling with the Vote Escrow system. This is not even remotely what Velodrome is and it is extremely troubling to me that you have been so vocal in our proposal without taking the time to understand what kind of protocol we are. Please consider reviewing our docs or watching a video explainer.
• Butterbum - No Role

  Oct. 29, 2022, 2:54 p.m.
  I feel @Ardordo r concerns are legitimate. Just cause they don’t agree with you doesn’t give you th… I feel @Ardordo r concerns are legitimate. Just cause they don’t agree with you doesn’t give you the right to discredit them. alexcutlerdoteth: Look, I continue to believe you should show some interest in other proposals if you mean for us to take your objections to ours as serious and principled. If they like I choose to comment only here on velodrome proposal is because they like I feel it is warranted. This is the second time Velodrome would be receiving Op form this grant fund, Yes some got more than you but none of them are already back for more, so you can expect exclusively form some community members here.
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• Jadmat - No Role

  Oct. 29, 2022, 3:02 p.m.
  How can you know the weekly Curve $OP rewards that will go to each Pool??? This thread makes me thi… How can you know the weekly Curve $OP rewards that will go to each Pool??? This thread makes me think that subsidies are actually the product that is in demand here. tao: Velodrome ha alcanzado la velocidad de escape / Velodrome debería demostrar su valía sin incentivos Some of us have emphasized here, Sustainable Growth. This does not include the increase in metrics for constant subsidy/issuance; but what will happen when both end? The incentives generate tvl and volume, but when the incentives end, the liquidity disappears. Let’s focus on the concept of “Growth”, the goal of Optimism: Do you think that if it hadn’t received the first grant, Velodrome would hold metrics above other dexes today? Curve and Uniswap have not yet received/used the subsidy. If your answer is: Yes, it will continue to maintain metrics above these; Well, then the new scholarship is not necessary, , since no dex has applied for a second grant. Not, if you think Velodrome wouldn’t be the major Dex; (as I said in my first answer) we should wait to see how the Uni and Curve grants work out before continuing to subsidize Velodrome
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  • alexcutlerdoteth: Jadmat: How can you know the weekly Curve $OP rewards that will go to each Pool??? Are you asking how we know how much in co-incentives Curve is likely to match for incentivized pools? If so, we really don’t. Curve has not committed to any sort of targets that I know of (as we have) and the overwhelming majority Curve’s emissions will continue to go to mainnet for the foreseeable future. It will take time before there is hard data on the effectiveness of using bribing veCRV voters with non-main net asset like $OP and we get a clear picture on their rate of their coincentivization. That said, Optimism’s research into the effectiveness of incentive programs to date did document the current rate of CRV emissions flowing to Optimism, which is what we used for our projection. To put this in perspective, that is $90,000 in co-incentives from Curve over a period where Velodrome distributed $2,900,000. That means we are pumping 32x the stimulus into the Optimism economy that Curve is while asking for a grant merely 8x the size of theirs. Jadmat: Some of us have emphasized here, Sustainable Growth. This does not include the increase in metrics for constant subsidy/issuance; but what will happen when both end? The incentives generate tvl and volume, but when the incentives end, the liquidity disappears We’ve addressed this ad naseum at this point, both in the proposal and in our responses. Please refer to those answers here, here, here, and here. If you want to dispute any particular arguments, please quote them and provide data or evidence to support your assertion. Jadmat: Do you think that if it hadn’t received the first grant, Velodrome would hold metrics above other dexes today? To be clear, Uniswap received their grant before us. I think the pace at which they’ve moved to put it to use makes it clear how much of a priority Optimism currently is for them. As for if our metrics would be the same? It’s impossible to know. Even before the grant, we had plenty of data indicating we were the most capital efficient DEX on Optimism and were beginning to attract new partners so it’s possible we would still be in a strong position. However, it would’ve made it far more expensive for the 15+ new protocols we’ve onboarded who have not received grants from the governance to onboard their users, liquidity, and activity to Optimism. In other words, any loss of Velodrome’s would’ve also been a loss for the growth of the ecosystem and that would’ve knock on effects that are difficulty to extrapolate. Jadmat: Yes, it will continue to maintain metrics above these; Well, then the new scholarship is not necessary, , since no dex has applied for a second grant. Not, if you think Velodrome wouldn’t be the major Dex; (as I said in my first answer) we should wait to see how the Uni and Curve grants work out before continuing to subsidize Velodrome I do not really understand your words here, but I will reiterate that every DEX that comes back to Optimism demonstrating a 2x-3x return on investment in terms of the growth multiple they’ve provided should be strongly considered for an extension of their incentive programs. The only thing a “wait and see” approach will give you is slowing growth to the detriment of the ecosystem and a messy comparative data set on DEX incentives.
• alexcutlerdoteth - No Role

  Oct. 29, 2022, 3:42 p.m.
  Hey Everyone - I want to take a quick step back here from the weeds and share some qualitative anal… Hey Everyone - I want to take a quick step back here from the weeds and share some qualitative analysis of the conversation so far. We’ve had an extraordinary 26 total non-Velodrome commenters on our proposal so far. They fit into four overarching categories: New Anon Accounts (less than 2 w old) Old Anon Accounts (greater than 2 w old) Delegate Accounts Builder Accounts In coding at the sentiment of commenters we find that 84 % are either positive or mixed on the proposal, while just 21 % are negative. Positive: 12 ( 52 %) Mixed: 6 ( 26 %) Negative: 5 ( 21 %) That said, sentiment varies significantly depending on account type: New Anon Accounts ( 6 total) – 3 positive ( 25 % of all positive) – 0 mixed ( 0 % of all mixed) – 3 negative ( 60 % of all negative) Old Anon Accounts ( 6 total) – 3 positive ( 25 % of all positive) – 2 mixed ( 33 % of all mixed) – 1 negative ( 16 % of all negative) Delegate Accounts ( 5 total) – 0 positive ( 0 % of positive) – 4 mixed ( 71 % of all mixed) – 1 negative ( 20 % of all negative) Builder Accounts ( 6 total) – 6 positive ( 50 % of positive) – 0 mixed ( 0 % of all mixed) – 0 negative ( 0 % of all negative) While it may be difficult to perceive to the sheer velocity of their posting, negative proposal sentiment to date has really just coming from about 5 accounts, of which 3 are new anon accounts created in the last two weeks. While that does not mean that their feedback should not be taken into consideration, we do hope it helpful to understand the nature of the overarching sentiment of the feedback to so far. We hope to see more feedback from delegate and builder accounts in the coming days to ensure that we can address their questions/concerns and make sure their voices are not being drowned out of this process. :v: Thank you for all the conversation so far!
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• alexcutlerdoteth - No Role

  Oct. 29, 2022, 4:22 p.m.
  Butterbum: I am not denying the fact that more stimulus will have a positive impact on metrics… Butterbum: I am not denying the fact that more stimulus will have a positive impact on metrics all round for the short term. Ser, I fear you are fundamentally misunderstanding the role that stimulus and infrastructure development plays in growing a sustainable economy 2 . The whole point of it is to create “stimulate” long term growth and sustainability. I’ve tried to convey this idea to you through linking to resources and using metaphors and analogies. I think at this point it is clear that you are not persuaded and you’ve made that clear. Perhaps we leave the space for some perspectives rather than continuing to go in circles on this. Butterbum: This is not an investment Fund It is a Grant Fund to help build a sustainable ecosystem. Not to make a protocol sustainable. Agreed, which is why the bulk of our proposal is focused on demonstrating our ecosystem impact and is co-signed by a significant portion of it. Butterbum: Velodrome is a newish protocol an upgrade to Olympus DAO design with features that mitigate selling with the Vote Escrow system. This is not even remotely what Velodrome is and it is extremely troubling to me that you have been so vocal in our proposal without taking the time to understand what kind of protocol we are. Please consider reviewing our docs or watching a video explainer.
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  • Butterbum: Thanks for you time, and for being present at this late stage in the proposal cycle(review period).
• alexcutlerdoteth - No Role

  Oct. 29, 2022, 5:13 p.m.
  Jadmat: How can you know the weekly Curve $OP rewards that will go to each Pool??? Are you a… Jadmat: How can you know the weekly Curve $OP rewards that will go to each Pool??? Are you asking how we know how much in co-incentives Curve is likely to match for incentivized pools? If so, we really don’t. Curve has not committed to any sort of targets that I know of (as we have) and the overwhelming majority Curve’s emissions will continue to go to mainnet for the foreseeable future. It will take time before there is hard data on the effectiveness of using bribing veCRV voters with non-main net asset like $OP and we get a clear picture on their rate of their coincentivization. That said, Optimism’s research into the effectiveness of incentive programs to date did document the current rate of CRV emissions flowing to Optimism, which is what we used for our projection. To put this in perspective, that is $ 90 , 000 in co-incentives from Curve over a period where Velodrome distributed $ 2 , 900 , 000 . That means we are pumping 32 x the stimulus into the Optimism economy that Curve is while asking for a grant merely 8 x the size of theirs. Jadmat: Some of us have emphasized here, Sustainable Growth. This does not include the increase in metrics for constant subsidy/issuance; but what will happen when both end? The incentives generate tvl and volume, but when the incentives end, the liquidity disappears We’ve addressed this ad naseum at this point, both in the proposal and in our responses. Please refer to those answers here, here, here, and here. If you want to dispute any particular arguments, please quote them and provide data or evidence to support your assertion. Jadmat: Do you think that if it hadn’t received the first grant, Velodrome would hold metrics above other dexes today? To be clear, Uniswap received their grant before us. I think the pace at which they’ve moved to put it to use makes it clear how much of a priority Optimism currently is for them. As for if our metrics would be the same? It’s impossible to know. Even before the grant, we had plenty of data indicating we were the most capital efficient DEX on Optimism and were beginning to attract new partners so it’s possible we would still be in a strong position. However, it would’ve made it far more expensive for the 15 + new protocols we’ve onboarded who have not received grants from the governance to onboard their users, liquidity, and activity to Optimism. In other words, any loss of Velodrome’s would’ve also been a loss for the growth of the ecosystem and that would’ve knock on effects that are difficulty to extrapolate. Jadmat: Yes, it will continue to maintain metrics above these; Well, then the new scholarship is not necessary, , since no dex has applied for a second grant. Not, if you think Velodrome wouldn’t be the major Dex; (as I said in my first answer) we should wait to see how the Uni and Curve grants work out before continuing to subsidize Velodrome I do not really understand your words here, but I will reiterate that every DEX that comes back to Optimism demonstrating a 2 x- 3 x return on investment in terms of the growth multiple they’ve provided should be strongly considered for an extension of their incentive programs. The only thing a “wait and see” approach will give you is slowing growth to the detriment of the ecosystem and a messy comparative data set on DEX incentives.
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  • Jadmat: alexcutlerdoteth: ¿Está preguntando cómo sabemos cuánto en co-incentivos es probable que Curve iguale para los grupos incentivados? no, @tao in his last post shows 2 charts reporting weekly uniswap and curve incentives for particular pools; how can you find out the weekly Curve $OP rewards that will go to each Pool??? alexcutlerdoteth: Para poner esto en perspectiva, son $90,000 en co-incentivos de Curve durante un período en el que Velodrome distribuyó $2,900,000. Eso significa que estamos bombeando 32 veces el estímulo en la economía optimista que Curve está pidiendo una subvención de solo 8 veces el tamaño de la suya. That’s right, and that pumping was absorbed by the skaters, each one chooses how to mistreat their tokenomica alexcutlerdoteth: Si desea disputar algún argumento en particular, cítelos y proporcione datos o evidencia para respaldar su afirmación. There is only data on how incentives and subsidies bring tvl; there is no data of a working product without this I have read the complete thread, you can look for the statements that without subsidy there seems to be no traction alexcutlerdoteth: Para ser claros, Uniswap recibió su subvención antes que nosotros. Creo que el ritmo al que se han movido para ponerlo en uso deja en claro cuán prioritario es el optimismo actualmente para ellos. 100% agree with this alexcutlerdoteth: Lo único que le dará un enfoque de “esperar y ver” es una desaceleración del crecimiento en detrimento del ecosistema y un conjunto de datos comparativos desordenados sobre los incentivos DEX. your conclusion is that if Optimims doesn’t inject 4M of $OP now ngmi? or is Velodrome who ngmi?
• Butterbum - No Role

  Oct. 29, 2022, 5:27 p.m.
  Thanks for you time, and for being present at this late stage in the proposal cycle(review period).… Thanks for you time, and for being present at this late stage in the proposal cycle(review period). :pray:
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• OPUser - No Role

  Oct. 29, 2022, 6:56 p.m.
  Thank you for the engagement. There are couple of things but one major I would like to clarify, it … Thank you for the engagement. There are couple of things but one major I would like to clarify, it is final that you are moving ahead with Lowering Barriers to Entry with Locking Incentives - 37 . 5 % [ 1 . 5 M OP] using 1 . 5 M OP for veVelo lockers.
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  • alexcutlerdoteth: Aes: Hey everyone - this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism. Thank you for the kind words, ser. Excited for our plan to come for fruition in the next few weeks here. OPUser: it is final that you are moving ahead with using 1.5M OP for veVelo lockers. Forgive me, but the proposal is locked after two delegates approve for it to move to the review phase is it not? You probably know the rules better than me, so are you saying we can still make edits? I’m also curious why we wouldn’t be? They have been demonstrated to deliver a massive ROI on the underlying incentive and help new protocols onboard / lock capital into the ecosystem.
• Aes - No Role

  Oct. 29, 2022, 7:03 p.m.
  Hey everyone - this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support o… Hey everyone - this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism.
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  • alexcutlerdoteth: Aes: Hey everyone - this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism. Thank you for the kind words, ser. Excited for our plan to come for fruition in the next few weeks here. OPUser: it is final that you are moving ahead with using 1.5M OP for veVelo lockers. Forgive me, but the proposal is locked after two delegates approve for it to move to the review phase is it not? You probably know the rules better than me, so are you saying we can still make edits? I’m also curious why we wouldn’t be? They have been demonstrated to deliver a massive ROI on the underlying incentive and help new protocols onboard / lock capital into the ecosystem.
  • alexcutlerdoteth: Good Morning Voting is coming up so we wanted to create a summary/guide of the discussion so far for those unable to parts through the record breaking 133 comments on the proposal. Overview Velodrome spent several weeks creating what is likely the detailed and evidenced proposal to be submitted to governance yet. If you have the time, please consider reading its in it’s entirety. Since it’s posting 12 days ago it has received 133 comments from 31 commentators: Positive Commentators: 17 (58%) Mixed Commentators: 5 (17%) Negative Commentators: 7 (24%) As you can see, there are more positive commentators than negative and mixed commentators combined. Though it may be hard to tell from differentials in the volume of post: 2.4x more commentators were positive than negative 100% of comments from builders were positive 43% of negative commentators were from new accounts Only 13% of positive comments were from new accounts Notable Positive Comments Since there are have been far more positive comments than negative ones on the proposal, we’ll start by highlighting a few positive ones that we think emphasize our impact well. You can also check out the testimonials we’ve collected from 10+ partners (and counting) on our Twitter. Aes: this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism. bebis: There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team. They’re on-boarding a ton of people the hard way - with actual customer/client services. They’re getting teams and users invested long-term in the ecosystem’s success. They’re the main Optimism point of contact if you’re a builder/developer. Their bribing system makes operations much lighter for small teams and startups. They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously. SethVdL: alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. I am not one for long winded governance debates and even knowingly sat out on the Overtime discussion even though I sit on the Thales Council … That being said, I feel compelled to point out this statement from Alex because I feel the Velodrome ROI is in a class of it’s own and I want voters to understand what’s at stake … the system is working and it’s currently providing multiple protocols the opportunity to have deep liquidity for a fraction of the cost elsewhere. An approved grant to velodrome is like granting the entire ecosystem imo… which is what we are set out to do. TokenBrice: We are currently leading various campaigns to sustain liquidity, whether on Curve, through Warden Bribes, or on Velodrome. In terms of the amount of liquidity sustained / $-invested, Velodrome is one to two orders of magnitude above the competition. …it is delivering beyond what was expected : the OP veVELO locking bonus is a key part of the equation - increasing the efficiency of the flywheel even further. Besides, it drives projects to lock VELO, which means they enter a long-term commitment with Velodrome and Optimism. states_of_nature1651: It seems like the main source of the criticisms is that the benefit for Optimism looks like this: Optimism should be looking to cultivate the presence of legacy mainnet protocols rather than supporting OP native upstarts with flashy marketing and distortive incentives. Supporting deep liquidity on known legacy protocols will be better for OP in the long run. Putting our thumb on the scale for Velodrome will prevent this needed development. I think this is a flawed argument based on the data provided and I don’t see how any other current ecosystem player will step in to fill the niche Velodrome is filling in the near term. This isn’t a knock on the legacy protocols. Onboarding a bunch of new protocols to Optimism makes no sense for them as a growth strategy. This shows up If you look at their grant proposals. They are looking to extend their current competitive advantage on mainnet to Optimism - not get into the business Velodrome is in. jornx: I’ve been a long time user of Optimism and I use it frequently since I do a lot of arbitrage and other trading strategies on here…Optimism was never that interesting because liquidity was very limited on the main DEX at that time (uniswap). When Velodrome was added and especially when the OP grant was liquidity boomed and there were a lot more projects with deep liquidity on Optimism.When I look at all the grants that have been given by OP in my opinion Velodrome must have been one of the most succesful, onboarding new users and creating more possibilities for the user on the network. Key Discussion Points While negative and mixed commenters have represented a minority of the total engagement on the proposal, questions and concerns they’ve raised have allowed us to discuss and clarify key points on our proposal. We provide a quick overview of some of the key questions raised and provide short summaries of our responses: Is Velodrome Asking for Too Large a Grant? TLDR: No. It is 90%+ smaller than the average grant by every KPI, offers a proven 2x-3x ROI, and comes with Velodrome offering $6.5mm in co-incentives (31x those of other DEXs combined). Likewise, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of grant funds. No alternative frameworks for grant size evaluation have been suggested or offered. Is The Lock Bonus An Appropriate Use of Funds? TLDR: Yes. The incentive flows to veTOKEN lockers consistent with other proposals such as Curve/Balancer and while drive similar second order effects that grow the ecosystem by multiples and reduce costs for the ecosystem. No data has been provided suggesting it has any meaningful impact on price. Would Builder Grants be Better? TLDR: No. Velodrome grants have brought 30+ new builders to the ecosystem by reducing their incentive costs by 20% - 70% while less accountable direct builder grants offered by other protocols have yet to demonstrate their efficacy. Is Velodrome Really Competitive with Curve and Uniswap? TLDR: Yes. Velodrome is more efficient in TVL/Volume / $ spent in incentives (lowering costs ecosystem wide). It also attracts similar levels of volume per dollar in TVL while simultaneously hosting 3.2x more ecosystem projects tokens than Uniswap and Curve combined. Should Velodrome Be Forced to Operate Without OP Incentives? TLDR: Velodrome has demonstrated the highest ROI in terms of ecosystem growth of any governance or partner fund grant to date. The primary impact of pulling back on incentives would be to slow or reverse that ecosystem growth while simultaneously continuing the flow of incentives to less effective programs on other DEXs making comparative evaluations of different programs more challenging. Incentives already represent a declining proportion of our total activity and we expect that to continue to shrink over the course of this grant. Does Granting Velodrome Harm Other DEXs? TLDR: Ecosystem native DEXs and multi-chain DEXs have different goals and incentives when it comes to growing Optimism and cannot be easily compared. Overall though, all should be evaluated / granted equally in terms of the growth multiple they can return and growing ecosystem activity will benefit all. Summary We hope you’ve found this summary helpful and will continue to add it if/when new topics are raised to make the overall thread a bit easier to navigate as we move into the voting page. Thank you for reading!
• alexcutlerdoteth - No Role

  Oct. 29, 2022, 7:15 p.m.
  Aes: Hey everyone - this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in… Aes: Hey everyone - this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism. Thank you for the kind words, ser. Excited for our plan to come for fruition in the next few weeks here. :eyes: OPUser: it is final that you are moving ahead with using 1 . 5 M OP for veVelo lockers. Forgive me, but the proposal is locked after two delegates approve for it to move to the review phase is it not? You probably know the rules better than me, so are you saying we can still make edits? I’m also curious why we wouldn’t be? They have been demonstrated to deliver a massive ROI on the underlying incentive and help new protocols onboard / lock capital into the ecosystem.
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• OPUser - No Role

  Oct. 29, 2022, 7:28 p.m.
  alexcutlerdoteth: You probably know the rules better than me, so are you saying we can still m… alexcutlerdoteth: You probably know the rules better than me, so are you saying we can still make edits? Yes, you can. We are in delegate feedback week, so making changes are totally fine depending on feedback. Only problem would be if you made a major change to which either committee is not comfortable or delegate initially approved your proposal revoke their approval. I’m also curious why we wouldn’t be As a user if I need to buy project native token to be part of OP incentive, then I am not in favor of it. We discussed this in depth on two prior proposal. here 2 and here 1 . All though few accounts are new here which raises some skepticism but they are also sharing the same thought. I have read your past reply but I just want to clarify if its final or you are still considering. Again, appreciate your effort here.
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  • alexcutlerdoteth: OPUser: As a user if I need to buy project native token to be part of OP incentive, then I am not in favor of it. We discussed this in depth on two prior proposal. here and here. Curve’s proposal requires the buying and locking of veCRV on mainnet to directly access the the $OP bribes they are requesting as incentives. The pools that get those incentives are also 100% controlled by the votes of veCRV stakers on mainnet, requiring staked veCRV to access. Likewise to earn the fees the boosted liquidity offers, you must again stake veCRV on mainnet. In other words, projects and individuals need to buy and lock veCRV to access their proposed incentives as well. I have not seen you raise a similar objection in their case. Is there a reason for this? In contrast every .20c in lock incentives spent earns the ecosystem $1 in TVL locked in Optimism for 4 years (a 5x return). As far as I know, it is the only program in existence that requires projects to lock investment into the ecosystem to access $OP rewards. You yourself have mentioned worrying about capital moving off of the network when incentives tapper, this solves for that at a 5x multiple. Do you have a suggestion for better a strategy? Or an explanation why you’d call this out as a deal breaker for us, but not Curve which actually requires capital flight from Optimism? I would also direct you back to @TokenBrice’s eloquent explanation on the impact these incentives on projects like his. It’d be good to understand how think the removal of them would impact the strategy they are currently employing to grow their presence on Optimism.
  • alexcutlerdoteth: OPUser: Curve:- rewards goes towards new or existing veCRV users. Velo:- Same as above, existing and new users will be rewarded. + if you buy and lock new token then we give back some of your principle amount in form of $OP reward. The $OP reward of-course vary from epoch to epoch like mentioned above in comments. This is tough for me to wrap my head around. I think you are trying to create a distinction where there really isn’t one. Your objection was: OPUser: As a user if I need to buy project native token to be part of OP incentive, then I am not in favor of it. Curve: You must acquire (or have acquired) and lock veCRV on Ethereum mainnet to access incentives designed to facilitate growth on Optimism. Velodrome: You must acquire and lock veVELO on Optimism to access the incentives designed to facilitate growth on Optimism. In both cases, you need to acquire “the project native token to be part of OP incentive”, though as @GuyWithKeyboard just noted this is not limited to “buying” as you suggest. If I am understanding your attempt at a distinction, for Curve you are saying you see no issue with requiring the acquisition of veCRV to access OP rewards, despite the fact that it leaks value and activity from Optimism to mainnet. But in the case of Velodrome, you don’t think it is appropriate because it requires the acquisition of new tokens? So there is something intrinsically better about requiring the acquisition of a project native token when you you include both existing AND new veCRV lockers on mainnet rather than focusing the incentive just on new veVELO lockers on Optimism? Even when considering in our case the result is millions in new capital locked in the ecosystem, versus value leakage? This seems really hard to square fren, especially given when you’ve supported other proposals that likewise “require the acquisition of project native tokens” to access the incentives such as Balancer and Beethoven. And to be clear here, I think the Curve proposal is a perfectly acceptable given the technical limitations that exist at the moment to them supporting a fully native solution. It may be worth it to the ecosystem even if the incentive isn’t quite as efficient. But, I’m just struggling to find coherency in your suggestion that it’s okay in the case of a solution that is objectively less optimal for Optimism and not okay in the case of an example that has demonstrated itself to be a ecosystem growth multiplier.
  • katie: OPUser: Yes, you can. We are in delegate feedback week, so making changes are totally fine depending on feedback. Only problem would be if you made a major change to which either committee is not comfortable or delegate initially approved your proposal revoke their approval. Jumping in here to say I don’t agree with this. As one of the 2 delegates that gave their approval, I personally do not like to see edits made after approval has been given. In previous cycles where changes were made after delegate approval, the proposals were withdrawn and resubmitted. If the velodrome team is comfortable with their proposal in the current state, then I would not suggest any changes be made at this time.
• alexcutlerdoteth - No Role

  Oct. 29, 2022, 7:56 p.m.
  OPUser: As a user if I need to buy project native token to be part of OP incentive, then I am … OPUser: As a user if I need to buy project native token to be part of OP incentive, then I am not in favor of it. We discussed this in depth on two prior proposal. here and here. Curve’s proposal requires the buying and locking of veCRV on mainnet to directly access the the $OP bribes they are requesting as incentives. The pools that get those incentives are also 100 % controlled by the votes of veCRV stakers on mainnet, requiring staked veCRV to access. Likewise to earn the fees the boosted liquidity offers, you must again stake veCRV on mainnet. In other words, projects and individuals need to buy and lock veCRV to access their proposed incentives as well. I have not seen you raise a similar objection in their case. Is there a reason for this? In contrast every . 20 c in lock incentives spent earns the ecosystem $ 1 in TVL locked in Optimism for 4 years (a 5 x return). As far as I know, it is the only program in existence that requires projects to lock investment into the ecosystem to access $OP rewards. You yourself have mentioned worrying about capital moving off of the network when incentives tapper, this solves for that at a 5 x multiple. image 1156 × 704 30 . 3 KB Do you have a suggestion for better a strategy? Or an explanation why you’d call this out as a deal breaker for us, but not Curve which actually requires capital flight from Optimism? I would also direct you back to @TokenBrice’s eloquent explanation on the impact these incentives on projects like his. It’d be good to understand how think the removal of them would impact the strategy they are currently employing to grow their presence on Optimism.
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  • OPUser: alexcutlerdoteth: Do you have a suggestion for better a strategy? Or an explanation why you’d call this out as a deal breaker for us, but not Curve which actually requires capital flight from Optimism? Thank you for this and I glad we got to clarify this earlier. Curve:- rewards goes towards new or existing veCRV users. Velo:- Same as above, existing and new users will be rewarded. + if you buy and lock new token then we give back some of your principle amount in form of $OP reward. The $OP reward of-course vary from epoch to epoch like mentioned above in comments. This is where these two proposal are different.
  • jackanorak: Jumping in here quickly to say that alex’s post shouldn’t be taken as a direct knock on curve’s proposal, which i think (and i know he thinks) has been admirably shaped through a lot of cooperation and effort. I do think, though, it’s important to have consistency in your standards and reasoning – that’s the only way you get the outcomes you want.
• OPUser - No Role

  Oct. 29, 2022, 8:18 p.m.
  alexcutlerdoteth: Do you have a suggestion for better a strategy? Or an explanation why you’d … alexcutlerdoteth: Do you have a suggestion for better a strategy? Or an explanation why you’d call this out as a deal breaker for us, but not Curve which actually requires capital flight from Optimism? Thank you for this and I glad we got to clarify this earlier. Curve:- rewards goes towards new or existing veCRV users. Velo:- Same as above, existing and new users will be rewarded. + if you buy and lock new token then we give back some of your principle amount in form of $OP reward. The $OP reward of-course vary from epoch to epoch like mentioned above in comments. This is where these two proposal are different.
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  • alexcutlerdoteth: OPUser: Curve:- rewards goes towards new or existing veCRV users. Velo:- Same as above, existing and new users will be rewarded. + if you buy and lock new token then we give back some of your principle amount in form of $OP reward. The $OP reward of-course vary from epoch to epoch like mentioned above in comments. This is tough for me to wrap my head around. I think you are trying to create a distinction where there really isn’t one. Your objection was: OPUser: As a user if I need to buy project native token to be part of OP incentive, then I am not in favor of it. Curve: You must acquire (or have acquired) and lock veCRV on Ethereum mainnet to access incentives designed to facilitate growth on Optimism. Velodrome: You must acquire and lock veVELO on Optimism to access the incentives designed to facilitate growth on Optimism. In both cases, you need to acquire “the project native token to be part of OP incentive”, though as @GuyWithKeyboard just noted this is not limited to “buying” as you suggest. If I am understanding your attempt at a distinction, for Curve you are saying you see no issue with requiring the acquisition of veCRV to access OP rewards, despite the fact that it leaks value and activity from Optimism to mainnet. But in the case of Velodrome, you don’t think it is appropriate because it requires the acquisition of new tokens? So there is something intrinsically better about requiring the acquisition of a project native token when you you include both existing AND new veCRV lockers on mainnet rather than focusing the incentive just on new veVELO lockers on Optimism? Even when considering in our case the result is millions in new capital locked in the ecosystem, versus value leakage? This seems really hard to square fren, especially given when you’ve supported other proposals that likewise “require the acquisition of project native tokens” to access the incentives such as Balancer and Beethoven. And to be clear here, I think the Curve proposal is a perfectly acceptable given the technical limitations that exist at the moment to them supporting a fully native solution. It may be worth it to the ecosystem even if the incentive isn’t quite as efficient. But, I’m just struggling to find coherency in your suggestion that it’s okay in the case of a solution that is objectively less optimal for Optimism and not okay in the case of an example that has demonstrated itself to be a ecosystem growth multiplier.
• jackanorak - No Role

  Oct. 29, 2022, 8:18 p.m.
  Jumping in here quickly to say that alex’s post shouldn’t be taken as a direct knock on curve’s pro… Jumping in here quickly to say that alex’s post shouldn’t be taken as a direct knock on curve’s proposal, which i think (and i know he thinks) has been admirably shaped through a lot of cooperation and effort. I do think, though, it’s important to have consistency in your standards and reasoning – that’s the only way you get the outcomes you want.
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• GuyWithKeyboard - No Role

  Oct. 29, 2022, 8:40 p.m.
  Just a quick note here, I haven’t the time right now to write my full thoughts for you guys but jus… Just a quick note here, I haven’t the time right now to write my full thoughts for you guys but just want to note that you certainly do not have to buy the VELO token to lock and get OP rewards. You can simply farm the VELO we distribute through LP incentives, we distribute around ~ 12 m VELO (~$ 350 k) a week right now so plenty to go around, and take your VELO to lock it for veVELO. No purchase necessary.
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• dohpe - No Role

  Oct. 29, 2022, 9:10 p.m.
  first time poster, just want to say that Velodrome have been incredibly active and I have been foll… first time poster, just want to say that Velodrome have been incredibly active and I have been following them since their initial airdrop, I was sceptic at first and had my issues early with a miscommunication however they have been very active and have been very hard at work at building and growing the network and fixing bugs and adding features to the website, they are way more active on the Optimism network than any other protocol I have seen so far and I think they are worthy of this grant.
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• alexcutlerdoteth - No Role

  Oct. 29, 2022, 9:11 p.m.
  OPUser: Curve:- rewards goes towards new or existing veCRV users. Velo:- Same as above, existi… OPUser: Curve:- rewards goes towards new or existing veCRV users. Velo:- Same as above, existing and new users will be rewarded. + if you buy and lock new token then we give back some of your principle amount in form of $OP reward. The $OP reward of-course vary from epoch to epoch like mentioned above in comments. This is tough for me to wrap my head around. I think you are trying to create a distinction where there really isn’t one. Your objection was: OPUser: As a user if I need to buy project native token to be part of OP incentive, then I am not in favor of it. Curve: You must acquire (or have acquired) and lock veCRV on Ethereum mainnet to access incentives designed to facilitate growth on Optimism. Velodrome: You must acquire and lock veVELO on Optimism to access the incentives designed to facilitate growth on Optimism. In both cases, you need to acquire “the project native token to be part of OP incentive”, though as @GuyWithKeyboard just noted this is not limited to “buying” as you suggest. If I am understanding your attempt at a distinction, for Curve you are saying you see no issue with requiring the acquisition of veCRV to access OP rewards, despite the fact that it leaks value and activity from Optimism to mainnet. But in the case of Velodrome, you don’t think it is appropriate because it requires the acquisition of new tokens? So there is something intrinsically better about requiring the acquisition of a project native token when you you include both existing AND new veCRV lockers on mainnet rather than focusing the incentive just on new veVELO lockers on Optimism? Even when considering in our case the result is millions in new capital locked in the ecosystem, versus value leakage? This seems really hard to square fren, especially given when you’ve supported other proposals that likewise “require the acquisition of project native tokens” to access the incentives such as Balancer and Beethoven 2 . And to be clear here, I think the Curve proposal is a perfectly acceptable given the technical limitations that exist at the moment to them supporting a fully native solution. It may be worth it to the ecosystem even if the incentive isn’t quite as efficient. But, I’m just struggling to find coherency in your suggestion that it’s okay in the case of a solution that is objectively less optimal for Optimism and not okay in the case of an example that has demonstrated itself to be a ecosystem growth multiplier.
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  • Jadmat: For a protocol that seeks to boost its incentives, it is not comparable to do it with $velo or with $crv, the metrics here show a much greater loss of capital for $velo stakers. alexcutlerdoteth: ¿Incluso cuando consideramos en nuestro caso que el resultado son millones en capital nuevo encerrado en el ecosistema, en lugar de una fuga de valor? Curve’s proposal encourages the diversion of $crv rewards TOWARDS OPTIMISM, it is exactly the opposite of what you indicate, under your analogy it would be an “importing value from the main network”
  • OPUser: alexcutlerdoteth: I think you are trying to create a distinction where there really isn’t one. Example:- I have 100K in $USD some veCRV and veVelo. Case 1 : Existing veToken holder Curve - As a existing holder of veCRV, I will get reward depending on the amount I hold and how I vote. Velo - same as above Case 2 : New user Curve - I can use 100K $USD to acquire more CRV, lock it to get more veCRV. My voting power increase resulting in more reward and my principle amount is locked in form new veCRV. Velo - Same as above, + I will get some % of my principle money back in form of $OP as mentioned in the proposal for buying and locking $VELO. We have seen that lock bonus vary but could possibly reach up to $1.3 in $OP for $1 in depending on amount locked in that specific epoch but even If I take an average of 80% 30% return then at the end of epoch I will back $80K back 30K in form of $OP airdropped as a reward. So basically, we are paying users to buy protocol native token which is not the case with Curve. Hope this example provide more context from my side. tao: 40K OP incentives per week over 6 months, distributed to veVELO lockers proportionally to new veVELO balance per week I am not trying to create a distinction, its clearly mentioned in the proposal. katie: do not like to see edits made after approval has been given Thank you for this, Katie. I would like us to continue this conversation during coming Reflection period.
  • Sunfire: alexcutlerdoteth: This seems really hard to square fren, especially given when you’ve supported other proposals that likewise “require the acquisition of project native tokens” to access the incentives such as Balancer and Beethoven Where are you getting this from and what exactly is the context? incentives = OP tokens from the grant? project native tokens = bal/beets? if so, thats entirely untrue good ser.
• katie - No Role

  Oct. 29, 2022, 9:17 p.m.
  OPUser: Yes, you can. We are in delegate feedback week, so making changes are totally fine dep… OPUser: Yes, you can. We are in delegate feedback week, so making changes are totally fine depending on feedback. Only problem would be if you made a major change to which either committee is not comfortable or delegate initially approved your proposal revoke their approval. Jumping in here to say I don’t agree with this. As one of the 2 delegates that gave their approval, I personally do not like to see edits made after approval has been given. In previous cycles where changes were made after delegate approval, the proposals were withdrawn and resubmitted. If the velodrome team is comfortable with their proposal in the current state, then I would not suggest any changes be made at this time.
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  • OPUser: alexcutlerdoteth: I think you are trying to create a distinction where there really isn’t one. Example:- I have 100K in $USD some veCRV and veVelo. Case 1 : Existing veToken holder Curve - As a existing holder of veCRV, I will get reward depending on the amount I hold and how I vote. Velo - same as above Case 2 : New user Curve - I can use 100K $USD to acquire more CRV, lock it to get more veCRV. My voting power increase resulting in more reward and my principle amount is locked in form new veCRV. Velo - Same as above, + I will get some % of my principle money back in form of $OP as mentioned in the proposal for buying and locking $VELO. We have seen that lock bonus vary but could possibly reach up to $1.3 in $OP for $1 in depending on amount locked in that specific epoch but even If I take an average of 80% 30% return then at the end of epoch I will back $80K back 30K in form of $OP airdropped as a reward. So basically, we are paying users to buy protocol native token which is not the case with Curve. Hope this example provide more context from my side. tao: 40K OP incentives per week over 6 months, distributed to veVELO lockers proportionally to new veVELO balance per week I am not trying to create a distinction, its clearly mentioned in the proposal. katie: do not like to see edits made after approval has been given Thank you for this, Katie. I would like us to continue this conversation during coming Reflection period.
• Jadmat - No Role

  Oct. 29, 2022, 10:25 p.m.
  alexcutlerdoteth: ¿Está preguntando cómo sabemos cuánto en co-incentivos es probable que Curve… alexcutlerdoteth: ¿Está preguntando cómo sabemos cuánto en co-incentivos es probable que Curve iguale para los grupos incentivados? no, @tao in his last post shows 2 charts reporting weekly uniswap and curve incentives for particular pools; how can you find out the weekly Curve $OP rewards that will go to each Pool??? alexcutlerdoteth: Para poner esto en perspectiva, son $ 90 , 000 en co-incentivos de Curve durante un período en el que Velodrome distribuyó $ 2 , 900 , 000 . Eso significa que estamos bombeando 32 veces el estímulo en la economía optimista que Curve está pidiendo una subvención de solo 8 veces el tamaño de la suya. That’s right, and that pumping was absorbed by the skaters, each one chooses how to mistreat their tokenomica alexcutlerdoteth: Si desea disputar algún argumento en particular, cítelos y proporcione datos o evidencia para respaldar su afirmación. There is only data on how incentives and subsidies bring tvl; there is no data of a working product without this I have read the complete thread, you can look for the statements that without subsidy there seems to be no traction alexcutlerdoteth: Para ser claros, Uniswap recibió su subvención antes que nosotros. Creo que el ritmo al que se han movido para ponerlo en uso deja en claro cuán prioritario es el optimismo actualmente para ellos. 100 % agree with this alexcutlerdoteth: Lo único que le dará un enfoque de “esperar y ver” es una desaceleración del crecimiento en detrimento del ecosistema y un conjunto de datos comparativos desordenados sobre los incentivos DEX. your conclusion is that if Optimims doesn’t inject 4 M of $OP now ngmi? or is Velodrome who ngmi?
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  • alexcutlerdoteth: Jadmat: no, @tao in his last post shows 2 charts reporting weekly uniswap and curve incentives for particular pools; how can you find out the weekly Curve $OP rewards that will go to each Pool??? Oh, my apologies. You are talking about these chart. These have nothing to do with the grant proposals. This is just an analysis of the relative effectiveness of when protocols incentivize liquidity on Curve or Uniswap with direct incentives versus when they incentivize on Velodrome with bribes. As you can see they get somewhere between 1.3x - 3.3x the ROI on Velodrome. This is because bribes for emissions models have been proven to be more capital efficient that direct liquidity incentives and Velodrome is the only platform with native bribing on Optimism. Jadmat: That’s right, and that pumping was absorbed by the skaters, each one chooses how to mistreat their tokenomica I don’t think this statement translated well. Could you try to restate it? Jadmat: your conclusion is that if Optimims doesn’t inject 4M of $OP now ngmi? or is Velodrome who ngmi? Velodrome would be fine. It is the rate of ecosystem growth that would suffer. The cost of liquidity incentives would increase, putting strain on ecosystem treasuries. Projects would need to increase the rate at which they are spending their granted OP to close the gap, depleting governance funds faster and increasing OP sell pressure. And it’d make it harder for new projects to bootstrap and onboard, slowing the growth in economic activity and losing builders to other networks. The opposite of what governance is supposed to be doing. I think it is probably worth reemphasizing that we’ve onboarded over 32 net new protocols and projects to the ecosystem at a pace of about 5 per-month. Those projects are bringing new users, capital, and activity to the network. We believe we need to continue to onboard new protocols at this pace and have proven methods for doing it. As @states_of_nature1651 so nicely put it (great post, ser), no legacy AMM is even suggesting that they’re interested in taking that work on. But really, you don’t need to trust us on this, just listen to the builders. Jadmat: For a protocol that seeks to boost its incentives, it is not comparable to do it with $velo or with $crv, the metrics here show a much greater loss of capital for $velo stakers. Can you clarify this and provide some supporting data? Voters on Velodrome have earned more than voters on Curve for our entire existence. Jadmat: Curve’s proposal encourages the diversion of $crv rewards TOWARDS OPTIMISM, it is exactly the opposite of what you indicate, under your analogy it would be an “importing value from the main network” Yes, this is correct. Assuming Curve’s proposal passes, governance will literally bribing main-net veCRV stakers to vote to direct CRV emissions to the Optimism network. It is yet to be seen what the ROI of this strategy will be. Velodrome on the other hand is offering $6.5M in emissions for incentivized pools, 1.6x the total value of the grant we are requesting and over half of all $OP incentives projected to be distributed via governance over the same period. Think about this, for a 4M OP grant we’re basically going to give a 50% match on ALL the stimulus offered by Optimism Governance at large. We are committed keeping these emissions on Optimism in the context of this grant because we’re ecosystem maxis who believe that it has a tremendous opportunity for growth. That does not mean that they must continue to go exclusively go to Optimism in the absence of such an agreement. There is just no way to cut the data to suggest that Optimism is getting anything other than an incredible ROI from granting Velodrome.
• states_of_nature1651 - No Role

  Oct. 29, 2022, 10:48 p.m.
  I have been hesitant to post because I didn’t want to be cliche and be another new-ish account post… I have been hesitant to post because I didn’t want to be cliche and be another new-ish account posting on the Veldodrome thread. But here we go. It seems like the main source of the criticisms is that the benefit for Optimism looks like this: Optimism should be looking to cultivate the presence of legacy mainnet protocols rather than supporting OP native upstarts with flashy marketing and distortive incentives. Supporting deep liquidity on known legacy protocols will be better for OP in the long run. Putting our thumb on the scale for Velodrome will prevent this needed development. I think this is a flawed argument based on the data provided and I don’t see how any other current ecosystem player will step in to fill the niche Velodrome is filling in the near term. This isn’t a knock on the legacy protocols. Onboarding a bunch of new protocols to Optimism makes no sense for them as a growth strategy. This shows up If you look at their grant proposals. They are looking to extend their current competitive advantage on mainnet to Optimism - not get into the business Velodrome is in. If Velodrome was proposing using the OP grant to spend a ton of money bribing a 3 -pool, tricrypto or funding the development of v 3 pools then sure… they are trying to box out the competition. However, they aren’t trying to use the grant for this. They are asking to continue the incentives that have been filling a needed niche for OP’s future growth. Protocols that have come here are backing up that these incentives, including the lock bonus, were the easiest way for them to come to Optimism. The mindset that we stop incentives and let Velodrome succeed or fail because we have so many well known protocols around to pick up the slack seems super short sighted. How will waiting to see what happens with the Uni/Curve incentive programs onboard 20 protocols to Optimism? Their incentive programs aren’t even designed to do this. I’m sure there will be competition between the different DEX/AMMs, but this grant doesn’t seem to be playing a role in that. There are still a ton of needs to fill where legacy protocols have an obvious competitive advantage they will be able to exploit with some focused development. Velodrome making good use of incentives also goes both ways. Optimism governance benefits from having a DEX that they have significant influence (and voting power) over that can adapt on the fly to ecosystem needs. The Velodrome team is willing to take on a ton of due diligence responsibilities to get the grant and they have basically created their own accountability metrics they will be measured by. Seems like an obvious win.
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  • alexcutlerdoteth: Good Morning Voting is coming up so we wanted to create a summary/guide of the discussion so far for those unable to parts through the record breaking 133 comments on the proposal. Overview Velodrome spent several weeks creating what is likely the detailed and evidenced proposal to be submitted to governance yet. If you have the time, please consider reading its in it’s entirety. Since it’s posting 12 days ago it has received 133 comments from 31 commentators: Positive Commentators: 17 (58%) Mixed Commentators: 5 (17%) Negative Commentators: 7 (24%) As you can see, there are more positive commentators than negative and mixed commentators combined. Though it may be hard to tell from differentials in the volume of post: 2.4x more commentators were positive than negative 100% of comments from builders were positive 43% of negative commentators were from new accounts Only 13% of positive comments were from new accounts Notable Positive Comments Since there are have been far more positive comments than negative ones on the proposal, we’ll start by highlighting a few positive ones that we think emphasize our impact well. You can also check out the testimonials we’ve collected from 10+ partners (and counting) on our Twitter. Aes: this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism. bebis: There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team. They’re on-boarding a ton of people the hard way - with actual customer/client services. They’re getting teams and users invested long-term in the ecosystem’s success. They’re the main Optimism point of contact if you’re a builder/developer. Their bribing system makes operations much lighter for small teams and startups. They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously. SethVdL: alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. I am not one for long winded governance debates and even knowingly sat out on the Overtime discussion even though I sit on the Thales Council … That being said, I feel compelled to point out this statement from Alex because I feel the Velodrome ROI is in a class of it’s own and I want voters to understand what’s at stake … the system is working and it’s currently providing multiple protocols the opportunity to have deep liquidity for a fraction of the cost elsewhere. An approved grant to velodrome is like granting the entire ecosystem imo… which is what we are set out to do. TokenBrice: We are currently leading various campaigns to sustain liquidity, whether on Curve, through Warden Bribes, or on Velodrome. In terms of the amount of liquidity sustained / $-invested, Velodrome is one to two orders of magnitude above the competition. …it is delivering beyond what was expected : the OP veVELO locking bonus is a key part of the equation - increasing the efficiency of the flywheel even further. Besides, it drives projects to lock VELO, which means they enter a long-term commitment with Velodrome and Optimism. states_of_nature1651: It seems like the main source of the criticisms is that the benefit for Optimism looks like this: Optimism should be looking to cultivate the presence of legacy mainnet protocols rather than supporting OP native upstarts with flashy marketing and distortive incentives. Supporting deep liquidity on known legacy protocols will be better for OP in the long run. Putting our thumb on the scale for Velodrome will prevent this needed development. I think this is a flawed argument based on the data provided and I don’t see how any other current ecosystem player will step in to fill the niche Velodrome is filling in the near term. This isn’t a knock on the legacy protocols. Onboarding a bunch of new protocols to Optimism makes no sense for them as a growth strategy. This shows up If you look at their grant proposals. They are looking to extend their current competitive advantage on mainnet to Optimism - not get into the business Velodrome is in. jornx: I’ve been a long time user of Optimism and I use it frequently since I do a lot of arbitrage and other trading strategies on here…Optimism was never that interesting because liquidity was very limited on the main DEX at that time (uniswap). When Velodrome was added and especially when the OP grant was liquidity boomed and there were a lot more projects with deep liquidity on Optimism.When I look at all the grants that have been given by OP in my opinion Velodrome must have been one of the most succesful, onboarding new users and creating more possibilities for the user on the network. Key Discussion Points While negative and mixed commenters have represented a minority of the total engagement on the proposal, questions and concerns they’ve raised have allowed us to discuss and clarify key points on our proposal. We provide a quick overview of some of the key questions raised and provide short summaries of our responses: Is Velodrome Asking for Too Large a Grant? TLDR: No. It is 90%+ smaller than the average grant by every KPI, offers a proven 2x-3x ROI, and comes with Velodrome offering $6.5mm in co-incentives (31x those of other DEXs combined). Likewise, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of grant funds. No alternative frameworks for grant size evaluation have been suggested or offered. Is The Lock Bonus An Appropriate Use of Funds? TLDR: Yes. The incentive flows to veTOKEN lockers consistent with other proposals such as Curve/Balancer and while drive similar second order effects that grow the ecosystem by multiples and reduce costs for the ecosystem. No data has been provided suggesting it has any meaningful impact on price. Would Builder Grants be Better? TLDR: No. Velodrome grants have brought 30+ new builders to the ecosystem by reducing their incentive costs by 20% - 70% while less accountable direct builder grants offered by other protocols have yet to demonstrate their efficacy. Is Velodrome Really Competitive with Curve and Uniswap? TLDR: Yes. Velodrome is more efficient in TVL/Volume / $ spent in incentives (lowering costs ecosystem wide). It also attracts similar levels of volume per dollar in TVL while simultaneously hosting 3.2x more ecosystem projects tokens than Uniswap and Curve combined. Should Velodrome Be Forced to Operate Without OP Incentives? TLDR: Velodrome has demonstrated the highest ROI in terms of ecosystem growth of any governance or partner fund grant to date. The primary impact of pulling back on incentives would be to slow or reverse that ecosystem growth while simultaneously continuing the flow of incentives to less effective programs on other DEXs making comparative evaluations of different programs more challenging. Incentives already represent a declining proportion of our total activity and we expect that to continue to shrink over the course of this grant. Does Granting Velodrome Harm Other DEXs? TLDR: Ecosystem native DEXs and multi-chain DEXs have different goals and incentives when it comes to growing Optimism and cannot be easily compared. Overall though, all should be evaluated / granted equally in terms of the growth multiple they can return and growing ecosystem activity will benefit all. Summary We hope you’ve found this summary helpful and will continue to add it if/when new topics are raised to make the overall thread a bit easier to navigate as we move into the voting page. Thank you for reading!
• Jadmat - No Role

  Oct. 29, 2022, 10:54 p.m.
  For a protocol that seeks to boost its incentives, it is not comparable to do it with $velo or with… For a protocol that seeks to boost its incentives, it is not comparable to do it with $velo or with $crv, the metrics here show a much greater loss of capital for $velo stakers. alexcutlerdoteth: ¿Incluso cuando consideramos en nuestro caso que el resultado son millones en capital nuevo encerrado en el ecosistema, en lugar de una fuga de valor? Curve’s proposal encourages the diversion of $crv rewards TOWARDS OPTIMISM, it is exactly the opposite of what you indicate, under your analogy it would be an “importing value from the main network”
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  • alexcutlerdoteth: Jadmat: no, @tao in his last post shows 2 charts reporting weekly uniswap and curve incentives for particular pools; how can you find out the weekly Curve $OP rewards that will go to each Pool??? Oh, my apologies. You are talking about these chart. These have nothing to do with the grant proposals. This is just an analysis of the relative effectiveness of when protocols incentivize liquidity on Curve or Uniswap with direct incentives versus when they incentivize on Velodrome with bribes. As you can see they get somewhere between 1.3x - 3.3x the ROI on Velodrome. This is because bribes for emissions models have been proven to be more capital efficient that direct liquidity incentives and Velodrome is the only platform with native bribing on Optimism. Jadmat: That’s right, and that pumping was absorbed by the skaters, each one chooses how to mistreat their tokenomica I don’t think this statement translated well. Could you try to restate it? Jadmat: your conclusion is that if Optimims doesn’t inject 4M of $OP now ngmi? or is Velodrome who ngmi? Velodrome would be fine. It is the rate of ecosystem growth that would suffer. The cost of liquidity incentives would increase, putting strain on ecosystem treasuries. Projects would need to increase the rate at which they are spending their granted OP to close the gap, depleting governance funds faster and increasing OP sell pressure. And it’d make it harder for new projects to bootstrap and onboard, slowing the growth in economic activity and losing builders to other networks. The opposite of what governance is supposed to be doing. I think it is probably worth reemphasizing that we’ve onboarded over 32 net new protocols and projects to the ecosystem at a pace of about 5 per-month. Those projects are bringing new users, capital, and activity to the network. We believe we need to continue to onboard new protocols at this pace and have proven methods for doing it. As @states_of_nature1651 so nicely put it (great post, ser), no legacy AMM is even suggesting that they’re interested in taking that work on. But really, you don’t need to trust us on this, just listen to the builders. Jadmat: For a protocol that seeks to boost its incentives, it is not comparable to do it with $velo or with $crv, the metrics here show a much greater loss of capital for $velo stakers. Can you clarify this and provide some supporting data? Voters on Velodrome have earned more than voters on Curve for our entire existence. Jadmat: Curve’s proposal encourages the diversion of $crv rewards TOWARDS OPTIMISM, it is exactly the opposite of what you indicate, under your analogy it would be an “importing value from the main network” Yes, this is correct. Assuming Curve’s proposal passes, governance will literally bribing main-net veCRV stakers to vote to direct CRV emissions to the Optimism network. It is yet to be seen what the ROI of this strategy will be. Velodrome on the other hand is offering $6.5M in emissions for incentivized pools, 1.6x the total value of the grant we are requesting and over half of all $OP incentives projected to be distributed via governance over the same period. Think about this, for a 4M OP grant we’re basically going to give a 50% match on ALL the stimulus offered by Optimism Governance at large. We are committed keeping these emissions on Optimism in the context of this grant because we’re ecosystem maxis who believe that it has a tremendous opportunity for growth. That does not mean that they must continue to go exclusively go to Optimism in the absence of such an agreement. There is just no way to cut the data to suggest that Optimism is getting anything other than an incredible ROI from granting Velodrome.
• tao - No Role

  Oct. 29, 2022, 10:54 p.m.
  Seems like item “ 5 ) Velodrome should prove itself without incentives” is the main theme of commen… Seems like item “ 5 ) Velodrome should prove itself without incentives” is the main theme of comments challenging the proposal. Our stance is simple: given than Optimism has chosen to run a continuous program to incentivize growth and activity in the ecosystem – and created this Governance Fund specifically for it – , then Velodrome is an obvious protocol to continue incentivizing. We’ve shared plenty of data for why this is the case. We also welcome continuous incentives for other protocols demonstrating success in growing the ecosystem.
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• fierydev - No Role

  Oct. 30, 2022, 8:29 a.m.
  At this point, VELO and OP have pretty much become synonymous! VELO is basically in investment in t… At this point, VELO and OP have pretty much become synonymous! VELO is basically in investment in the OP ecosystem, but amplified! It is the place where every OP protocol wants to host liquidity! VEO wars has been a success, as a participant, I fully support this proposal! *VELO has also helped onboard RevenantLabs! The DAO has made a 100 k$ VELO buy to get them started!
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• OPUser - No Role

  Oct. 30, 2022, 8:33 a.m.
  alexcutlerdoteth: I think you are trying to create a distinction where there really isn’t one.… alexcutlerdoteth: I think you are trying to create a distinction where there really isn’t one. Example:- I have 100 K in $USD some veCRV and veVelo. Case 1 : Existing veToken holder Curve - As a existing holder of veCRV, I will get reward depending on the amount I hold and how I vote. Velo - same as above Case 2 : New user Curve - I can use 100 K $USD to acquire more CRV, lock it to get more veCRV. My voting power increase resulting in more reward and my principle amount is locked in form new veCRV. Velo - Same as above, + I will get some % of my principle money back in form of $OP as mentioned in the proposal for buying and locking $VELO. We have seen that lock bonus vary but could possibly reach up to $ 1 . 3 in $OP for $ 1 in depending on amount locked in that specific epoch but even If I take an average of 80 % 30 % return then at the end of epoch I will back $ 80 K back 30 K in form of $OP airdropped as a reward. So basically, we are paying users to buy protocol native token which is not the case with Curve. Hope this example provide more context from my side. tao: 40 K OP incentives per week over 6 months, distributed to veVELO lockers proportionally to new veVELO balance per week I am not trying to create a distinction, its clearly mentioned in the proposal. katie: do not like to see edits made after approval has been given Thank you for this, Katie. I would like us to continue this conversation during coming Reflection period.
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• alexcutlerdoteth - No Role

  Oct. 30, 2022, 10:56 a.m.
  Yes, I’m understanding you correctly. You are arguing that governance should have no problem with a… Yes, I’m understanding you correctly. You are arguing that governance should have no problem with an incentive that requires acquisition "the project native token to be part of OP incentive” as long as previous holders were eligible too. So you’d rather Optimism’s incentivizes go to previous holders of veCRV on mainnet (who have no vested interest in Optimism), than reward veVELO holders who are locking millions in new investments in Optimism. I still struggle to understand how think this is a defensible position. OPUser: So basically, we are paying users to buy protocol native token No, we are not. We pointed this out here, here, and here. The token can bought or farmed from the ~ 12 m VELO (~$ 350 k) we distribute weekly. I’m not sure why you continue to say this when it is not true, but I’d appreciate it if you corrected your statement publicly so there is no confusion. OPUser: We have seen that lock bonus vary but could possibly reach up to $ 1 . 3 in $OP for $ 1 in $VELO but even If I take an average of 80 % return then at the end of epoch I will back $ 80 K back in form of $OP airdropped as a reward. You are again saying something that is not true here. @tao pointed you to the dashboard with the chart you see below on two occasions. The lock bonus has never exceeded a 37 % airdrop for new veVELO lockers. Again I would ask that you correct your statement so there is no confusion. Screenshot 2022 - 10 - 30 at 5 . 28 . 28 AM 1536 × 604 81 . 9 KB I think what you are advocating for here is objectively a bad deal for growing Optimism. You could have an incentive that lowers the costs for new protocols onboarding the ecosystem (locking $ 1 in capital for every 20 c in incentives), but it seems that you think that ensuring that existing lockers are included is more important, even if that means rewarding $veCRV voters with no vested interest or investment in the ecosystem over actual Optimism users. I think we’ll have to agree to disagree. Do any other delegates have a POV here?
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• alexcutlerdoteth - No Role

  Oct. 30, 2022, noon
  Jadmat: no, @tao in his last post shows 2 charts reporting weekly uniswap and curve incentiv… Jadmat: no, @tao in his last post shows 2 charts reporting weekly uniswap and curve incentives for particular pools; how can you find out the weekly Curve $OP rewards that will go to each Pool??? Oh, my apologies. You are talking about these chart. These have nothing to do with the grant proposals. This is just an analysis of the relative effectiveness of when protocols incentivize liquidity on Curve or Uniswap with direct incentives versus when they incentivize on Velodrome with bribes. As you can see they get somewhere between 1 . 3 x - 3 . 3 x the ROI on Velodrome. This is because bribes for emissions models have been proven to be more capital efficient that direct liquidity incentives and Velodrome is the only platform with native bribing on Optimism. Jadmat: That’s right, and that pumping was absorbed by the skaters, each one chooses how to mistreat their tokenomica I don’t think this statement translated well. Could you try to restate it? Jadmat: your conclusion is that if Optimims doesn’t inject 4 M of $OP now ngmi? or is Velodrome who ngmi? Velodrome would be fine. It is the rate of ecosystem growth that would suffer. The cost of liquidity incentives would increase, putting strain on ecosystem treasuries. Projects would need to increase the rate at which they are spending their granted OP to close the gap, depleting governance funds faster and increasing OP sell pressure. And it’d make it harder for new projects to bootstrap and onboard, slowing the growth in economic activity and losing builders to other networks. The opposite of what governance is supposed to be doing. I think it is probably worth reemphasizing that we’ve onboarded over 32 net new protocols and projects to the ecosystem at a pace of about 5 per-month. Screenshot 2022 - 10 - 30 at 6 . 26 . 09 AM 1338 × 622 77 KB Those projects are bringing new users, capital, and activity to the network. We believe we need to continue to onboard new protocols at this pace and have proven methods for doing it. As @states_of_nature 1651 so nicely put it (great post, ser), no legacy AMM is even suggesting that they’re interested in taking that work on. But really, you don’t need to trust us on this, just listen to the builders. Jadmat: For a protocol that seeks to boost its incentives, it is not comparable to do it with $velo or with $crv, the metrics here show a much greater loss of capital for $velo stakers. Can you clarify this and provide some supporting data? Voters on Velodrome have earned more than voters on Curve for our entire existence. Jadmat: Curve’s proposal encourages the diversion of $crv rewards TOWARDS OPTIMISM, it is exactly the opposite of what you indicate, under your analogy it would be an “importing value from the main network” Yes, this is correct. Assuming Curve’s proposal passes, governance will literally bribing main-net veCRV stakers to vote to direct CRV emissions to the Optimism network. It is yet to be seen what the ROI of this strategy will be. Velodrome on the other hand is offering $ 6 . 5 M in emissions for incentivized pools, 1 . 6 x the total value of the grant we are requesting and over half of all $OP incentives projected to be distributed via governance over the same period. Think about this, for a 4 M OP grant we’re basically going to give a 50 % match on ALL the stimulus offered by Optimism Governance at large. We are committed keeping these emissions on Optimism in the context of this grant because we’re ecosystem maxis who believe that it has a tremendous opportunity for growth. That does not mean that they must continue to go exclusively go to Optimism in the absence of such an agreement. There is just no way to cut the data to suggest that Optimism is getting anything other than an incredible ROI from granting Velodrome.
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• OPUser - No Role

  Oct. 30, 2022, noon
  alexcutlerdoteth: You are arguing that governance should have no problem with an incentive tha… alexcutlerdoteth: You are arguing that governance should have no problem with an incentive that requires acquisition "the project native token to be part of OP incentive” as long as previous holders were eligible too. So you’d rather Optimism’s incentivizes go to previous holders of veCRV on mainnet (who have no vested interest in Optimism), than reward veVELO holders who are locking millions in new investments in Optimism. I still struggle to understand how think this is a defensible position. This is absolutely not what I am suggesting. Its a free market and a user/protocol can do what ever they want with their fund. But I am not supporting subsiding buying and locking protocol native token with gov fund. alexcutlerdoteth: Again I would ask that you correct your statement so there is no confusion. And even I I was referring to this data(Edit 1 :- this was initial twit, actual distribution was different, more info in comments below) . Gonna keep both for readers to make an informed decision. https://twitter.com/VelodromeFi/status/ 1548651423201730561 ?s= 20 &t=PSgj 9 fek 0 xVUPYr 2 W_PwdA again, I am glad we had this conversation at early stage. But I see we are repeating the same statement again and again, this concern was raised in this thread couple of time, you were kind to enough to provide your side but I dont see any progress on this topic. So, happy Sunday and good luck with voting. Edit 2 : Supported Balancer & BeethovenX proposal then why not this ? Their proposal is not airdropping OP directly to users wallet for locking BAL or Beets edit 3 - dont want to spam the thread so will edit this comment as needed. I understand that, as a user I dont necessarily need to buy the token, acquiring via farming could be another way to get the token. But my concern remain same, we are subsidizing native project token lock by help of gov fund. I would rather like to see them being used as a part of integration grant.
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  • jackanorak: Okay I see what you’re getting at. Nah you should take that down bc you misunderstood the tweet and probably the bonus mechanism. DMs open if you want a rundown. I want you to look at two things: the date of the tweet (July 17) and the deadline for locking (July 28) The point was at that moment (July 17) there had been little enough locked in the campaign that the next $1 VELO locked would have returned $1.3 of OP. That is, there was more OP earmarked for distribution relative to locked VELO to date. But as more VELO is locked over the next 11 days, that same OP gets spread out over more locked VELO so the final distribution per VELO would be much, much less. The tweet was just indicating that that hadn’t really happened yet. In the end, enough had been locked that the bonus per $OP locked was a fraction of what you’ve posted. So again, prob best to take it down - easy thing to misunderstand.
  • alexcutlerdoteth: I think you may have also doubled down on the “buying and locking” claim. OPUser: I am not supporting subsiding buying and locking protocol native token with gov fund. Would you be willing to confirm that you understand that you do not need to buy VELO to access the lock bonus?
• jackanorak - No Role

  Oct. 30, 2022, 12:14 p.m.
  Okay I see what you’re getting at. Nah you should take that down bc you misunderstood the tweet and… Okay I see what you’re getting at. Nah you should take that down bc you misunderstood the tweet and probably the bonus mechanism. DMs open if you want a rundown. I want you to look at two things: the date of the tweet (July 17 ) and the deadline for locking (July 28 ) The point was at that moment (July 17 ) there had been little enough locked in the campaign that the next $ 1 VELO locked would have returned $ 1 . 3 of OP. That is, there was more OP earmarked for distribution relative to locked VELO to date. But as more VELO is locked over the next 11 days, that same OP gets spread out over more locked VELO so the final distribution per VELO would be much, much less. The tweet was just indicating that that hadn’t really happened yet. In the end, enough had been locked that the bonus per $OP locked was a fraction of what you’ve posted. So again, prob best to take it down - easy thing to misunderstand.
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• alexcutlerdoteth - No Role

  Oct. 30, 2022, 12:24 p.m.
  I think you may have also doubled down on the “buying and locking” claim. OPUser: I am not sup… I think you may have also doubled down on the “buying and locking” claim. OPUser: I am not supporting subsiding buying and locking protocol native token with gov fund. Would you be willing to confirm that you understand that you do not need to buy VELO to access the lock bonus? :pray:
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• alexcutlerdoteth - No Role

  Oct. 30, 2022, 12:44 p.m.
  By the way, there is another great way to think about the lock bonus. It may be one of the best way… By the way, there is another great way to think about the lock bonus. It may be one of the best ways to distribute Optimism Governance power to protocols and users who are most ecosystem aligned. There have been plenty of conversations about the best ways to ensure that protocols are able to gain a voice in governance. This may be one of the best ones as it essentially represents an exchange: you lock $ 1 in Optimism for four years, you get 20 c worth of voting power in Optimism governance. This makes a ton of sense because projects and individuals locking for four years is demonstrating a long term commitment to ecosystem. They are now invested in both Velodrome and Optimism’s success. They are exactly the kind of people who we want to have a say in governance. This seems far more likely to benefit the right kind of users that OP incentives that flow to fickle liquidity providers or mainnet stakers. There is also nothing in the language of this proposal that would prevent us from entering into a social contract with protocols who are earning these rewards to encourage them to hold and/or delegate the tokens they are earning. Would that help alleviate some concerns?
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• bebis - No Role

  Oct. 30, 2022, 7:14 p.m.
  There’s a lot of technical analysis going on here which I think distracts a bit from the value bein… There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team. They’re on-boarding a ton of people the hard way - with actual customer/client services. They’re getting teams and users invested long-term in the ecosystem’s success. They’re the main Optimism point of contact if you’re a builder/developer. Their bribing system makes operations much lighter for small teams and startups. They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously.
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  • katie: Agree completely. There are over 100 comments in this thread (which I guess I’m adding to now lol). It feels like folks are getting caught up in the minutia and missing the forest for the trees a bit here.
  • alexcutlerdoteth: Good Morning Voting is coming up so we wanted to create a summary/guide of the discussion so far for those unable to parts through the record breaking 133 comments on the proposal. Overview Velodrome spent several weeks creating what is likely the detailed and evidenced proposal to be submitted to governance yet. If you have the time, please consider reading its in it’s entirety. Since it’s posting 12 days ago it has received 133 comments from 31 commentators: Positive Commentators: 17 (58%) Mixed Commentators: 5 (17%) Negative Commentators: 7 (24%) As you can see, there are more positive commentators than negative and mixed commentators combined. Though it may be hard to tell from differentials in the volume of post: 2.4x more commentators were positive than negative 100% of comments from builders were positive 43% of negative commentators were from new accounts Only 13% of positive comments were from new accounts Notable Positive Comments Since there are have been far more positive comments than negative ones on the proposal, we’ll start by highlighting a few positive ones that we think emphasize our impact well. You can also check out the testimonials we’ve collected from 10+ partners (and counting) on our Twitter. Aes: this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism. bebis: There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team. They’re on-boarding a ton of people the hard way - with actual customer/client services. They’re getting teams and users invested long-term in the ecosystem’s success. They’re the main Optimism point of contact if you’re a builder/developer. Their bribing system makes operations much lighter for small teams and startups. They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously. SethVdL: alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. I am not one for long winded governance debates and even knowingly sat out on the Overtime discussion even though I sit on the Thales Council … That being said, I feel compelled to point out this statement from Alex because I feel the Velodrome ROI is in a class of it’s own and I want voters to understand what’s at stake … the system is working and it’s currently providing multiple protocols the opportunity to have deep liquidity for a fraction of the cost elsewhere. An approved grant to velodrome is like granting the entire ecosystem imo… which is what we are set out to do. TokenBrice: We are currently leading various campaigns to sustain liquidity, whether on Curve, through Warden Bribes, or on Velodrome. In terms of the amount of liquidity sustained / $-invested, Velodrome is one to two orders of magnitude above the competition. …it is delivering beyond what was expected : the OP veVELO locking bonus is a key part of the equation - increasing the efficiency of the flywheel even further. Besides, it drives projects to lock VELO, which means they enter a long-term commitment with Velodrome and Optimism. states_of_nature1651: It seems like the main source of the criticisms is that the benefit for Optimism looks like this: Optimism should be looking to cultivate the presence of legacy mainnet protocols rather than supporting OP native upstarts with flashy marketing and distortive incentives. Supporting deep liquidity on known legacy protocols will be better for OP in the long run. Putting our thumb on the scale for Velodrome will prevent this needed development. I think this is a flawed argument based on the data provided and I don’t see how any other current ecosystem player will step in to fill the niche Velodrome is filling in the near term. This isn’t a knock on the legacy protocols. Onboarding a bunch of new protocols to Optimism makes no sense for them as a growth strategy. This shows up If you look at their grant proposals. They are looking to extend their current competitive advantage on mainnet to Optimism - not get into the business Velodrome is in. jornx: I’ve been a long time user of Optimism and I use it frequently since I do a lot of arbitrage and other trading strategies on here…Optimism was never that interesting because liquidity was very limited on the main DEX at that time (uniswap). When Velodrome was added and especially when the OP grant was liquidity boomed and there were a lot more projects with deep liquidity on Optimism.When I look at all the grants that have been given by OP in my opinion Velodrome must have been one of the most succesful, onboarding new users and creating more possibilities for the user on the network. Key Discussion Points While negative and mixed commenters have represented a minority of the total engagement on the proposal, questions and concerns they’ve raised have allowed us to discuss and clarify key points on our proposal. We provide a quick overview of some of the key questions raised and provide short summaries of our responses: Is Velodrome Asking for Too Large a Grant? TLDR: No. It is 90%+ smaller than the average grant by every KPI, offers a proven 2x-3x ROI, and comes with Velodrome offering $6.5mm in co-incentives (31x those of other DEXs combined). Likewise, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of grant funds. No alternative frameworks for grant size evaluation have been suggested or offered. Is The Lock Bonus An Appropriate Use of Funds? TLDR: Yes. The incentive flows to veTOKEN lockers consistent with other proposals such as Curve/Balancer and while drive similar second order effects that grow the ecosystem by multiples and reduce costs for the ecosystem. No data has been provided suggesting it has any meaningful impact on price. Would Builder Grants be Better? TLDR: No. Velodrome grants have brought 30+ new builders to the ecosystem by reducing their incentive costs by 20% - 70% while less accountable direct builder grants offered by other protocols have yet to demonstrate their efficacy. Is Velodrome Really Competitive with Curve and Uniswap? TLDR: Yes. Velodrome is more efficient in TVL/Volume / $ spent in incentives (lowering costs ecosystem wide). It also attracts similar levels of volume per dollar in TVL while simultaneously hosting 3.2x more ecosystem projects tokens than Uniswap and Curve combined. Should Velodrome Be Forced to Operate Without OP Incentives? TLDR: Velodrome has demonstrated the highest ROI in terms of ecosystem growth of any governance or partner fund grant to date. The primary impact of pulling back on incentives would be to slow or reverse that ecosystem growth while simultaneously continuing the flow of incentives to less effective programs on other DEXs making comparative evaluations of different programs more challenging. Incentives already represent a declining proportion of our total activity and we expect that to continue to shrink over the course of this grant. Does Granting Velodrome Harm Other DEXs? TLDR: Ecosystem native DEXs and multi-chain DEXs have different goals and incentives when it comes to growing Optimism and cannot be easily compared. Overall though, all should be evaluated / granted equally in terms of the growth multiple they can return and growing ecosystem activity will benefit all. Summary We hope you’ve found this summary helpful and will continue to add it if/when new topics are raised to make the overall thread a bit easier to navigate as we move into the voting page. Thank you for reading!
  • nickbtts: Hello! nickbtts here, I know a number of the delegates and teams from various DAOs, conferences and projects and I was part of the original conception, design and deployment of Velodrome. I’m not a core team member these days, but know the team very well. Thank you @polynya for this response; I agree wholeheartedly with the sentiment around grant performance; reporting has been sparse and comms around post-grant activity barely exist. Accountability is hugely important, and Velodrome are the the first project to document, analyse and share performance data demonstrating the success of their grant programme, which is something that should really be a requirement of grant recipients. However, this is a tactical focus and it is far more difficult to measure the exponential strategic impact of outreach, business development, relationship building and friction reduction. I’d like to re-amplify a comment from @bebis of Byte Masons below: bebis: There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team. They’re on-boarding a ton of people the hard way - with actual customer/client services. They’re getting teams and users invested long-term in the ecosystem’s success. They’re the main Optimism point of contact if you’re a builder/developer. Their bribing system makes operations much lighter for small teams and startups. They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously. It’s important to note that Velodrome has had zero fundraising, private investment or token raise. The entire project has been bootstrapped on a small $150k grant and has been running lean (extremely lean) ever since. It takes an inordinate amount of time and effort to simply manage the current project relationships, never mind nurturing and building new ones as an increasingly important first engagement point for Optimism, all while continuing to develop the product itself (and engage heavily in governance!). I myself have been approached by a number of protocols looking to deploy on Optimism (redirected to Optimism bizdev), despite not being Velodrome core team; Velodrome is seen as a portal to the ecosystem due to the ability to quickly deploy deep accessible liquidity, a quick response time, support from a team with a great network, easy composability and willingness to work with fellow builders (example: Velodrome Sugar). This is an exponential multiplier; Velodrome are not only onboarding users of the platform, but a range of protocols, who bring their own communities, users, TVL and expertise. Competition between L2s (and alt-L1s) is fierce and margins razor thin; this grant can be seen as allowing Velodrome to continue its growth and maintain an edge over other rollup competitors, continuing to onboard projects who may well do similar. Focusing on TVL and liquidity as the primary metrics is, to me, shortsighted, although those metrics also demonstrate the value of the project to the ecosystem. Accessibility is super important; those of us here who are actually builders know the pain of getting a response from key ecosystem personnel, generating the ‘right kind’ of liquidity (retail accessible) without greatly affecting your economics, navigating bureaucratic governance, plugging into new tech infrastructure etc. The Velodrome team have demonstrated their ability to remove these frictions time and time again; this should, in my opinion, be an important factor for delegates to consider.
• katie - No Role

  Oct. 30, 2022, 7:24 p.m.
  Agree completely. There are over 100 comments in this thread (which I guess I’m adding to now lo… Agree completely. There are over 100 comments in this thread (which I guess I’m adding to now lol). It feels like folks are getting caught up in the minutia and missing the forest for the trees a bit here.
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• alexcutlerdoteth - No Role

  Oct. 30, 2022, 7:53 p.m.
  Congratulations on being post 125 , @Katie! A new record! :joy: Congratulations on being post 125 , @Katie! A new record! :joy:
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• Sunfire - No Role

  Oct. 31, 2022, 4:18 p.m.
  alexcutlerdoteth: This seems really hard to square fren, especially given when you’ve supporte… alexcutlerdoteth: This seems really hard to square fren, especially given when you’ve supported other proposals that likewise “require the acquisition of project native tokens” to access the incentives such as Balancer and Beethoven Where are you getting this from and what exactly is the context? incentives = OP tokens from the grant? project native tokens = bal/beets? if so, thats entirely untrue good ser.
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• alexcutlerdoteth - No Role

  Oct. 31, 2022, 5:16 p.m.
  Heya - Happy to clarify. I was referring to this section from the Beethoven/Balancer proposal 1 i… Heya - Happy to clarify. I was referring to this section from the Beethoven/Balancer proposal 1 indicating they’d $OP would be used to directly bribe $veBAL voters (i.e. requiring the token to earn the reward). Screenshot 2022 - 10 - 31 at 12 . 06 . 52 PM 1432 × 360 43 . 4 KB To be clear, I have no problem with as I understand how incentivizing them returns multiples versus on direct incentives. I was just trying to draw OPUser’s attention to a lack of consistency in how he was evaluating proposals that require the veTOKENs to earn the OP rewards. It’s possible they aren’t actually bribing yet, but the point here is really just focused on what he is saying is okay to approve versus not.
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• Sunfire - No Role

  Oct. 31, 2022, 6:32 p.m.
  Is the net effect however, LM incentives, which liquidity providers benefit from when entering the … Is the net effect however, LM incentives, which liquidity providers benefit from when entering the pool utilizing whatever tokens they choose? The OP tokens from the grant are used as bribes when the bribe roi is positive and for direct LM when the bribes roi is negative, as you hinted, this is the most capital efficient method. Either way, the end result is the same no? which is LM incentives in the pools for OP participants of all kinds, utilizing various tokens, that provide liquidity in those pools. Also, either way, bribes or direct LM incentives, the grant tokens used are being matched 1 : 1 in value. Again, is this not truly benefitted at the user level, for people who join the pools, using any token they want for those various pools? therefore, to benefit from the use of the grant tokens, users simply need to provide liquidity in the pools. they are not required to attain project native tokens. Is that not the end result? would you agree with that analysis? Id like to further note that beetx on optimism has been using fees collected to market buy OP tokens to match with much (about 75 % so far) of the grant tokens used for direct LM incentives. Is this not further providing benefit to the OP eco and its users as its not simply matched with emissions only? Does that not also demonstrate a difference in the methodologies employed? Not trying to highjack your thread mate, and my apologies for doing so. Also not trying to be negative towards you or velo at all, and not saying either the velo or beetx methods are right or wrong. I simply wanted to explain the logic while i feel the comparison in bribing may not be so directly apt, and thus perhaps why OPuser had that opinion.
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• alexcutlerdoteth - No Role

  Oct. 31, 2022, 7:25 p.m.
  I’m tracking with you 100 % and again want to reiterate that my note was in no way intended to be … I’m tracking with you 100 % and again want to reiterate that my note was in no way intended to be a criticism of either the Curve or Balancer proposal. I think it totally appropriate for OP incentives to be directed to those who acquire (or have previously acquired) native project tokens as long as the second order effects of those incentives can be clearly demonstrated to drive multiples in growth back. As you describe, while the OP from bribes do indeed flow exclusively to those who have acquire (or have acquired) “project native tokens”, they produce second and third order effects like increasing the cumulative rewards flowing to LPs within a given epoch and growing TVL on the network. Likewise while our OP lock bonuses flow exclusively exclusively to those acquiring “project native tokens”, they produce second and third order through requiring protocols to lock 4 x the investment in the ecosystem (increasing TVL) while giving them an ability to direct more emissions than the value of the underlying lock to LPs (in perpetuity). In one case, you’re using incentives to rent the direction of LP emissions and in the other case you’re using incentives to acquire the ability to direct emissions. In both cases, you need to own the project native token to access the first order incentive, but you do not need to hold the token to access the downstream benefits.
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• Sunfire - No Role

  Oct. 31, 2022, 9:20 p.m.
  I can see and understand your points made, thank you for the responses. hopefully we did some good … I can see and understand your points made, thank you for the responses. hopefully we did some good here in fleshing out the second and third order effects as you’ve worded it, which I believe is a good way to put it. I feel those effects could be different for each separate protocol but the important point imo is the value add to the OP eco. I believe the protocol 4 x lock requirement has the ability to achieve this. Again, apologies for any derailment, and thank you for your time and attention in this discussion.
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• alexcutlerdoteth - No Role

  Oct. 31, 2022, 10:37 p.m.
  No worries at all! Appreciated the opportunity to tighten up my articulation of why these incentiv… No worries at all! Appreciated the opportunity to tighten up my articulation of why these incentives all share the attribute of requiring "the project native token to be part of OP incentive” (OPUsers objection to us) while still creating second and third order multiplier effects that anyone can access and grow the ecosystem as a whole.
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• alexcutlerdoteth - No Role

  Nov. 1, 2022, 6:16 p.m.
  Good Morning Voting is coming up so we wanted to create a summary/guide of the discussion so far fo… Good Morning Voting is coming up so we wanted to create a summary/guide of the discussion so far for those unable to parts through the record breaking 133 comments on the proposal. :exploding_head: Overview Velodrome spent several weeks creating what is likely the detailed and evidenced proposal to be submitted to governance yet. If you have the time, please consider reading its in it’s entirety. Since it’s posting 12 days ago it has received 133 comments from 31 commentators: Positive Commentators: 17 ( 58 %) Mixed Commentators: 5 ( 17 %) Negative Commentators: 7 ( 24 %) As you can see, there are more positive commentators than negative and mixed commentators combined. Though it may be hard to tell from differentials in the volume of post: 2 . 4 x more commentators were positive than negative 100 % of comments from builders were positive 43 % of negative commentators were from new accounts Only 13 % of positive comments were from new accounts Notable Positive Comments Since there are have been far more positive comments than negative ones on the proposal, we’ll start by highlighting a few positive ones that we think emphasize our impact well. You can also check out the testimonials we’ve collected from 10 + partners (and counting) on our Twitter. Aes: this is Aes from MakerDAO’s Strategic Finance Core Unit. Wanted to post in support of this proposal and the Velo team - they’ve been extremely patient, a pleasure to work with, and have been critical in analyzing how MakerDAO could best leverage the velo veNFT airdrop to maximize DAI’s liquidity on Optimism. bebis: There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team. They’re on-boarding a ton of people the hard way - with actual customer/client services. They’re getting teams and users invested long-term in the ecosystem’s success. They’re the main Optimism point of contact if you’re a builder/developer. Their bribing system makes operations much lighter for small teams and startups. They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously. SethVdL: alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $ 3 . 8 m. But rather, it will return at least $ 7 . 6 m to $ 11 . 4 m in value based on the demonstrated performance of the original grant. I am not one for long winded governance debates and even knowingly sat out on the Overtime discussion even though I sit on the Thales Council … That being said, I feel compelled to point out this statement from Alex because I feel the Velodrome ROI is in a class of it’s own and I want voters to understand what’s at stake … the system is working and it’s currently providing multiple protocols the opportunity to have deep liquidity for a fraction of the cost elsewhere. An approved grant to velodrome is like granting the entire ecosystem imo… which is what we are set out to do. TokenBrice: We are currently leading various campaigns to sustain liquidity, whether on Curve, through Warden Bribes, or on Velodrome. In terms of the amount of liquidity sustained / $-invested, Velodrome is one to two orders of magnitude above the competition. …it is delivering beyond what was expected : the OP veVELO locking bonus is a key part of the equation - increasing the efficiency of the flywheel even further. Besides, it drives projects to lock VELO, which means they enter a long-term commitment with Velodrome and Optimism. states_of_nature 1651 : It seems like the main source of the criticisms is that the benefit for Optimism looks like this: Optimism should be looking to cultivate the presence of legacy mainnet protocols rather than supporting OP native upstarts with flashy marketing and distortive incentives. Supporting deep liquidity on known legacy protocols will be better for OP in the long run. Putting our thumb on the scale for Velodrome will prevent this needed development. I think this is a flawed argument based on the data provided and I don’t see how any other current ecosystem player will step in to fill the niche Velodrome is filling in the near term. This isn’t a knock on the legacy protocols. Onboarding a bunch of new protocols to Optimism makes no sense for them as a growth strategy. This shows up If you look at their grant proposals. They are looking to extend their current competitive advantage on mainnet to Optimism - not get into the business Velodrome is in. jornx: I’ve been a long time user of Optimism and I use it frequently since I do a lot of arbitrage and other trading strategies on here…Optimism was never that interesting because liquidity was very limited on the main DEX at that time (uniswap). When Velodrome was added and especially when the OP grant was liquidity boomed and there were a lot more projects with deep liquidity on Optimism.When I look at all the grants that have been given by OP in my opinion Velodrome must have been one of the most succesful, onboarding new users and creating more possibilities for the user on the network. Key Discussion Points While negative and mixed commenters have represented a minority of the total engagement on the proposal, questions and concerns they’ve raised have allowed us to discuss and clarify key points on our proposal. We provide a quick overview of some of the key questions raised and provide short summaries of our responses: Is Velodrome Asking for Too Large a Grant? TLDR: No. It is 90 %+ smaller than the average grant by every KPI, offers a proven 2 x- 3 x ROI, and comes with Velodrome offering $ 6 . 5 mm in co-incentives ( 31 x those of other DEXs combined). Likewise, Velodrome represents 10 % of TVL, 12 % of transaction volume, 16 % of transactions, and 13 % of users, while requesting 1 . 72 % of grant funds. No alternative frameworks for grant size evaluation have been suggested or offered. Is The Lock Bonus An Appropriate Use of Funds? TLDR: Yes. The incentive flows to veTOKEN lockers consistent with other proposals such as Curve/Balancer and while drive similar second order effects that grow the ecosystem by multiples and reduce costs for the ecosystem. No data has been provided suggesting it has any meaningful impact on price. Would Builder Grants be Better? TLDR: No. Velodrome grants have brought 30 + new builders to the ecosystem by reducing their incentive costs by 20 % - 70 % while less accountable direct builder grants offered by other protocols have yet to demonstrate their efficacy. Is Velodrome Really Competitive with Curve and Uniswap? TLDR: Yes. Velodrome is more efficient in TVL/Volume / $ spent in incentives (lowering costs ecosystem wide). It also attracts similar levels of volume per dollar in TVL while simultaneously hosting 3 . 2 x more ecosystem projects tokens than Uniswap and Curve combined. Should Velodrome Be Forced to Operate Without OP Incentives? TLDR: Velodrome has demonstrated the highest ROI in terms of ecosystem growth of any governance or partner fund grant to date. The primary impact of pulling back on incentives would be to slow or reverse that ecosystem growth while simultaneously continuing the flow of incentives to less effective programs on other DEXs making comparative evaluations of different programs more challenging. Incentives already represent a declining proportion of our total activity and we expect that to continue to shrink over the course of this grant. Does Granting Velodrome Harm Other DEXs? TLDR: Ecosystem native DEXs and multi-chain DEXs have different goals and incentives when it comes to growing Optimism and cannot be easily compared. Overall though, all should be evaluated / granted equally in terms of the growth multiple they can return and growing ecosystem activity will benefit all. Summary We hope you’ve found this summary helpful and will continue to add it if/when new topics are raised to make the overall thread a bit easier to navigate as we move into the voting page. Thank you for reading!
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  • mauvaison: Velodrome has cimented its place as the liquidity engine for Optimism, creating more long term value in locking massive POL than it is requesting in the proposal. The model works, but the additional OP will only accelerate its growth.
  • Ethantoast: I have loved Velodrome since I bridged over to optimism and it was actually the first Dapp I used when I received my OP airdrop. I am supportive of this proposal not only because Velodrome has the best team to work out the best use case for an OP grant that benefits the average OP ecosystem user but because of the beneficial deep and stable liquidity velodrome holds for the entire blockchain.
• mauvaison - No Role

  Nov. 1, 2022, 7:48 p.m.
  Velodrome has cimented its place as the liquidity engine for Optimism, creating more long term valu… Velodrome has cimented its place as the liquidity engine for Optimism, creating more long term value in locking massive POL than it is requesting in the proposal. The model works, but the additional OP will only accelerate its growth.
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• katie - No Role

  Nov. 1, 2022, 7:53 p.m.
  Defi Committee A Recommendation Our committee is abstaining from making a formal recommendation fo… Defi Committee A Recommendation Our committee is abstaining from making a formal recommendation for this proposal. We encourage delegates to read the proposal and vote accordingly.
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• theenlightened - No Role

  Nov. 1, 2022, 9:23 p.m.
  Hello Katie, pls may I know the reason(s) for this? Hello Katie, pls may I know the reason(s) for this?
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• millie - No Role

  Nov. 1, 2022, 9:49 p.m.
  I’m supportive of this proposal. Even though I’ve had some disagreements with the Velodrome team in… I’m supportive of this proposal. Even though I’ve had some disagreements with the Velodrome team in the past, I can’t deny that they have stimulated a lot of activity on Optimism, especially in regards to their liquidity mining program and the numerous protocol collaborations as a result of it. Before Velodrome launched their program with OP incentives, the liquidity situation on Optimism was quite shallow. You could hardly swap even minor amounts of ETH without slippage those days. Today swaps for ETH are as competitive on Optimism as most other chains/rollups with Velodrome being the leading DEX (by liquidity). In regards to OP incentives for vote-locking $VELO, I think it’s an aggressive strategy but one that is logical given that LPs will be receiving $VELO rewards, and those LPs are OP community members and ecosystem token holders after all. So essentially the value is distributed among Optimism ecosystem protocols, aligning values accordingly. This proposal will essentially extend their OP liquidity mining program to Optimism’s 1 year anniversary and ensure Optimism remains appealing to new entrants and competitive in that time. IMO Velodrome has been a net positive for Optimism and I think they’ll continue to be so.
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  • mastermojo: I agree with Millie. The Synthetix Ambassadors will be voting Yes on this proposal. Velodrome is a net positive for Optimism. I urge voters to also vote yes for this proposal.
• Ethantoast - No Role

  Nov. 1, 2022, 11:47 p.m.
  I have loved Velodrome since I bridged over to optimism and it was actually the first Dapp I used w… I have loved Velodrome since I bridged over to optimism and it was actually the first Dapp I used when I received my OP airdrop. I am supportive of this proposal not only because Velodrome has the best team to work out the best use case for an OP grant that benefits the average OP ecosystem user but because of the beneficial deep and stable liquidity velodrome holds for the entire blockchain.
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• polynya - No Role

  Nov. 2, 2022, 11:18 a.m.
  Velodrome is undoubtedly a flagship Optimism protocol, this is a thorough proposal, and the team ha… Velodrome is undoubtedly a flagship Optimism protocol, this is a thorough proposal, and the team has been very responsive here. With the committee not reaching consensus, I’ll however vote Against. I mentioned earlier as a request to committees that at Cycle 8 we have reached a point where it’s time to carefully evaluate the results of prior cycles and be increasingly more stringent about grants. Particularly for repeat projects, we have to be very particular. So, I’m going to practice that here. While Governance Fund has certainly benefited activity and user acquisition on Optimism, in my opinion it has far lagged the $OP tokens that have been distributed - not just Velodrome, but across the board. Arbitrum One has continued to grow organically without any incentives, and continues to be the leading smart contract L 2 - further muddying the waters. My impression of this proposal - and skimming through the 140 comments - is this approximately maintains status quo without bringing any new innovation to user acquisition that we are seeking. Sure, continued incentives will onboard more users, but there’s also a heavy cost in misallocating $OP tokens to mercenary liquidity farmers, whose time shouldn’t be extended for an entire year or so. We have seen ecosystems like Avalanche & NEAR plundered by long-term liquidity mining, with nothing to show for today - they remain veritable ghost chains. Generally, I personally don’t like to see incentives that are aimed at mining liquidity and growing TVL, and I’ve also written extensively about the risks of doing so while Optimism is still heavily centralized. Further, we have reached a point where liquidity isn’t the bottleneck on Optimism - we need to focus on growing other applications and onboard more users who can actually leverage all this excess liquidity. Velodrome has now established itself, and even without these incentives I’m sure they’ll continue to thrive, only losing some mercenary liquidity in the process. I have some other minor qualms, some of which are mentioned above, but overall, all things considered, in my opinion, we’ve been there, done that. There’ll be a more opportune time in the future to try this again - new ideas to incentivize user acquisition, more activity across other usecases, a more mature Optimism, a bull market etc.
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  • alexcutlerdoteth: Appreciate the thoughts. Before responding, it would be good to get a better sense of your underlying thinking. Can you give us some sense from a quantitative standpoint what metrics Velodrome would’ve needed to hit in order for it to (in your eyes) justify what is essentially a 3-6 month conditional extension of it’s incentive programs? We provided an unprecedented amount of data demonstrating our impact and the massive multiplier on grant funds committed to date, just hope to clearly understand where specifically you think we may have missed the mark.
  • nickbtts: Hello! nickbtts here, I know a number of the delegates and teams from various DAOs, conferences and projects and I was part of the original conception, design and deployment of Velodrome. I’m not a core team member these days, but know the team very well. Thank you @polynya for this response; I agree wholeheartedly with the sentiment around grant performance; reporting has been sparse and comms around post-grant activity barely exist. Accountability is hugely important, and Velodrome are the the first project to document, analyse and share performance data demonstrating the success of their grant programme, which is something that should really be a requirement of grant recipients. However, this is a tactical focus and it is far more difficult to measure the exponential strategic impact of outreach, business development, relationship building and friction reduction. I’d like to re-amplify a comment from @bebis of Byte Masons below: bebis: There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team. They’re on-boarding a ton of people the hard way - with actual customer/client services. They’re getting teams and users invested long-term in the ecosystem’s success. They’re the main Optimism point of contact if you’re a builder/developer. Their bribing system makes operations much lighter for small teams and startups. They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously. It’s important to note that Velodrome has had zero fundraising, private investment or token raise. The entire project has been bootstrapped on a small $150k grant and has been running lean (extremely lean) ever since. It takes an inordinate amount of time and effort to simply manage the current project relationships, never mind nurturing and building new ones as an increasingly important first engagement point for Optimism, all while continuing to develop the product itself (and engage heavily in governance!). I myself have been approached by a number of protocols looking to deploy on Optimism (redirected to Optimism bizdev), despite not being Velodrome core team; Velodrome is seen as a portal to the ecosystem due to the ability to quickly deploy deep accessible liquidity, a quick response time, support from a team with a great network, easy composability and willingness to work with fellow builders (example: Velodrome Sugar). This is an exponential multiplier; Velodrome are not only onboarding users of the platform, but a range of protocols, who bring their own communities, users, TVL and expertise. Competition between L2s (and alt-L1s) is fierce and margins razor thin; this grant can be seen as allowing Velodrome to continue its growth and maintain an edge over other rollup competitors, continuing to onboard projects who may well do similar. Focusing on TVL and liquidity as the primary metrics is, to me, shortsighted, although those metrics also demonstrate the value of the project to the ecosystem. Accessibility is super important; those of us here who are actually builders know the pain of getting a response from key ecosystem personnel, generating the ‘right kind’ of liquidity (retail accessible) without greatly affecting your economics, navigating bureaucratic governance, plugging into new tech infrastructure etc. The Velodrome team have demonstrated their ability to remove these frictions time and time again; this should, in my opinion, be an important factor for delegates to consider.
  • alexcutlerdoteth: polynya: At the very least, I would expect the Governance Fund to lead to greater activity on Optimism vs. Arbitrum One - given Arbitrum doesn’t have any incentives. I think we’re in total alignment on the overarching objective as well as failure of the Governance Fund (at large) to achieve it thus far. polynya: The obvious conclusion, as mentioned above, is that we have to try something different Yes, at a meta level, we have to “try something different.” On a proposal level though, especially in the context of extending programs with demonstrated data on the efficacy, we have assess whether or not trying something different makes sense in this specific case. Velodrome could’ve been a contributor to the broader failure or could’ve helped to mitigate its impact. If it is the former, a call for shift in strategy will likely lead to better outcomes. If it is the latter, it’s abandonment could actually drive even worse outcomes. That is why I hope you’ll indulge us pushing on this just a little more. polynya: I personally don’t like to see incentives that are aimed at mining liquidity and growing TVL … there’s… a heavy cost in misallocating $OP tokens to mercenary liquidity farmers. I think this is fair critique of many proposals, but not ours. Our objective isn’t aimed at increasing TVL or rewarding mercenary capital, it is to substantially lower the barriers of entry to Optimism for projects and protocols, making it easier for them to onboard to and grow within the ecosystem. You can see this in the fact that we do not directly allocate any OP to mercenary liquidity farmers. The OP instead flows (via a variety of mechanisms) to veVELO lockers who by virtue of the required 4 year lock have (as @TokenBrice put it) entered into “a long-term commitment with Velodrome and Optimism.” Accessing each of these incentives likewise requires them to match the value at a 2x-9x level (either by virtue of locking capital or putting up the bulk of the bribe). These are mercenary resistant incentives. Liquidity mining of VELO tokens (which take pressure off of OP) and the resulting TVL growth are really just second order effects of attracting and retaining projects that will (in your words) drive “user acquisition, more activity across other use-cases, a more mature Optimism.” Arbitrum’s greatest strength is really in the fact that it has strong ecosystem of apps (with lets be honest, significant funding) that people actively want to use. Our goal on Optimism needs to be to attract support the next wave of apps and builders so that they can do the same for Optimism, building the thriving and self-sustaining economy powered by retroactive public goods envisioned by the Foundation. Velodrome is helping to do just that. polynya: My impression of this proposal … is this approximately maintains status quo So what is Velodrome’s status quo? I would argue that it is currently the single biggest engine of ecosystem growth at the moment. You can see that in the fact that it has onboarded 32 new projects to the ecosystem, with most of them having not needed to rely on grants from the Governance Fund to do so. And it is doing this at a fraction of the cost of other protocols. According to the Foundations analysis of grants to date, the 42.6M OP granted thus far has earned: A 100% increase in transactions at a cost of 676 OP per incremental transaction A 74% increase in TVL (60M) at a cost of about .3 OP per incremental dollar In contrast, Velodrome’s grant of 3M OP from OPLabs has thus far earned: A 100% increase in transactions, at a cost of 40 OP per incremental transaction A 400% increase in TVL ($65M), at a cost of .03 OP per incremental dollar That is still too much to be paying in perpetuity and isn’t a complete picture of impact, but it is a 16x better ROI on Velodrome per transaction and at 10x better ROI per dollar in liquidity. And it doesn’t even take into account the downstream effects of the 32 project’s we’ve onboarded and the users, transactions, and activity that they are driving. We need to remember that is in part because Velodrome is offering Optimism 31x the level of co-incentives as other DEXs and 1.6x the value of the underlying grant request: $6.5M versus the projected $360k offered collectively by protocols worth billions of dollars. It is nearly half the entire value of Governance Fund grants slated to be approved over the same period and is real tangible ecosystem stimulus that doesn’t need to come out of Optimism’s pockets. This reinforces to me the idea when it comes to evaluating Velodrome’s grant performance to date, we’ve been the exception and not rule. Playing a huge role in mitigating the worst effects of the suboptimal grant allocations to date. An argument for extending what is working, especially while taking a step back to reevaluate what hasn’t. polynya: So, we should focus on different forms of incentives and proposals across a diverse set of usecases and see how that develops before considering returning back to traditional DeFi incentives. I think broadly speaking we in agreement about the outcome that we want to create. We need a rich ecosystem of applications that can attract the kind of users and activity that can sustain the ecosystem, especially once the market comes roaring back. I know you see us in the context of broader failures of grants to date, but I hope that maybe we’ve made the case that in this specific case doubling down on a proven strategy would be more impactful than abandoning it (especially knowing that it will be up again for reevaluation in just 3 months). In either case, appreciate the consideration.
  • Griff: I think velodrome is really really cool, and this is a fantastic proposal, but I chose to vote against this proposal for similar reasons as Lefteris. The main thing is that 4m $OP (even if it is broken into 2 parts) is just too large of a proposal, despite that, from the metrics, it is a totally legitimate ask. I think @polynya nails it here: polynya: we have reached a point where liquidity isn’t the bottleneck on Optimism - we need to focus on growing other applications and onboard more users who can actually leverage all this excess liquidity. It would be good to see the $OP in our coffers focus more towards onboarding new projects with diverse users outside instead of bribing more LPs that will likely leave when the incentives dry up.
• alexcutlerdoteth - No Role

  Nov. 2, 2022, 1:52 p.m.
  Appreciate the thoughts. Before responding, it would be good to get a better sense of your underlyi… Appreciate the thoughts. Before responding, it would be good to get a better sense of your underlying thinking. Can you give us some sense from a quantitative standpoint what metrics Velodrome would’ve needed to hit in order for it to (in your eyes) justify what is essentially a 3 - 6 month conditional extension of it’s incentive programs? We provided an unprecedented amount of data demonstrating our impact and the massive multiplier on grant funds committed to date, just hope to clearly understand where specifically you think we may have missed the mark.
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  • polynya: At the very least, I would expect the Governance Fund to lead to greater activity on Optimism vs. Arbitrum One - given Arbitrum doesn’t have any incentives. The obvious conclusion, as mentioned above, is that we have to try something different - throwing incentives chasing liquidity isn’t significantly growing Optimism’s userbase and transaction activity. Of course, this is subjective, and some may argue TVLs, staked amounts and trading volumes are more important, but I disagree - it’s all about growing a dedicated userbase with diverse activity at this stage - we have already achieved sufficient liquidity. So, my opinion is the bottleneck now is no longer liquidity, but onboarding users. So, we should focus on different forms of incentives and proposals across a diverse set of usecases and see how that develops before considering returning back to traditional DeFi incentives. The ultimate goal would be to surpass BSC - which is #2 to Ethereum L1 - with XM DAUs and 50M+ tx/day, but of course that’s a long term goal.
• mastermojo - No Role

  Nov. 2, 2022, 2:21 p.m.
  I agree with Millie. The Synthetix Ambassadors will be voting Yes on this proposal. Velodrome is a … I agree with Millie. The Synthetix Ambassadors will be voting Yes on this proposal. Velodrome is a net positive for Optimism. I urge voters to also vote yes for this proposal.
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• polynya - No Role

  Nov. 2, 2022, 2:30 p.m.
  At the very least, I would expect the Governance Fund to lead to greater activity on Optimism vs. A… At the very least, I would expect the Governance Fund to lead to greater activity on Optimism vs. Arbitrum One - given Arbitrum doesn’t have any incentives. The obvious conclusion, as mentioned above, is that we have to try something different - throwing incentives chasing liquidity isn’t significantly growing Optimism’s userbase and transaction activity. Of course, this is subjective, and some may argue TVLs, staked amounts and trading volumes are more important, but I disagree - it’s all about growing a dedicated userbase with diverse activity at this stage - we have already achieved sufficient liquidity. So, my opinion is the bottleneck now is no longer liquidity, but onboarding users. So, we should focus on different forms of incentives and proposals across a diverse set of usecases and see how that develops before considering returning back to traditional DeFi incentives. The ultimate goal would be to surpass BSC - which is # 2 to Ethereum L 1 - with XM DAUs and 50 M+ tx/day, but of course that’s a long term goal.
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  • Smerdyakov: Hi all, polynya in particular. I have an anecdote to share among all this data. I am Smerdyakov of the OpenX Project, I speak about our project but I only speak for myself. Two months ago we arrived on Optimism from a truly plundered blockchain, albeit not one plundered by excessive liquidity mining. Our project ran on Harmony for more than a year. We know too well what conditions create a functioning DeFi ecosystem, what inhibits their development, and what conditions can ultimately destroy it. We chose Optimism for its obvious dedication to builders who are dead-set on re-creating and inventing powerful but accessible blockchain-native financial instruments. I want to briefly share with you some of the value we created that was destroyed. Our developers had just pushed a fractional-routing aggregator which, to this day, is used by Harmony traders to maximize the liquidity that remains on chain. We were busy working on governance-focused NFTs containing underlying LP tokens to automate away many of the “steps” between the initial onboarding of a new user to decentralized finance and their full participation in all of the benefits it has to offer. We needed a secure blockchain to recreate our vision, and we needed a capital efficient strategy to bootstrap. We had zero doubt our project’s innovations would generate revenue - but revenue isn’t liquidity. My humble opinion: The importance of the veCRV / Solidly / Velodrome and similar models has simply not been understood. The importance of what Velodrome calls “white glove service” even more so. We mentioned our “home” blockchain collapsed, but perhaps the reader is unfamiliar with the story of the Horizon Bridge. We encourage users investigate it, it is a very instructive case in securing interoperability among blockchains. The consequences for us were severe. The two audits we performed on Harmony buy us nothing here. We arrived with the initial liquidity we raised from an ad hoc pre-sale of our NFTs on Harmony and about 3 BTC in out-of-pocket value our Team provided. We needed a capital efficient strategy to bootstrap sticky liquidity as an unaudited, teensy-cap project. Velodrome did their due diligence and onboarded us. They whitelisted our experimental SushiBar after we pitched it, the same is true for our optimization of cvxCRV. Having an established project with the ability to onboard and incentivize experimental projects is necessary for the further innovation of native-blockchain instruments. Half of this is due to the capital efficiency of what we’ll call an “initial value-proposition” - that is, a “bribe,” although this word makes granny cringe. This purchases more than a week of liquidity. It purchases a week of exposure by way of introduction to the ecosystem via a decentralized marketplace of deep core liquidity. A place where bigger wallets make trades. A place where users can learn of a new listing, a new financial concept or instrument even, and go from there. (The importance of Core liquidity has not been discussed either from what I have read here.) If there is to be a “Core” Liquidity market place the team behind it must bear great responsibilities - they must be excellent market-makers! Nevermind the difficulties of managing partnerships across dozens of projects from every imaginable timezone and background. This leads me to Velodrome’s team. They describe themselves as white glove. Our experience has been more than that. They embraced our project, true, but it was their constructive criticism that allowed us to re-imagine some of our ideas. This facilitated innovation. Our SushiBar will now be used as the vote-escrowed foundation for solving the rebase and equitable tx fee distribution issues inherent in veNFTs. Their critiques of our cvxCRV fork forced us to examine cvxCRV’s influence on Curve and re-imagine our offering as a perpetual bond built with mechanisms that offset the parasitic influences derivatives-without-programmed-parity introduce. This then inspired us to develop a reserve-and-peg-by-parity mechanism we believe will help re-introduce perpetual bonds as legitimate, blockchain-native financial tools that can tokenize locked value, serve as a bond, all while serving a perpetual function in our exchange. Velodrome traded their white gloves for boxing mitts when it came to analyzing our ideas. They did this to protect the space they created while honoring the commitment made in their documentation to reward sophisticated Defi users, they did so with their feedback and patience. If there is to be a whitelisting process to protect and foster innovation before full decentralization is possible for an exchange such as this, it must be curated by a team committed to onboarding innovation. Dozens of hours spent helping a teensy-cap maximize capital efficiency - has this been understood? It is their passion for constructive blockchain-native development that allows Velodrome’s team to function as a Hospitality Tent for the Optimism Ecosystem. The fact of our being here to share our success is proof-of-onboarding enough for us. We have numbers to share concerning our capital efficiency upon request, especially as it relates to our liquidity-balancing strategies. These will only further substantiate the success of Velodrome and the capital efficient onboarding options it presents. (As a project:) We believe Velodrome has come closer than anyone to perfecting the models that have produced sustainable decentralized market-making strategies and potential. We support their proposal 100%.
  • alexcutlerdoteth: polynya: At the very least, I would expect the Governance Fund to lead to greater activity on Optimism vs. Arbitrum One - given Arbitrum doesn’t have any incentives. I think we’re in total alignment on the overarching objective as well as failure of the Governance Fund (at large) to achieve it thus far. polynya: The obvious conclusion, as mentioned above, is that we have to try something different Yes, at a meta level, we have to “try something different.” On a proposal level though, especially in the context of extending programs with demonstrated data on the efficacy, we have assess whether or not trying something different makes sense in this specific case. Velodrome could’ve been a contributor to the broader failure or could’ve helped to mitigate its impact. If it is the former, a call for shift in strategy will likely lead to better outcomes. If it is the latter, it’s abandonment could actually drive even worse outcomes. That is why I hope you’ll indulge us pushing on this just a little more. polynya: I personally don’t like to see incentives that are aimed at mining liquidity and growing TVL … there’s… a heavy cost in misallocating $OP tokens to mercenary liquidity farmers. I think this is fair critique of many proposals, but not ours. Our objective isn’t aimed at increasing TVL or rewarding mercenary capital, it is to substantially lower the barriers of entry to Optimism for projects and protocols, making it easier for them to onboard to and grow within the ecosystem. You can see this in the fact that we do not directly allocate any OP to mercenary liquidity farmers. The OP instead flows (via a variety of mechanisms) to veVELO lockers who by virtue of the required 4 year lock have (as @TokenBrice put it) entered into “a long-term commitment with Velodrome and Optimism.” Accessing each of these incentives likewise requires them to match the value at a 2x-9x level (either by virtue of locking capital or putting up the bulk of the bribe). These are mercenary resistant incentives. Liquidity mining of VELO tokens (which take pressure off of OP) and the resulting TVL growth are really just second order effects of attracting and retaining projects that will (in your words) drive “user acquisition, more activity across other use-cases, a more mature Optimism.” Arbitrum’s greatest strength is really in the fact that it has strong ecosystem of apps (with lets be honest, significant funding) that people actively want to use. Our goal on Optimism needs to be to attract support the next wave of apps and builders so that they can do the same for Optimism, building the thriving and self-sustaining economy powered by retroactive public goods envisioned by the Foundation. Velodrome is helping to do just that. polynya: My impression of this proposal … is this approximately maintains status quo So what is Velodrome’s status quo? I would argue that it is currently the single biggest engine of ecosystem growth at the moment. You can see that in the fact that it has onboarded 32 new projects to the ecosystem, with most of them having not needed to rely on grants from the Governance Fund to do so. And it is doing this at a fraction of the cost of other protocols. According to the Foundations analysis of grants to date, the 42.6M OP granted thus far has earned: A 100% increase in transactions at a cost of 676 OP per incremental transaction A 74% increase in TVL (60M) at a cost of about .3 OP per incremental dollar In contrast, Velodrome’s grant of 3M OP from OPLabs has thus far earned: A 100% increase in transactions, at a cost of 40 OP per incremental transaction A 400% increase in TVL ($65M), at a cost of .03 OP per incremental dollar That is still too much to be paying in perpetuity and isn’t a complete picture of impact, but it is a 16x better ROI on Velodrome per transaction and at 10x better ROI per dollar in liquidity. And it doesn’t even take into account the downstream effects of the 32 project’s we’ve onboarded and the users, transactions, and activity that they are driving. We need to remember that is in part because Velodrome is offering Optimism 31x the level of co-incentives as other DEXs and 1.6x the value of the underlying grant request: $6.5M versus the projected $360k offered collectively by protocols worth billions of dollars. It is nearly half the entire value of Governance Fund grants slated to be approved over the same period and is real tangible ecosystem stimulus that doesn’t need to come out of Optimism’s pockets. This reinforces to me the idea when it comes to evaluating Velodrome’s grant performance to date, we’ve been the exception and not rule. Playing a huge role in mitigating the worst effects of the suboptimal grant allocations to date. An argument for extending what is working, especially while taking a step back to reevaluate what hasn’t. polynya: So, we should focus on different forms of incentives and proposals across a diverse set of usecases and see how that develops before considering returning back to traditional DeFi incentives. I think broadly speaking we in agreement about the outcome that we want to create. We need a rich ecosystem of applications that can attract the kind of users and activity that can sustain the ecosystem, especially once the market comes roaring back. I know you see us in the context of broader failures of grants to date, but I hope that maybe we’ve made the case that in this specific case doubling down on a proven strategy would be more impactful than abandoning it (especially knowing that it will be up again for reevaluation in just 3 months). In either case, appreciate the consideration.
• StrategicReserve - No Role

  Nov. 2, 2022, 2:30 p.m.
  I think the issue is not whether Velodrome has “earned” the additional incentives but rather ponder… I think the issue is not whether Velodrome has “earned” the additional incentives but rather pondering whether extensions (particularly liquidity incentives) should be granted at all. When we discussed the total OP incentives Velodrome had received compared to its competitors (Uniswap, Curve, etc.), you stated: alexcutlerdoteth: However if they do, we’d expect them to do exactly what we are doing upon the conclusion of their programs: come back with results and ask for support in continuing the programs if there is still an ecosystem growth case to be made. I am not sure anyone in the liquidity incentives class would be approved for another grant, even with outstanding performance. It’s really up to the whims of governance. I think you deserve credit for “going there” and asking for another round, particularly with the amount of data you’ve provided. But I’m not surprised such an ask brings up existential issues regarding OP governance. It’s impossible to detangle the issues.
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• nickbtts - No Role

  Nov. 2, 2022, 2:41 p.m.
  Hello! nickbtts here, I know a number of the delegates and teams from various DAOs, conferences and… Hello! nickbtts here, I know a number of the delegates and teams from various DAOs, conferences and projects and I was part of the original conception, design and deployment of Velodrome. I’m not a core team member these days, but know the team very well. Thank you @polynya for this response; I agree wholeheartedly with the sentiment around grant performance; reporting has been sparse and comms around post-grant activity barely exist. Accountability is hugely important, and Velodrome are the the first project to document, analyse and share performance data demonstrating the success of their grant programme, which is something that should really be a requirement of grant recipients. However, this is a tactical focus and it is far more difficult to measure the exponential strategic impact of outreach, business development, relationship building and friction reduction. I’d like to re-amplify a comment from @bebis of Byte Masons below: bebis: There’s a lot of technical analysis going on here which I think distracts a bit from the value being added by the Velodrome team. They’re on-boarding a ton of people the hard way - with actual customer/client services. They’re getting teams and users invested long-term in the ecosystem’s success. They’re the main Optimism point of contact if you’re a builder/developer. Their bribing system makes operations much lighter for small teams and startups. They’re doing the hard, high-effort stuff that most aren’t willing to. I’d consider any proposal they put forth extremely seriously. It’s important to note that Velodrome has had zero fundraising, private investment or token raise. The entire project has been bootstrapped on a small $ 150 k grant and has been running lean (extremely lean) ever since. It takes an inordinate amount of time and effort to simply manage the current project relationships, never mind nurturing and building new ones as an increasingly important first engagement point for Optimism, all while continuing to develop the product itself (and engage heavily in governance!). I myself have been approached by a number of protocols looking to deploy on Optimism (redirected to Optimism bizdev), despite not being Velodrome core team; Velodrome is seen as a portal to the ecosystem due to the ability to quickly deploy deep accessible liquidity, a quick response time, support from a team with a great network, easy composability and willingness to work with fellow builders (example: Velodrome Sugar 1 ). This is an exponential multiplier; Velodrome are not only onboarding users of the platform, but a range of protocols, who bring their own communities, users, TVL and expertise. Competition between L 2 s (and alt-L 1 s) is fierce and margins razor thin; this grant can be seen as allowing Velodrome to continue its growth and maintain an edge over other rollup competitors, continuing to onboard projects who may well do similar. Focusing on TVL and liquidity as the primary metrics is, to me, shortsighted, although those metrics also demonstrate the value of the project to the ecosystem. Accessibility is super important; those of us here who are actually builders know the pain of getting a response from key ecosystem personnel, generating the ‘right kind’ of liquidity (retail accessible) without greatly affecting your economics, navigating bureaucratic governance, plugging into new tech infrastructure etc. The Velodrome team have demonstrated their ability to remove these frictions time and time again; this should, in my opinion, be an important factor for delegates to consider.
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• polynya - No Role

  Nov. 2, 2022, 3:08 p.m.
  Appreciate the perspective, but we’ve already been through the bootstrapping phase via the first gr… Appreciate the perspective, but we’ve already been through the bootstrapping phase via the first grant. As mentioned, I wish the Velodrome team the best regardless, and I’m sure the project will continue to thrive even without the subsidies; arguably also reach a self-sustainable state sooner.
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  • daoism: It seems the project is paying said team with protocol revenue. The grant allows continued growth, facilitating an over-performing team to continue to deliver a high level of service to new protocols either building on Optimism, currently on-boarding or actively looking to. One could argue that some projects may not have chosen Optimism if it weren’t for the Velodrome team’s outreach, pitch and onboarding assistance; by not accelerating the current trajectory we may well stymie Opti protocol growth (of which any one could be “our GMX”). This grant, I think, directly affects Optimism’s competitiveness, not just Velodrome’s. I agree liquidity isn’t the current bottleneck; what is currently missing is a (or more than one) native ecosystem that necessitates adjacent builders to move to Optimism (Lens is a great example on Polygon; if you’re utilising a Social Graph, you have to build there). This is a business development problem; we’ve seen time and time again that dev grants alone can’t necessarily solve this, you need evangelistic, committed ecosystem-centric builders aggressively bringing in partners who they think may become foundational elements. One could argue greater funding of bizdev at Foundation level would possibly have a similar outcome, but in this case we see user on-boarding (friction reduction through bridge/infra familiarity), higher liquidity plus greater composability on top of on-the-ground focused outreach.
  • forrest: I voted Against this proposal. I tried to follow this discussion closely after my initial comment but my concerns remain the same. This Grant would be 1.72% of Optimism’s Governance Fund and would grow the circulating supply of the OP token by 1.86%. This is significant, and I do not appreciate Velodrome team members trying to say otherwise. We are talking about millions of $ here: alexcutlerdoteth: In other words, I think the ask only looks big in a vacuum. Velodrome’s current traction is great but if anything proves to me that they have already achieved a network effect and do not require millions more from the Optimism Treasury to establish themselves, it seems they can accomplish all of the goals outlined in this proposal without the grant: polynya: I’m sure the project will continue to thrive even without the subsidies; arguably also reach a self-sustainable state sooner. Separately, I am not sure what kind of message it sends that the DeFi Committee decided to Abstain in a Recommendation on a ~$5.5 million grant. This is a pretty significant treasury move. Disclosure: I co-founded a different Optimism DEX so consider me biased
• Smerdyakov - No Role

  Nov. 2, 2022, 4:54 p.m.
  Hi all, polynya in particular. I have an anecdote to share among all this data. I am Smerdyakov of … Hi all, polynya in particular. I have an anecdote to share among all this data. I am Smerdyakov of the OpenX Project, I speak about our project but I only speak for myself. Two months ago we arrived on Optimism from a truly plundered blockchain, albeit not one plundered by excessive liquidity mining. Our project ran on Harmony for more than a year. We know too well what conditions create a functioning DeFi ecosystem, what inhibits their development, and what conditions can ultimately destroy it. We chose Optimism for its obvious dedication to builders who are dead-set on re-creating and inventing powerful but accessible blockchain-native financial instruments. I want to briefly share with you some of the value we created that was destroyed. Our developers had just pushed a fractional-routing aggregator which, to this day, is used by Harmony traders to maximize the liquidity that remains on chain. We were busy working on governance-focused NFTs containing underlying LP tokens to automate away many of the “steps” between the initial onboarding of a new user to decentralized finance and their full participation in all of the benefits it has to offer. We needed a secure blockchain to recreate our vision, and we needed a capital efficient strategy to bootstrap. We had zero doubt our project’s innovations would generate revenue - but revenue isn’t liquidity. My humble opinion: The importance of the veCRV / Solidly / Velodrome and similar models has simply not been understood. The importance of what Velodrome calls “white glove service” even more so. We mentioned our “home” blockchain collapsed, but perhaps the reader is unfamiliar with the story of the Horizon Bridge. We encourage users investigate it, it is a very instructive case in securing interoperability among blockchains. The consequences for us were severe. The two audits we performed on Harmony buy us nothing here. We arrived with the initial liquidity we raised from an ad hoc pre-sale of our NFTs on Harmony and about 3 BTC in out-of-pocket value our Team provided. We needed a capital efficient strategy to bootstrap sticky liquidity as an unaudited, teensy-cap project. Velodrome did their due diligence and onboarded us. They whitelisted our experimental SushiBar after we pitched it, the same is true for our optimization of cvxCRV. Having an established project with the ability to onboard and incentivize experimental projects is necessary for the further innovation of native-blockchain instruments. Half of this is due to the capital efficiency of what we’ll call an “initial value-proposition” - that is, a “bribe,” although this word makes granny cringe. This purchases more than a week of liquidity. It purchases a week of exposure by way of introduction to the ecosystem via a decentralized marketplace of deep core liquidity. A place where bigger wallets make trades. A place where users can learn of a new listing, a new financial concept or instrument even, and go from there. (The importance of Core liquidity has not been discussed either from what I have read here.) If there is to be a “Core” Liquidity market place the team behind it must bear great responsibilities - they must be excellent market-makers! Nevermind the difficulties of managing partnerships across dozens of projects from every imaginable timezone and background. This leads me to Velodrome’s team. They describe themselves as white glove. Our experience has been more than that. They embraced our project, true, but it was their constructive criticism that allowed us to re-imagine some of our ideas. This facilitated innovation. Our SushiBar will now be used as the vote-escrowed foundation for solving the rebase and equitable tx fee distribution issues inherent in veNFTs. Their critiques of our cvxCRV fork forced us to examine cvxCRV’s influence on Curve and re-imagine our offering as a perpetual bond built with mechanisms that offset the parasitic influences derivatives-without-programmed-parity introduce. This then inspired us to develop a reserve-and-peg-by-parity mechanism we believe will help re-introduce perpetual bonds as legitimate, blockchain-native financial tools that can tokenize locked value, serve as a bond, all while serving a perpetual function in our exchange. Velodrome traded their white gloves for boxing mitts when it came to analyzing our ideas. They did this to protect the space they created while honoring the commitment made in their documentation to reward sophisticated Defi users, they did so with their feedback and patience. If there is to be a whitelisting process to protect and foster innovation before full decentralization is possible for an exchange such as this, it must be curated by a team committed to onboarding innovation. Dozens of hours spent helping a teensy-cap maximize capital efficiency - has this been understood? It is their passion for constructive blockchain-native development that allows Velodrome’s team to function as a Hospitality Tent for the Optimism Ecosystem. The fact of our being here to share our success is proof-of-onboarding enough for us. We have numbers to share concerning our capital efficiency upon request, especially as it relates to our liquidity-balancing strategies. These will only further substantiate the success of Velodrome and the capital efficient onboarding options it presents. (As a project:) We believe Velodrome has come closer than anyone to perfecting the models that have produced sustainable decentralized market-making strategies and potential. We support their proposal 100 %.
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  • Smerdyakov: I’d like to speak on this “Core Liquidity” concept a bit more, I believe it needs clarification. I am no expert in Game Theory and I am not concerned with traditional applications of these terms as much as I am in making this point as I understand it: In a decentralized marketplace there needs to be some situation that no individual project - or collection of projects - could improve upon by branching off and trying it themselves. This would simply split liquidity and, while that can have its advantages, it defeats the purpose of consolidating deep liquidity to remove unnecessary PI that deters larger swaps. But why should Velodrome be the place for this? It’s not really a matter of why, it’s a matter of because. It is because they have already taken the risks and achieved it in a capital efficient manner. They are the Core Liquidity for Optimism because they developed the best model to retain sticky liquidity. This is a proof of past performance, and regarding future developments I’m not sure what else there is to go by. I’d like to add regarding liquidity and bringing new users to Optimism: It took us about three days to review the opportunities offered by Velodrome to understand what it meant for us. The 3 BTC in value we bribed is value we brought to this chain because of Velodrome. The locking airdrops for users allow new entrants to catch up. We say this without the added benefit of receiving the airdrops as a project because we are an aggregator of veVELO and are thus not eligible. Dozens (or more) users followed us from Harmony. Some bribed out-of-pocket once they understood the capital efficiency of the opportunity. We are proud of our results but projects like OATH and SONNE have performed similar strategies to great success as well. Why emit a token with limited liquidity when you can create a speculative value proposition for it that also acts as an equitable distribution of emissions. More generally, my thoughts on the progression from veCRV → veNFT (Solidly) → Velodrome is that a large step has been taken in the formation of sustainable decentralized market-making. This growth will not produce its ripest fruit until its possibilities have been comprehended and exhausted. It will take months, perhaps years, of experimentation to bear this out. Velodrome has been wildly successful already by every measure of capital efficiency. Speaking of positive feedback loops, I know of none better than entrusting a proven good steward of their talents with more capital to exercise them. How users choose to use their bribe rewards and airdrops is of course their business. I’d only like to point out the VELO is one of the few tokens on chain that has chosen huge price exposure to the OP token itself via their highly incentivized VELO-OP pool. We may fear mercenary liquidity miners but users capable of thinking more than two weeks ahead understand the liquidity looping possibilities created by these incentives and will maximize their liquidity provision and return possibilities. Velodrome has taken the riskier proposition of betting on Optimism by exposing the value of their project to it. The very success of the VELO token is thereby inextricably linked to the good stewardship of their incentive packages.
• BarryLime - No Role

  Nov. 2, 2022, 7:41 p.m.
  Chiming in with my 2 cents as a very active user across the entire Optimism ecosystem. Velodrome … Chiming in with my 2 cents as a very active user across the entire Optimism ecosystem. Velodrome was my “gateway drug” into Optimism several months ago – it was one of my first dapps on the network and has helped to cement Optimism as my L 2 of choice. I was initially intrigued by the idea of this all-in-one liquidity hub. I kicked the tires on the protocol both as a liquidity provider and as a VELO locker. The experience was buttery smooth, and delivered a fantastic liquidity marketplace all under one roof (which requires at least 3 roofs to accomplish on mainnet between Curve/Convex/Votium). But the real magic is that my experience with Velodrome has strongly encouraged me to continue interacting with the broader Optimism ecosystem. Every financial activity (swapping, bribing, LP’ing, collecting rewards) can be done right here on Optimism without bridging anywhere else. Every week Velodrome is highlighting and onboarding a new project that I can explore. I can say that SEVERAL of the projects that have bribed me through Velodrome have also gained me as a user. This protocol is a net win for everyone – protocols, users, and Optimism as a whole. And the OP incentives are critical to continue pushing the flywheel and incentivizing growth across the ecosystem. I strongly support this proposal.
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• alexcutlerdoteth - No Role

  Nov. 2, 2022, 8:24 p.m.
  polynya: At the very least, I would expect the Governance Fund to lead to greater activity on … polynya: At the very least, I would expect the Governance Fund to lead to greater activity on Optimism vs. Arbitrum One - given Arbitrum doesn’t have any incentives. I think we’re in total alignment on the overarching objective as well as failure of the Governance Fund (at large) to achieve it thus far. polynya: The obvious conclusion, as mentioned above, is that we have to try something different Yes, at a meta level, we have to “try something different.” On a proposal level though, especially in the context of extending programs with demonstrated data on the efficacy, we have assess whether or not trying something different makes sense in this specific case. Velodrome could’ve been a contributor to the broader failure or could’ve helped to mitigate its impact. If it is the former, a call for shift in strategy will likely lead to better outcomes. If it is the latter, it’s abandonment could actually drive even worse outcomes. That is why I hope you’ll indulge us pushing on this just a little more. polynya: I personally don’t like to see incentives that are aimed at mining liquidity and growing TVL … there’s… a heavy cost in misallocating $OP tokens to mercenary liquidity farmers. I think this is fair critique of many proposals, but not ours. Our objective isn’t aimed at increasing TVL or rewarding mercenary capital, it is to substantially lower the barriers of entry to Optimism for projects and protocols, making it easier for them to onboard to and grow within the ecosystem. You can see this in the fact that we do not directly allocate any OP to mercenary liquidity farmers. The OP instead flows (via a variety of mechanisms) to veVELO lockers who by virtue of the required 4 year lock have (as @TokenBrice put it) entered into “a long-term commitment with Velodrome and Optimism.” Accessing each of these incentives likewise requires them to match the value at a 2 x- 9 x level (either by virtue of locking capital or putting up the bulk of the bribe). These are mercenary resistant incentives. Liquidity mining of VELO tokens (which take pressure off of OP) and the resulting TVL growth are really just second order effects of attracting and retaining projects that will (in your words) drive “user acquisition, more activity across other use-cases, a more mature Optimism.” Arbitrum’s greatest strength is really in the fact that it has strong ecosystem of apps (with lets be honest, significant funding) that people actively want to use. Our goal on Optimism needs to be to attract support the next wave of apps and builders so that they can do the same for Optimism, building the thriving and self-sustaining economy powered by retroactive public goods envisioned by the Foundation. Velodrome is helping to do just that. polynya: My impression of this proposal … is this approximately maintains status quo So what is Velodrome’s status quo? I would argue that it is currently the single biggest engine of ecosystem growth at the moment. You can see that in the fact that it has onboarded 32 new projects to the ecosystem, with most of them having not needed to rely on grants from the Governance Fund to do so. And it is doing this at a fraction of the cost of other protocols. According to the Foundations analysis of grants to date, the 42 . 6 M OP granted thus far has earned: A 100 % increase in transactions at a cost of 676 OP per incremental transaction A 74 % increase in TVL ( 60 M) at a cost of about . 3 OP per incremental dollar In contrast, Velodrome’s grant of 3 M OP from OPLabs has thus far earned: A 100 % increase in transactions, at a cost of 40 OP per incremental transaction A 400 % increase in TVL ($ 65 M), at a cost of . 03 OP per incremental dollar That is still too much to be paying in perpetuity and isn’t a complete picture of impact, but it is a 16 x better ROI on Velodrome per transaction and at 10 x better ROI per dollar in liquidity. And it doesn’t even take into account the downstream effects of the 32 project’s we’ve onboarded and the users, transactions, and activity that they are driving. We need to remember that is in part because Velodrome is offering Optimism 31 x the level of co-incentives as other DEXs and 1 . 6 x the value of the underlying grant request: $ 6 . 5 M versus the projected $ 360 k offered collectively by protocols worth billions of dollars. It is nearly half the entire value of Governance Fund grants slated to be approved over the same period and is real tangible ecosystem stimulus that doesn’t need to come out of Optimism’s pockets. This reinforces to me the idea when it comes to evaluating Velodrome’s grant performance to date, we’ve been the exception and not rule. Playing a huge role in mitigating the worst effects of the suboptimal grant allocations to date. An argument for extending what is working, especially while taking a step back to reevaluate what hasn’t. polynya: So, we should focus on different forms of incentives and proposals across a diverse set of usecases and see how that develops before considering returning back to traditional DeFi incentives. I think broadly speaking we in agreement about the outcome that we want to create. We need a rich ecosystem of applications that can attract the kind of users and activity that can sustain the ecosystem, especially once the market comes roaring back. I know you see us in the context of broader failures of grants to date, but I hope that maybe we’ve made the case that in this specific case doubling down on a proven strategy would be more impactful than abandoning it (especially knowing that it will be up again for reevaluation in just 3 months). In either case, appreciate the consideration.
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  • polynya: Thanks - but everything you say here is what I already know from reading the proposal and comments above, and fail to address my issue with liquidity no longer being the bottleneck on Optimism - particularly for Velodrome that has been successfully bootstrapped by the first round (as mentioned, to qualify for a second round bigger than the first, a project must offer a significantly advanced value proposition, but I see status quo here) - diversity of useful applications people will use being it. Particularly tooling & UX needs to be a stronger focus. One of the “minor qualms” I alluded to above is using $OP as a vehicle to increase demand for locked $VELO tokens - something OPUser and others have pointed out. Personally, I think this is a less egregious use of that strategy than some other projects have proposed, but nevertheless, it certainly is status quo. I’ll be following the comments, and open to reconsider - I’ll leave my vote till the last day or so as this is a contentious & important proposal.
  • alexcutlerdoteth: forrest: I voted Against this proposal. forrest: Disclosure: I co-founded a different Optimism DEX so consider me biased Fair enough. I actually didn’t realize you were a Rubicon founder. I think an abstention in that case might be more appropriate, but there is no rule that you can’t vote down a fellow DEX so that’s your call. For the record, if Rubicon can come back showing that they have delivered same kind of growth multiples on your 900,000 OP grant I promise we’ll be first in line to show support for your next proposal. forrest: This Grant would be 1.72% of Optimism’s Governance Fund and would grow the circulating supply of the OP token by 1.86%. This is significant, and I do not appreciate Velodrome team members trying to say otherwise. We are talking about millions of $ here: Since you raised this again, I’ll want to make sure reemphasize all our responses that put the size of our ask in proper context so people don’t the wrong idea. Our ask is significantly smaller than those distributed to date by the Governance Fund relative to key KPIs: tao: As a share of the Optimism ecosystem, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of the Governance Fund. tao: 98% less than average OP granted per $ in TVL 80% less than median OP granted per $ in TVL 98% less than average OP granted per $ in Volume 65% less than median OP granted per $ in Volume 98% less than average OP granted per transaction 86% less than the median OP granted per transaction 91% less than the average OP granted per user 51% less than the median OP granted per user Velodrome is offering 31x the co-incentives of other DEX projects combined while only asking for 1.6x larger grant. alexcutlerdoteth: Velodrome Total Grant: 7,000,000 OP Total Co-Incentives: $12,500,000 Total Projects Supported: 29 Total Projected ROI: 2x-3x (minimum) Other DEX Protocols: Total Grant: 4,240,000 OP Total Co-Incentives: $360,000 (estimated) Total Projects Supported: 9 Total Projected ROI: TBD Our grant request is oriented towards continuing activities that have a proven ability to return 2x-3x the underlying value of grant: tao: $6M+ VELO liquidity incentives distributed into the ecosystem (2-3x OP grant) 30+ new protocols onboarded and supported with liquidity growth in ecosystem 30-70% reduction in liquidity incentive costs per $ TVL for ecosystem partners $5M+ liquidity of OP token pairs, creating $1B in volume $1M+ in protocol revenue returned to veVELO lockers (primarily protocols) $10M+ value locked as veVELO (70% of total) locked into the Optimism for ~3.5ys $250k veVELO airdrop for OP Team, $2M veVELO airdrop to ecosystem partners alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. Our grant is dramatically over performing Governance Fund grants to date: alexcutlerdoteth: According to the Foundations analysis of grants to date, the 42.6M OP granted thus far has earned: A 100% increase in transactions at a cost of 676 OP per incremental transaction A 74% increase in TVL (60M) at a cost of about .3 OP per incremental dollar In contrast, Velodrome’s grant of 3M OP from OPLabs has thus far earned: A 100% increase in transactions, at a cost of 40 OP per incremental transaction A 400% increase in TVL ($65M), at a cost of .03 OP per incremental dollar alexcutlerdoteth: Indeed, Velodrome has actually onboarded more net-new protocols (20 for 3M OP) than the Governance Fund itself (18 for 7.4M OP) and did so at a fraction of the cost. In short, the grant only looks large if you ignore baselines in terms of KPIs, massive co-investment, or demonstrated ROI multiples it has delivered. It remains significantly smaller in actual dollar terms than the one originally given to us by OPLabs. Repeatedly suggesting “it is too big” without directly engaging in this context isn’t constructive, especially from someone who received their own incredibly generous grant but has yet to produce evidence of similar returns.
• polynya - No Role

  Nov. 3, 2022, 3:21 a.m.
  Thanks - but everything you say here is what I already know from reading the proposal and comments … Thanks - but everything you say here is what I already know from reading the proposal and comments above, and fail to address my issue with liquidity no longer being the bottleneck on Optimism - particularly for Velodrome that has been successfully bootstrapped by the first round (as mentioned, to qualify for a second round bigger than the first, a project must offer a significantly advanced value proposition, but I see status quo here) - diversity of useful applications people will use being it. Particularly tooling & UX needs to be a stronger focus. One of the “minor qualms” I alluded to above is using $OP as a vehicle to increase demand for locked $VELO tokens - something OPUser and others have pointed out. Personally, I think this is a less egregious use of that strategy than some other projects have proposed, but nevertheless, it certainly is status quo. I’ll be following the comments, and open to reconsider - I’ll leave my vote till the last day or so as this is a contentious & important proposal.
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  • Samoajoe: I feel like this is an extremely good proposal, and in my opinion, anything but stays quo. I am new to crypto over the last 2 years, and in that time have come to very much espouse the general ethos of ethereum and its various L2’s. In the last bull run Main net was essentially unusable for users such as myself, and I was hearing all about the various L2’s and very hopeful for their release. I ended up bridging over to OP very early, and I hate to use this phrase. But at the time, there was nothing to do here but hope for an airdrop. The first protocol that changed my attitude about OP and it really having some lifeblood and exciting innovation, was velodrome. I was in their initial twitter spaces with them and the op team. They committed to build alongside OP for the good of the ecosystem from the very start. I recently became involved and interested in a second OP protocol, Sonne finance, that launched directly on top of velodrome, and has been aided greatly by their relationship with velodrome. In discord I have even asked the velo team about their plans to operate across other L2’s as well, and imo, you will not find a team more focused and dedicated to OP as they passionately make the case for why OP is the only place they want to be. I believe some of the proliferation on arbitrum is simply a prelude to them offering similar liquidity incentives to what op has done. I do believe op incentives are performing exactly as designed, in attracting and exciting users, such as myself as well as protocols like Sonne finance, and open x, mentioned above directly through the partnership with velodrome. I understand the desire to see organic growth without the added stimulus of op liquidity incentives, however I believe at this early stage, bootstrapping of users, protocols, and liquidity are still very much pertinent goals for OP. As OP tokens must eventually be distributed anyway, what better way, than bootstrapping new users and protocols, and building general excitement around OP through partnering with one of the biggest proponents of the long term OP vision velodrome.
  • alexcutlerdoteth: polynya: I’ll be following the comments, and open to reconsider - I’ll leave my vote till the last day or so as this is a contentious & important proposal. Deeply appreciate your open mindedness, ser. polynya: I’d very much like to see proposals focused on bizdev & marketing rather than liquidity mining. This is an interesting point-of-view I hadn’t really considered as an implication of your thoughts so far. For whatever it is worth, as someone who has spent most of their career working in those domains I think the Governance Fund would be wise to avoid directly subsidizing business development or marketing activities. It is a squishy space that is difficult to assess objectively and that can lead to ineffective (or abusive) allocations of funds. That said, I agree that they can play an incredibly important role to ecosystem growth, so the question is what is the best way to enable them? I submit that you do that by supporting and removing the barriers the projects demonstrating the most competency in doing that business development and marketing work successfully. This thread is full of projects and protocols (and users) attesting to the Velodrome Team doing just that. Indeed, Velodrome has actually onboarded more net-new protocols (20 for 3M OP) than the Governance Fund itself (18 for 7.4M OP) and did so at a fraction of the cost. That is why I think it should carry some weight when we the functional SMEs in this area say that we don’t need grants to pay us to do or subsidize the costs of the work. We need grants that have demonstrated an ability to lower the barriers of entry to the ecosystem so we can continue facilitating the growth of new protocols. As long as the ecosystem continues to grow, we can continue to self-fund the ecosystem leading marketing / biz dev efforts we’re leading while keeping the millions of dollars in incentives we’re generating focused exclusively on Optimism’s growth. That is what this grant is enabling, not liquidity mining for its own sake.
• Mingyue - No Role

  Nov. 3, 2022, 4:01 a.m.
  Why arbitrum leads L 2 s?Obviously,because of GMX.GMX now is actually arbitrum “native”.GMX leads a… Why arbitrum leads L 2 s?Obviously,because of GMX.GMX now is actually arbitrum “native”.GMX leads arbitrum’s prosperity,and others add flowers to embroidery―embellish what is already beautiful. Times go by,multichain’s protocol will also move to new chain,not only the builder’s main attention,but also the main incentives and liquity. I’m not saying multichain’s protocol is not important. I’m just want to express the significance of native protocol,which represent a chain’s core competitiveness. We need just a little more supports of native protocol,that’s the way i think to keep optimism’s long term prosperity. I’m not Point out Velodrome in particular,all competitive native protocol should be paid more attention to support it’s growth.And Velodrome’s data shows it probably could be the person who open the gate for attracting users,that why I support and believe in Velodrome.
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  • FilterBySpam: This demonstration demonstrates a lack of understanding of project token economics. GMX has a very strong token model, which makes them an advantage over other platforms. There was an arbitrary wallet check that resulted in the loss of 10,000 $OP in two months.Total OP received 13, 1480, 1638, 3699, 3195, or 10K $OP in two months, and all of them were discarded for another token the next week after being received.This explains why some people might agree with the proposal while others might not.
• Samoajoe - No Role

  Nov. 3, 2022, 4:18 a.m.
  I feel like this is an extremely good proposal, and in my opinion, anything but stays quo. I am new… I feel like this is an extremely good proposal, and in my opinion, anything but stays quo. I am new to crypto over the last 2 years, and in that time have come to very much espouse the general ethos of ethereum and its various L 2 ’s. In the last bull run Main net was essentially unusable for users such as myself, and I was hearing all about the various L 2 ’s and very hopeful for their release. I ended up bridging over to OP very early, and I hate to use this phrase. But at the time, there was nothing to do here but hope for an airdrop. The first protocol that changed my attitude about OP and it really having some lifeblood and exciting innovation, was velodrome. I was in their initial twitter spaces with them and the op team. They committed to build alongside OP for the good of the ecosystem from the very start. I recently became involved and interested in a second OP protocol, Sonne finance, that launched directly on top of velodrome, and has been aided greatly by their relationship with velodrome. In discord I have even asked the velo team about their plans to operate across other L 2 ’s as well, and imo, you will not find a team more focused and dedicated to OP as they passionately make the case for why OP is the only place they want to be. I believe some of the proliferation on arbitrum is simply a prelude to them offering similar liquidity incentives to what op has done. I do believe op incentives are performing exactly as designed, in attracting and exciting users, such as myself as well as protocols like Sonne finance, and open x, mentioned above directly through the partnership with velodrome. I understand the desire to see organic growth without the added stimulus of op liquidity incentives, however I believe at this early stage, bootstrapping of users, protocols, and liquidity are still very much pertinent goals for OP. As OP tokens must eventually be distributed anyway, what better way, than bootstrapping new users and protocols, and building general excitement around OP through partnering with one of the biggest proponents of the long term OP vision velodrome.
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• FilterBySpam - No Role

  Nov. 3, 2022, 10:30 a.m.
  This demonstration demonstrates a lack of understanding of project token economics. GMX has a very … This demonstration demonstrates a lack of understanding of project token economics. GMX has a very strong token model, which makes them an advantage over other platforms. There was an arbitrary wallet check that resulted in the loss of 10 , 000 $OP in two months.Total OP received 13 9 , 1480 3 , 1638 3 , 3699 3 , 3195 5 , or 10 K $OP in two months, and all of them were discarded for another token the next week after being received.This explains why some people might agree with the proposal while others might not.
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  • alexcutlerdoteth: FilterBySpam: There was an arbitrary wallet check that resulted in the loss of 10,000 $OP in two months.Total OP received 13 , 1480 , 1638 , 3699 , 3195 , or 10K $OP in two months, and all of them were discarded for another token the next week after being received. Great example. You are pointing to the wallet of Inverse Finance, one of the protocols that we’ve successfully onboarded to the Optimism Ecosystem from mainnet. They had no presence on Optimism prior to their granting of a veNFT, have not applied for or received a direct grant from Optimism’s Governance Fund, and are currently in the process of expanding their presence on the network. The Governance Fund to date has granted about 46,600,000 OP to 41 project at an average cost of ~1,130,000 per project attracted. You appear to trying to cast aspersions over a net-new project incentivized with about 10,000 OP over two months? That is a 113x better ROI than governance is currently getting. Did you notice what they did with the funds after swapping them? They locked their investment for 4 years in Optimism Ecosystem in the form of veVELO. This veVELO will allow them to create revenue positive liquidity programs without needing to rely on external incentives or OP grants. So we appreciate you brining it up as we think it perfect demonstrates the incredible ROI we’re delivering when it comes to onboarding new protocols to the ecosystem. If it is still something that concerns you, perhaps you could produce an example of a 10,000 OP grant producing a better value in return?
• daoism - No Role

  Nov. 3, 2022, 12:15 p.m.
  It seems the project is paying said team with protocol revenue. The grant allows continued growth, … It seems the project is paying said team with protocol revenue. The grant allows continued growth, facilitating an over-performing team to continue to deliver a high level of service to new protocols either building on Optimism, currently on-boarding or actively looking to. One could argue that some projects may not have chosen Optimism if it weren’t for the Velodrome team’s outreach, pitch and onboarding assistance; by not accelerating the current trajectory we may well stymie Opti protocol growth (of which any one could be “our GMX”). This grant, I think, directly affects Optimism’s competitiveness, not just Velodrome’s. I agree liquidity isn’t the current bottleneck; what is currently missing is a (or more than one) native ecosystem that necessitates adjacent builders to move to Optimism (Lens is a great example on Polygon; if you’re utilising a Social Graph, you have to build there). This is a business development problem; we’ve seen time and time again that dev grants alone can’t necessarily solve this, you need evangelistic, committed ecosystem-centric builders aggressively bringing in partners who they think may become foundational elements. One could argue greater funding of bizdev at Foundation level would possibly have a similar outcome, but in this case we see user on-boarding (friction reduction through bridge/infra familiarity), higher liquidity plus greater composability on top of on-the-ground focused outreach.
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• polynya - No Role

  Nov. 3, 2022, 1:45 p.m.
  I’d very much like to see proposals focused on bizdev & marketing rather than liquidity mining. I’d very much like to see proposals focused on bizdev & marketing rather than liquidity mining.
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  • alexcutlerdoteth: polynya: I’ll be following the comments, and open to reconsider - I’ll leave my vote till the last day or so as this is a contentious & important proposal. Deeply appreciate your open mindedness, ser. polynya: I’d very much like to see proposals focused on bizdev & marketing rather than liquidity mining. This is an interesting point-of-view I hadn’t really considered as an implication of your thoughts so far. For whatever it is worth, as someone who has spent most of their career working in those domains I think the Governance Fund would be wise to avoid directly subsidizing business development or marketing activities. It is a squishy space that is difficult to assess objectively and that can lead to ineffective (or abusive) allocations of funds. That said, I agree that they can play an incredibly important role to ecosystem growth, so the question is what is the best way to enable them? I submit that you do that by supporting and removing the barriers the projects demonstrating the most competency in doing that business development and marketing work successfully. This thread is full of projects and protocols (and users) attesting to the Velodrome Team doing just that. Indeed, Velodrome has actually onboarded more net-new protocols (20 for 3M OP) than the Governance Fund itself (18 for 7.4M OP) and did so at a fraction of the cost. That is why I think it should carry some weight when we the functional SMEs in this area say that we don’t need grants to pay us to do or subsidize the costs of the work. We need grants that have demonstrated an ability to lower the barriers of entry to the ecosystem so we can continue facilitating the growth of new protocols. As long as the ecosystem continues to grow, we can continue to self-fund the ecosystem leading marketing / biz dev efforts we’re leading while keeping the millions of dollars in incentives we’re generating focused exclusively on Optimism’s growth. That is what this grant is enabling, not liquidity mining for its own sake.
• alexcutlerdoteth - No Role

  Nov. 3, 2022, 1:50 p.m.
  FilterBySpam: There was an arbitrary wallet check that resulted in the loss of 10 , 000 $OP … FilterBySpam: There was an arbitrary wallet check that resulted in the loss of 10 , 000 $OP in two months.Total OP received 13 , 1480 , 1638 , 3699 , 3195 , or 10 K $OP in two months, and all of them were discarded for another token the next week after being received. Great example. You are pointing to the wallet of Inverse Finance, one of the protocols that we’ve successfully onboarded to the Optimism Ecosystem from mainnet. They had no presence on Optimism prior to their granting of a veNFT, have not applied for or received a direct grant from Optimism’s Governance Fund, and are currently in the process of expanding their presence on the network. The Governance Fund to date has granted about 46 , 600 , 000 OP to 41 project at an average cost of ~ 1 , 130 , 000 per project attracted. You appear to trying to cast aspersions over a net-new project incentivized with about 10 , 000 OP over two months? That is a 113 x better ROI than governance is currently getting. Did you notice what they did with the funds after swapping them? They locked their investment for 4 years in Optimism Ecosystem in the form of veVELO. This veVELO will allow them to create revenue positive liquidity programs without needing to rely on external incentives or OP grants. So we appreciate you brining it up as we think it perfect demonstrates the incredible ROI we’re delivering when it comes to onboarding new protocols to the ecosystem. If it is still something that concerns you, perhaps you could produce an example of a 10 , 000 OP grant producing a better value in return?
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• SonneFinance - No Role

  Nov. 3, 2022, 3:07 p.m.
  There are too many valuable comments here, but as Sonne Finance, we want to add what we think about… There are too many valuable comments here, but as Sonne Finance, we want to add what we think about the proposal and Velodrome in general. While it’s very important to investigate as deep as possible, it sometimes might lead to missing the bigger picture. Firstly, Velodrome is the point of contact for new projects. There is no better place to launch a project, while incentivizing liquidity. One of the main reasons of our launch on Optimism was Velodrome. Mingyue: It is of great significance to grant more op to native optimism protocols(i.e.Velodrome) rather than those mutichain projects such as uniswap and curve.Uniswap and curve’s boom will do very little help to optimism’s prosperous,and,their TVL is also not steady,that is to say when op grants over,those TVL would more probably move to other chains(Arbitrum,Zksync,and many other new chains) in lack of enough incentives.Only native protocol can help optimism’s big prosperous in bull market and grow up in bear market. Secondly, Velodrome is one of the few native projects out there having success on Optimism. We saw what happened when OP incentives are gone from non-native protocol: image 801 × 534 24 . 9 KB People simply farmed OP rewards, dumped them and leave. Total market size of AAVE dropped from $ 1 . 4 B to $ 400 m in just under a week. But anything Velodrome spends, is almost guaranteed to stay in the ecosystem: Lock bonus: Users have to lock veVELO for 4 years in order to get an OP bonus. They have to stay 4 years in Optimism ecosystem. Bribe matches: Another project have to put skin in the game in order to have this boost. And for that, that project needs to focus and compete with others in Optimism ecosystem, which creates a positive feedback loop for whole ecosystem. It incentivizes both project launches on Optimism and having deeper liquidity. Key Pairs: That’s where we are skeptical at, we don’t believe further incentivization of key pairs should be there. And it creates unfair advantage to some projects. Or we can argue that Sonne should be a key pair too, but it would create unfair advantage for us as well. We believe that the success of Velodrome, will lead to success of Optimism ecosystem in general. Though we have some suggestions: Decrease 1 . 5 M Locking incentives to 750 k. While it might be helpful for new users to explore Optimism ecosystem through Velodrome, spending 1 . 5 M OP to incentivize locking VELO is a bit too much. Key ecosystem pairs incentivization might not be fair for all. OP/USDC and wETH/USDC deep liquidity is important to have on-chain, but we believe other incentivizations are not necessary. Competition is what keeps action alive, and that suggestion is against fair competition. We believe that wBTC/USDC pair for example is far more important than other pairs right now. It might be decreased to 500 k OP, and only for wETH, OP and wBTC against USDC or in between. Other than that, as Sonne Finance, we hope that the proposal passes. Velodrome is playing a huge part on Optimism’s success, and we believe that it will continue to do so in the future as well.
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  • AxlVaz: SonneFinance: People simply farmed OP rewards, dumped them and leave. Total market size of AAVE dropped from $1.4B to $400m in just under a week. I believe this information you are providing is incorrect. Aave had TVL’s ATH of $600M at the beginning of August second Defillama. or am I wrong? DefiLlama DefiLlama DefiLlama is a DeFi TVL aggregator. It is committed to providing accurate data without ads or sponsored content, as well as transparency.
• Smerdyakov - No Role

  Nov. 3, 2022, 3:51 p.m.
  I’d like to speak on this “Core Liquidity” concept a bit more, I believe it needs clarification. I … I’d like to speak on this “Core Liquidity” concept a bit more, I believe it needs clarification. I am no expert in Game Theory and I am not concerned with traditional applications of these terms as much as I am in making this point as I understand it: In a decentralized marketplace there needs to be some situation that no individual project - or collection of projects - could improve upon by branching off and trying it themselves. This would simply split liquidity and, while that can have its advantages, it defeats the purpose of consolidating deep liquidity to remove unnecessary PI that deters larger swaps. But why should Velodrome be the place for this? It’s not really a matter of why, it’s a matter of because. It is because they have already taken the risks and achieved it in a capital efficient manner. They are the Core Liquidity for Optimism because they developed the best model to retain sticky liquidity. This is a proof of past performance, and regarding future developments I’m not sure what else there is to go by. I’d like to add regarding liquidity and bringing new users to Optimism: It took us about three days to review the opportunities offered by Velodrome to understand what it meant for us. The 3 BTC in value we bribed is value we brought to this chain because of Velodrome. The locking airdrops for users allow new entrants to catch up. We say this without the added benefit of receiving the airdrops as a project because we are an aggregator of veVELO and are thus not eligible. Dozens (or more) users followed us from Harmony. Some bribed out-of-pocket once they understood the capital efficiency of the opportunity. We are proud of our results but projects like OATH and SONNE have performed similar strategies to great success as well. Why emit a token with limited liquidity when you can create a speculative value proposition for it that also acts as an equitable distribution of emissions. More generally, my thoughts on the progression from veCRV → veNFT (Solidly) → Velodrome is that a large step has been taken in the formation of sustainable decentralized market-making. This growth will not produce its ripest fruit until its possibilities have been comprehended and exhausted. It will take months, perhaps years, of experimentation to bear this out. Velodrome has been wildly successful already by every measure of capital efficiency. Speaking of positive feedback loops, I know of none better than entrusting a proven good steward of their talents with more capital to exercise them. How users choose to use their bribe rewards and airdrops is of course their business. I’d only like to point out the VELO is one of the few tokens on chain that has chosen huge price exposure to the OP token itself via their highly incentivized VELO-OP pool. We may fear mercenary liquidity miners but users capable of thinking more than two weeks ahead understand the liquidity looping possibilities created by these incentives and will maximize their liquidity provision and return possibilities. Velodrome has taken the riskier proposition of betting on Optimism by exposing the value of their project to it. The very success of the VELO token is thereby inextricably linked to the good stewardship of their incentive packages.
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• alexcutlerdoteth - No Role

  Nov. 3, 2022, 4:16 p.m.
  polynya: I’ll be following the comments, and open to reconsider - I’ll leave my vote till the … polynya: I’ll be following the comments, and open to reconsider - I’ll leave my vote till the last day or so as this is a contentious & important proposal. Deeply appreciate your open mindedness, ser. polynya: I’d very much like to see proposals focused on bizdev & marketing rather than liquidity mining. This is an interesting point-of-view I hadn’t really considered as an implication of your thoughts so far. For whatever it is worth, as someone who has spent most of their career working in those domains I think the Governance Fund would be wise to avoid directly subsidizing business development or marketing activities. It is a squishy space that is difficult to assess objectively and that can lead to ineffective (or abusive) allocations of funds. That said, I agree that they can play an incredibly important role to ecosystem growth, so the question is what is the best way to enable them? I submit that you do that by supporting and removing the barriers the projects demonstrating the most competency in doing that business development and marketing work successfully. This thread is full of projects and protocols (and users) attesting to the Velodrome Team doing just that 1 . Indeed, Velodrome has actually onboarded more net-new protocols ( 20 for 3 M OP) than the Governance Fund itself ( 18 for 7 . 4 M OP) and did so at a fraction of the cost. That is why I think it should carry some weight when we the functional SMEs in this area say that we don’t need grants to pay us to do or subsidize the costs of the work. We need grants that have demonstrated an ability to lower the barriers of entry to the ecosystem so we can continue facilitating the growth of new protocols. As long as the ecosystem continues to grow, we can continue to self-fund the ecosystem leading marketing / biz dev efforts we’re leading while keeping the millions of dollars in incentives we’re generating focused exclusively on Optimism’s growth. That is what this grant is enabling, not liquidity mining for its own sake.
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  • alexcutlerdoteth: forrest: I voted Against this proposal. forrest: Disclosure: I co-founded a different Optimism DEX so consider me biased Fair enough. I actually didn’t realize you were a Rubicon founder. I think an abstention in that case might be more appropriate, but there is no rule that you can’t vote down a fellow DEX so that’s your call. For the record, if Rubicon can come back showing that they have delivered same kind of growth multiples on your 900,000 OP grant I promise we’ll be first in line to show support for your next proposal. forrest: This Grant would be 1.72% of Optimism’s Governance Fund and would grow the circulating supply of the OP token by 1.86%. This is significant, and I do not appreciate Velodrome team members trying to say otherwise. We are talking about millions of $ here: Since you raised this again, I’ll want to make sure reemphasize all our responses that put the size of our ask in proper context so people don’t the wrong idea. Our ask is significantly smaller than those distributed to date by the Governance Fund relative to key KPIs: tao: As a share of the Optimism ecosystem, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of the Governance Fund. tao: 98% less than average OP granted per $ in TVL 80% less than median OP granted per $ in TVL 98% less than average OP granted per $ in Volume 65% less than median OP granted per $ in Volume 98% less than average OP granted per transaction 86% less than the median OP granted per transaction 91% less than the average OP granted per user 51% less than the median OP granted per user Velodrome is offering 31x the co-incentives of other DEX projects combined while only asking for 1.6x larger grant. alexcutlerdoteth: Velodrome Total Grant: 7,000,000 OP Total Co-Incentives: $12,500,000 Total Projects Supported: 29 Total Projected ROI: 2x-3x (minimum) Other DEX Protocols: Total Grant: 4,240,000 OP Total Co-Incentives: $360,000 (estimated) Total Projects Supported: 9 Total Projected ROI: TBD Our grant request is oriented towards continuing activities that have a proven ability to return 2x-3x the underlying value of grant: tao: $6M+ VELO liquidity incentives distributed into the ecosystem (2-3x OP grant) 30+ new protocols onboarded and supported with liquidity growth in ecosystem 30-70% reduction in liquidity incentive costs per $ TVL for ecosystem partners $5M+ liquidity of OP token pairs, creating $1B in volume $1M+ in protocol revenue returned to veVELO lockers (primarily protocols) $10M+ value locked as veVELO (70% of total) locked into the Optimism for ~3.5ys $250k veVELO airdrop for OP Team, $2M veVELO airdrop to ecosystem partners alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. Our grant is dramatically over performing Governance Fund grants to date: alexcutlerdoteth: According to the Foundations analysis of grants to date, the 42.6M OP granted thus far has earned: A 100% increase in transactions at a cost of 676 OP per incremental transaction A 74% increase in TVL (60M) at a cost of about .3 OP per incremental dollar In contrast, Velodrome’s grant of 3M OP from OPLabs has thus far earned: A 100% increase in transactions, at a cost of 40 OP per incremental transaction A 400% increase in TVL ($65M), at a cost of .03 OP per incremental dollar alexcutlerdoteth: Indeed, Velodrome has actually onboarded more net-new protocols (20 for 3M OP) than the Governance Fund itself (18 for 7.4M OP) and did so at a fraction of the cost. In short, the grant only looks large if you ignore baselines in terms of KPIs, massive co-investment, or demonstrated ROI multiples it has delivered. It remains significantly smaller in actual dollar terms than the one originally given to us by OPLabs. Repeatedly suggesting “it is too big” without directly engaging in this context isn’t constructive, especially from someone who received their own incredibly generous grant but has yet to produce evidence of similar returns.
• AxlVaz - No Role

  Nov. 3, 2022, 4:23 p.m.
  SonneFinance: People simply farmed OP rewards, dumped them and leave. Total market size of AAV… SonneFinance: People simply farmed OP rewards, dumped them and leave. Total market size of AAVE dropped from $ 1 . 4 B to $ 400 m in just under a week. I believe this information you are providing is incorrect. Aave had TVL’s ATH of $ 600 M at the beginning of August second Defillama. or am I wrong? DefiLlama DefiLlama 3 DefiLlama is a DeFi TVL aggregator. It is committed to providing accurate data without ads or sponsored content, as well as transparency.
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• SonneFinance - No Role

  Nov. 3, 2022, 4:32 p.m.
  That’s TVL, not Total Market Size. Just to add to this: $ 1 . 4 B total market size with $ 1 B bor… That’s TVL, not Total Market Size. Just to add to this: $ 1 . 4 B total market size with $ 1 B borrows $ 400 M total market size with $ 0 borrows are equal in $ 400 M TVL. We believe that TVL alone is not the best metric to evaluate liquidity markets. But it’s velodrome’s proposal, so let’s leave the discussion to another time sir.
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• AxlVaz - No Role

  Nov. 3, 2022, 5:14 p.m.
  I got carried away by the image tag “TVL Chart”. It was a quick response. I got carried away by the image tag “TVL Chart”. It was a quick response.
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• linda - No Role

  Nov. 4, 2022, 2:06 a.m.
  I’m going to be consistent with my DeFi committee A decision and vote abstain. For me personally, t… I’m going to be consistent with my DeFi committee A decision and vote abstain. For me personally, the amount requested was extremely high but also I definitely appreciated seeing the results so far so I didn’t feel strongly to vote a yes or no given these factors and that we don’t have a group focused on project grant accountability for the governance fund yet (especially needed for an amount this high IMO).
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  • DanieleSalatti: linda: […] the amount requested was extremely high but also I definitely appreciated seeing the results so far so I didn’t feel strongly to vote a yes or no given these factors and that we don’t have a group focused on project grant accountability for the governance fund yet (especially needed for an amount this high IMO) This is pretty much my position right now. Just like @polynya I am going to wait before I vote on this since the amount at stake is high and the community doesn’t seem to be aligned. I want to allow for a couple more days of discussion. I am going to be honest though: at the moment, the entity of the amount requested and the back and forth on this thread makes me want to lean towards a vote against this proposal. A vote against is a two way door (a new proposal can be submitted and discussed with more time), a vote for is not.
• cryptoharry - No Role

  Nov. 4, 2022, 3:05 a.m.
  Hi all, I’m cryptoharry, Head of the Treasury Working Group at Inverse Finance DAO. This thread is … Hi all, I’m cryptoharry, Head of the Treasury Working Group at Inverse Finance DAO. This thread is extremely in-depth, with a lot of high-quality arguments from both sides - I’d like to share a few thoughts from myself. Velodrome onboarded our protocol to the Optimism Ecosystem by offering us a veNFT at their launch. I have nothing but great things to say about the team at Velodrome, they have been a pleasure to work with so far. Bringing our decentralized stablecoin, DOLA, across to Optimism has so far been a success, and we have already begun building (first smart contract on optimism besides our token deployed a couple of weeks ago!). I notice that someone previously cited our DAO Multisig Wallet executing a few swaps of OP → VELO, I’d like to highlight that our many swaps of USDC (bridged from Ethereum L 1 ) to VELO (to be locked for 4 years) were excluded, you can see over $ 20 k in transactions here and plenty more to come! As Alex highlighted above, the OP incentivisation that we have received from Velodrome (around 10 k) has not only helped onboard us, but led to us investing significantly more $ than received and building on the chain. I believe that this behaviour will be replicated with other protocols as a result of Velodrome’s strategy. I am in full support of Velodrome receiving what they have requested, I am confident that they are one of the best-placed projects in the ecosystem to help turbocharge the continual growth of Optimism as a successful L 2 . At Inverse, we have a lot of potential for big plans on the chain, so it’s in our interest for the ecosystem to be as active/successful as possible.
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• Justin - No Role

  Nov. 4, 2022, 4:49 a.m.
  good proposal. support this. good proposal. support this.
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• Lumisticat - No Role

  Nov. 4, 2022, 8:35 a.m.
  Great proposal with Velodrome :+ 1 : Great proposal with Velodrome :+ 1 :
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• forrest - No Role

  Nov. 4, 2022, 4:09 p.m.
  I voted Against this proposal. I tried to follow this discussion closely after my initial comment b… I voted Against this proposal. I tried to follow this discussion closely after my initial comment but my concerns remain the same. This Grant would be 1 . 72 % of Optimism’s Governance Fund and would grow the circulating supply of the OP token by 1 . 86 %. This is significant, and I do not appreciate Velodrome team members trying to say otherwise. We are talking about millions of $ here: alexcutlerdoteth: In other words, I think the ask only looks big in a vacuum. Velodrome’s current traction is great but if anything proves to me that they have already achieved a network effect and do not require millions more from the Optimism Treasury to establish themselves, it seems they can accomplish all of the goals outlined in this proposal without the grant: polynya: I’m sure the project will continue to thrive even without the subsidies; arguably also reach a self-sustainable state sooner. Separately, I am not sure what kind of message it sends that the DeFi Committee decided to Abstain in a Recommendation on a ~$ 5 . 5 million grant. This is a pretty significant treasury move. Disclosure: I co-founded a different Optimism DEX so consider me biased
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  • alexcutlerdoteth: forrest: I voted Against this proposal. forrest: Disclosure: I co-founded a different Optimism DEX so consider me biased Fair enough. I actually didn’t realize you were a Rubicon founder. I think an abstention in that case might be more appropriate, but there is no rule that you can’t vote down a fellow DEX so that’s your call. For the record, if Rubicon can come back showing that they have delivered same kind of growth multiples on your 900,000 OP grant I promise we’ll be first in line to show support for your next proposal. forrest: This Grant would be 1.72% of Optimism’s Governance Fund and would grow the circulating supply of the OP token by 1.86%. This is significant, and I do not appreciate Velodrome team members trying to say otherwise. We are talking about millions of $ here: Since you raised this again, I’ll want to make sure reemphasize all our responses that put the size of our ask in proper context so people don’t the wrong idea. Our ask is significantly smaller than those distributed to date by the Governance Fund relative to key KPIs: tao: As a share of the Optimism ecosystem, Velodrome represents 10% of TVL, 12% of transaction volume, 16% of transactions, and 13% of users, while requesting 1.72% of the Governance Fund. tao: 98% less than average OP granted per $ in TVL 80% less than median OP granted per $ in TVL 98% less than average OP granted per $ in Volume 65% less than median OP granted per $ in Volume 98% less than average OP granted per transaction 86% less than the median OP granted per transaction 91% less than the average OP granted per user 51% less than the median OP granted per user Velodrome is offering 31x the co-incentives of other DEX projects combined while only asking for 1.6x larger grant. alexcutlerdoteth: Velodrome Total Grant: 7,000,000 OP Total Co-Incentives: $12,500,000 Total Projects Supported: 29 Total Projected ROI: 2x-3x (minimum) Other DEX Protocols: Total Grant: 4,240,000 OP Total Co-Incentives: $360,000 (estimated) Total Projects Supported: 9 Total Projected ROI: TBD Our grant request is oriented towards continuing activities that have a proven ability to return 2x-3x the underlying value of grant: tao: $6M+ VELO liquidity incentives distributed into the ecosystem (2-3x OP grant) 30+ new protocols onboarded and supported with liquidity growth in ecosystem 30-70% reduction in liquidity incentive costs per $ TVL for ecosystem partners $5M+ liquidity of OP token pairs, creating $1B in volume $1M+ in protocol revenue returned to veVELO lockers (primarily protocols) $10M+ value locked as veVELO (70% of total) locked into the Optimism for ~3.5ys $250k veVELO airdrop for OP Team, $2M veVELO airdrop to ecosystem partners alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $3.8m. But rather, it will return at least $7.6m to $11.4m in value based on the demonstrated performance of the original grant. Our grant is dramatically over performing Governance Fund grants to date: alexcutlerdoteth: According to the Foundations analysis of grants to date, the 42.6M OP granted thus far has earned: A 100% increase in transactions at a cost of 676 OP per incremental transaction A 74% increase in TVL (60M) at a cost of about .3 OP per incremental dollar In contrast, Velodrome’s grant of 3M OP from OPLabs has thus far earned: A 100% increase in transactions, at a cost of 40 OP per incremental transaction A 400% increase in TVL ($65M), at a cost of .03 OP per incremental dollar alexcutlerdoteth: Indeed, Velodrome has actually onboarded more net-new protocols (20 for 3M OP) than the Governance Fund itself (18 for 7.4M OP) and did so at a fraction of the cost. In short, the grant only looks large if you ignore baselines in terms of KPIs, massive co-investment, or demonstrated ROI multiples it has delivered. It remains significantly smaller in actual dollar terms than the one originally given to us by OPLabs. Repeatedly suggesting “it is too big” without directly engaging in this context isn’t constructive, especially from someone who received their own incredibly generous grant but has yet to produce evidence of similar returns.
• beachcan - No Role

  Nov. 4, 2022, 4:15 p.m.
  hi, please allow me quote this seemingly overlooked list: tao: This proposal has the support o… hi, please allow me quote this seemingly overlooked list: tao: This proposal has the support of: Abracadabra Alchemix Angle Protocol Beefy Finance Byte Masons dForce Hop Protocol Inverse Finance Liquidity Protocol QiDAO Optimism Prime Overnight Finance Revest Finance Sonne Finance Synthetix Ambassadors Synthetix Treasury Council Tarot Finance Yearn Finance (more coming) those are builders, the lot of them. they are the ones building on OP city, and Velodrome helped onboard them as efficiently as possible. the earliest developers on OP city - a fresh, new city on blockchain land - are trying to make a point. please, let’s try to hear them out. i would also add to that list the commoners of OP city (retail) such as myself. individually we might be small, but look at us collectively and you are looking at arguably the most committed group of citizens in OP city. we are in it for the long haul. and i thank Velodrome for providing us with a great DeFi playground for the next 4 years+. looking forward to more swings and slides, along with more neighbors to play with!
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• alexcutlerdoteth - No Role

  Nov. 4, 2022, 5:25 p.m.
  forrest: I voted Against this proposal. forrest: Disclosure: I co-founded a different O… forrest: I voted Against this proposal. forrest: Disclosure: I co-founded a different Optimism DEX so consider me biased Fair enough. I actually didn’t realize you were a Rubicon founder. I think an abstention in that case might be more appropriate, but there is no rule that you can’t vote down a fellow DEX so that’s your call. For the record, if Rubicon can come back showing that they have delivered same kind of growth multiples on your 900 , 000 OP grant I promise we’ll be first in line to show support for your next proposal. forrest: This Grant would be 1 . 72 % of Optimism’s Governance Fund and would grow the circulating supply of the OP token by 1 . 86 %. This is significant, and I do not appreciate Velodrome team members trying to say otherwise. We are talking about millions of $ here: Since you raised this again, I’ll want to make sure reemphasize all our responses that put the size of our ask in proper context so people don’t the wrong idea. Our ask is significantly smaller than those distributed to date by the Governance Fund relative to key KPIs: tao: As a share of the Optimism ecosystem, Velodrome represents 10 % of TVL, 12 % of transaction volume, 16 % of transactions, and 13 % of users, while requesting 1 . 72 % of the Governance Fund. tao: 98 % less than average OP granted per $ in TVL 80 % less than median OP granted per $ in TVL 98 % less than average OP granted per $ in Volume 65 % less than median OP granted per $ in Volume 98 % less than average OP granted per transaction 86 % less than the median OP granted per transaction 91 % less than the average OP granted per user 51 % less than the median OP granted per user Velodrome is offering 31 x the co-incentives of other DEX projects combined while only asking for 1 . 6 x larger grant. alexcutlerdoteth: Velodrome Total Grant: 7 , 000 , 000 OP Total Co-Incentives: $ 12 , 500 , 000 Total Projects Supported: 29 Total Projected ROI: 2 x- 3 x (minimum) Other DEX Protocols: Total Grant: 4 , 240 , 000 OP Total Co-Incentives: $ 360 , 000 (estimated) Total Projects Supported: 9 Total Projected ROI: TBD Our grant request is oriented towards continuing activities that have a proven ability to return 2 x- 3 x the underlying value of grant: tao: $ 6 M+ VELO liquidity incentives distributed into the ecosystem ( 2 - 3 x OP grant) 30 + new protocols onboarded and supported with liquidity growth in ecosystem 30 - 70 % reduction in liquidity incentive costs per $ TVL for ecosystem partners $ 5 M+ liquidity of OP token pairs, creating $ 1 B in volume $ 1 M+ in protocol revenue returned to veVELO lockers (primarily protocols) $ 10 M+ value locked as veVELO ( 70 % of total) locked into the Optimism for ~ 3 . 5 ys $ 250 k veVELO airdrop for OP Team, $ 2 M veVELO airdrop to ecosystem partners alexcutlerdoteth: It would behoove us not to think of it in terms of this will cost $ 3 . 8 m. But rather, it will return at least $ 7 . 6 m to $ 11 . 4 m in value based on the demonstrated performance of the original grant. Our grant is dramatically over performing Governance Fund grants to date: alexcutlerdoteth: According to the Foundations analysis of grants to date, the 42 . 6 M OP granted thus far has earned: A 100 % increase in transactions at a cost of 676 OP per incremental transaction A 74 % increase in TVL ( 60 M) at a cost of about . 3 OP per incremental dollar In contrast, Velodrome’s grant of 3 M OP from OPLabs has thus far earned: A 100 % increase in transactions, at a cost of 40 OP per incremental transaction A 400 % increase in TVL ($ 65 M), at a cost of . 03 OP per incremental dollar alexcutlerdoteth: Indeed, Velodrome has actually onboarded more net-new protocols ( 20 for 3 M OP) than the Governance Fund itself ( 18 for 7 . 4 M OP) and did so at a fraction of the cost. In short, the grant only looks large if you ignore baselines in terms of KPIs, massive co-investment, or demonstrated ROI multiples it has delivered. It remains significantly smaller in actual dollar terms than the one originally given to us by OPLabs. Repeatedly suggesting “it is too big” without directly engaging in this context isn’t constructive, especially from someone who received their own incredibly generous grant but has yet to produce evidence of similar returns.
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• OPUser - No Role

  Nov. 4, 2022, 5:43 p.m.
  Voted Against. [READY][GF: Phase 1 Proposal] Velodrome Finance Governance Fund: Phase 1 … Voted Against. [READY][GF: Phase 1 Proposal] Velodrome Finance Governance Fund: Phase 1 This is absolutely not what I am suggesting. Its a free market and a user/protocol can do what ever they want with their fund. But I am not supporting subsiding buying and locking protocol native token with gov fund. I was referring to this data(Edit 1 :- this was initial twit, actual distribution was different, more info in comments below) . Gonna keep both for readers to make an informed decision. again, I am glad we had this conversation at early stage. But I see we are repeating the same… [READY][GF: Phase 1 Proposal] Velodrome Finance Governance Fund: Phase 1 Example:- I have 100 K in $USD some veCRV and veVelo. Case 1 : Existing veToken holder Curve - As a existing holder of veCRV, I will get reward depending on the amount I hold and how I vote. Velo - same as above Case 2 : New user Curve - I can use 100 K $USD to acquire more CRV, lock it to get more veCRV. My voting power increase resulting in more reward and my principle amount is locked in form new veCRV. Velo - Same as above, + I will get some % of my principle money back in form of $… Apart from my major concern of spending 1 . 5 M $OP to subsidies price of Native project token. What I would like to see from proposal requesting second grant:- More focused towards protocol integration Approach mentioned here is cost effective but only short lived, integration takes time but it has a long lasting benefits. If distribution plan is similar to first one, I would at least suggest to keep a time gap between two proposals or reduce the ask by 30 - 40 % compare to first proposal.
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  • alexcutlerdoteth: OPUser: Voted Against. Fair enough. OPUser: Apart from my major concern of spending 1.5M $OP to subsidies price of Native project token. We debunked this claim with data/evidence multiple times and multiple ways. OPUser: More focused towards protocol integration Approach mentioned here is cost effective but only short lived, integration takes time but it has a long lasting benefits. We’ve onboarded and integrated with more protocols than any other single entity in the ecosystem. Thank you for your consideration.
• alexcutlerdoteth - No Role

  Nov. 4, 2022, 6:11 p.m.
  OPUser: Voted Against. Fair enough. OPUser: Apart from my major concern of spending 1 … OPUser: Voted Against. Fair enough. OPUser: Apart from my major concern of spending 1 . 5 M $OP to subsidies price of Native project token. We debunked this claim with data/evidence multiple times and multiple ways. OPUser: More focused towards protocol integration Approach mentioned here is cost effective but only short lived, integration takes time but it has a long lasting benefits. We’ve onboarded and integrated with more protocols than any other single entity in the ecosystem 1 . Screenshot 2022 - 11 - 04 at 12 . 49 . 07 PM 2074 × 938 141 KB Thank you for your consideration. :v:
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• hank - No Role

  Nov. 4, 2022, 7:21 p.m.
  Looking good :+ 1 : One of the most complete and beneficial proposals on optimism. Without on chain… Looking good :+ 1 : One of the most complete and beneficial proposals on optimism. Without on chain liquidity there is no success for the cain. Velodrome have created a liquidity machine.
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• DanieleSalatti - No Role

  Nov. 4, 2022, 8:08 p.m.
  linda: […] the amount requested was extremely high but also I definitely appreciated seeing th… linda: […] the amount requested was extremely high but also I definitely appreciated seeing the results so far so I didn’t feel strongly to vote a yes or no given these factors and that we don’t have a group focused on project grant accountability for the governance fund yet (especially needed for an amount this high IMO) This is pretty much my position right now. Just like @polynya I am going to wait before I vote on this since the amount at stake is high and the community doesn’t seem to be aligned. I want to allow for a couple more days of discussion. I am going to be honest though: at the moment, the entity of the amount requested and the back and forth on this thread makes me want to lean towards a vote against this proposal. A vote against is a two way door (a new proposal can be submitted and discussed with more time), a vote for is not.
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  • OPUser: DanieleSalatti: A vote against is a two way door (a new proposal can be submitted and discussed with more time), a vote for is not. I wish somehow we could pin this so that many user could see.
  • alexcutlerdoteth: Hey @DanieleSalatti Appreciate you giving us a sense of where your head is at. Hope you’ll indulge me probing on your thinking just a little bit more. DanieleSalatti: since the amount at stake is high Can you give us an idea of what you’d need to see to convince you that the ask wasn’t actually high in any kind of comparative terms to other grants? Including those active up for votes at this moment? We’ve tried to break this down any number of different ways. DanieleSalatti: community doesn’t seem to be aligned Can you give us an idea of what would convince you that community is actually fairly aligned? We’ve done qualitative analysis on the commenters on this proposal and found 65% of them (24 total) to be positive with just 22% of them negative (8 total, 40% new accounts). This is mirrored pretty closely in the current voting where 55% of voters have voted yes (2636 total) where just 10% have against (515 total). You’ll also notice that over 20 protocols and builders are supporting our proposal as wel. There is certainly a vocal minority opposed, but surely we need tools to see the bigger picture. DanieleSalatti: A vote against is a two way door (a new proposal can be submitted and discussed with more time), a vote for is not. This I would push back on a bit. A vote against is almost certainly a vote to put an indefinite end on what is arguably the most effective incentive program currently active as there is currently no timeline for “Season 3”. The Optimism Foundation has already hinted that big changes are coming, so really no one knows when a new proposal could conceivably be put up for review let alone be approved/implemented. The protocols we’re actively onboarding to the ecosystem (32 already and another 12 or so in the pipeline) need the ability carefully plan and model their expansion and investment in Optimism. The reliability and consistency of incentives is critical to that as builders like @TokenBrice, @cryptoharry, @Smerdyakov, and others have expressed in this discussion. Letting incentives lapse would not come without a significant cost and risks stalling the hard earned momentum we’ve built. I will also note that this really isn’t a lump-sum grant of 4M OP. It is a grant of 2M that gives governance the option of ending the program at the three month mark if they are not pleased with the results per the mechanism we designed with @Katie. Extending existing programs that have proven their effectiveness for three more months while securing our commitment to pump $6.5M in stimulus exclusively into the Optimism ecosystem feels far less risky than letting the program lapse. I will also add that this process is incredibly intensive and has taken our team away from the core work of our protocol for weeks on end now. I think we can deliver a lot more value if we can put our attention back on onboarding another protocols, not spending all of our time trying to persuade delegates of our value.
• OPUser - No Role

  Nov. 4, 2022, 8:10 p.m.
  DanieleSalatti: A vote against is a two way door (a new proposal can be submitted and discusse… DanieleSalatti: A vote against is a two way door (a new proposal can be submitted and discussed with more time), a vote for is not. I wish somehow we could pin this so that many user could see.
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• alexcutlerdoteth - No Role

  Nov. 4, 2022, 9:07 p.m.
  Hey @DanieleSalatti Appreciate you giving us a sense of where your head is at. Hope you’ll indulge … Hey @DanieleSalatti Appreciate you giving us a sense of where your head is at. Hope you’ll indulge me probing on your thinking just a little bit more. DanieleSalatti: since the amount at stake is high Can you give us an idea of what you’d need to see to convince you that the ask wasn’t actually high in any kind of comparative terms to other grants? Including those active up for votes at this moment? We’ve tried to break this down any number of different ways. DanieleSalatti: community doesn’t seem to be aligned Can you give us an idea of what would convince you that community is actually fairly aligned? We’ve done qualitative analysis on the commenters on this proposal and found 65 % of them ( 24 total) to be positive with just 22 % of them negative ( 8 total, 40 % new accounts). This is mirrored pretty closely in the current voting where 55 % of voters have voted yes ( 2636 total) where just 10 % have against ( 515 total). You’ll also notice that over 20 protocols and builders are supporting our proposal as wel. There is certainly a vocal minority opposed, but surely we need tools to see the bigger picture. DanieleSalatti: A vote against is a two way door (a new proposal can be submitted and discussed with more time), a vote for is not. This I would push back on a bit. A vote against is almost certainly a vote to put an indefinite end on what is arguably the most effective incentive program currently active as there is currently no timeline for “Season 3 ”. The Optimism Foundation has already hinted that big changes are coming, so really no one knows when a new proposal could conceivably be put up for review let alone be approved/implemented. The protocols we’re actively onboarding to the ecosystem ( 32 already and another 12 or so in the pipeline) need the ability carefully plan and model their expansion and investment in Optimism. The reliability and consistency of incentives is critical to that as builders like @TokenBrice, @cryptoharry, @Smerdyakov, and others have expressed in this discussion. Letting incentives lapse would not come without a significant cost and risks stalling the hard earned momentum we’ve built. I will also note that this really isn’t a lump-sum grant of 4 M OP. It is a grant of 2 M that gives governance the option of ending the program at the three month mark if they are not pleased with the results per the mechanism we designed with @Katie. Extending existing programs that have proven their effectiveness for three more months while securing our commitment to pump $ 6 . 5 M in stimulus exclusively into the Optimism ecosystem feels far less risky than letting the program lapse. I will also add that this process is incredibly intensive and has taken our team away from the core work of our protocol for weeks on end now. I think we can deliver a lot more value if we can put our attention back on onboarding another protocols, not spending all of our time trying to persuade delegates of our value.
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• katie - No Role

  Nov. 4, 2022, 10:12 p.m.
  Voted yes - It seems like one of the main concerns around this proposal is grant size, which is und… Voted yes - It seems like one of the main concerns around this proposal is grant size, which is understandable because this is a large request. However, only half of the funds will be distributed up front, with the second half being contingent upon an efficacy report at the 2 . 5 month mark which I feel has been overlooked (see below). This circumvents the issue of the team having to submit another proposal and go through this extremely labor intensive process (as shown by the 176 comments as of writing this) but also includes the accountability component which has been missing from previous proposals. tao: Based on feedback from key delegates and Optimism governance participants, we propose staging the delivery of the grant to allow for evaluation of its effectiveness. Details as follows: Maintain grant amount as outlined above, but deliver only half of the funds up front. Deliver a full report on efficacy at the 2 . 5 month mark, to be submitted directly to governance Upon delivery of the report, open a 2 week window where anyone in governance can raise a proposal that, upon two delegate approvals, can proceed direct to snapshot to suspend further grant payments If none are submitted, funding continues The Velodrome team has been extremely successful with growing the ecosystem (which is the purpose of the governance fund) with their previous grant as shown extensively by data and metrics. This is an impressive grant performance, backed by verifiable numbers and data. We should be rewarding teams that are building on Optimism. None of the funds requested are going to any internal operational costs, this grant is 100 % focused on bootstrapping liquidity, lowering barriers to entry, and acquiring new users, which again, is the purpose of the governance fund. I would also like to point out that the Velodrome has responded to every single concern raised with a thoughtful response backed by numbers, facts and technical analysis. There has clearly been a massive amount of effort on the Velodrome team to address concerns and move this proposal forward which should not be taken lightly. I would encourage others to look past the grant size and focus on the data and metrics that have shown the success of this project so far. These are the types of grants and projects the governance fund should be supporting imo.
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• bobby - This user is a moderator

  Nov. 5, 2022, 1:34 a.m.
  Hi folks — regarding the discussion around accuracy of Velo’s metrics: want to draw your attention … Hi folks — regarding the discussion around accuracy of Velo’s metrics: want to draw your attention to these summaries from OP Labs’ analytics team on Velo’s affect on TVL. twitter.com Michael Silberling ?✨ 7 @MSilb 7 Where does this value go? (h/t DeFiLlama again for the API) Since their respective OP Summer programs were announced: - Velodrome: +$ 89 M net inflows - PoolTogether: +$ 25 . 8 M - Lyra: +$ 8 M - Rubicon: +$ 1 . 8 M Then on Aug 4 , Aave’s program launched, bringing in +$ 240 M in on Day 1 https://t.co/cLjSSBLQsn 3 : 53 PM - 5 Aug 2022 8 twitter.com Michael Silberling ?✨ 8 @MSilb 7 Re-Sharing - Net Flows In/Out of DeFi Apps on Optimism since OP rewards announcements (@DefiLlama API): msilb 7 .github.io/msilb 7 -crypto-… v interesting now that programs are maturing and/or ending: - @AaveAave +$ 255 M - @VelodromeFi +$ 52 M - @StargateFinance +$ 42 M - @PoolTogether_ +$ 34 M https://t.co/fuBNCZmb 6 s 2 : 06 PM - 4 Nov 2022 29 2
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• polynya - No Role

  Nov. 5, 2022, 2:11 a.m.
  Good to see some numbers from a neutral source. I think this is more evidence that liquidity mining… Good to see some numbers from a neutral source. I think this is more evidence that liquidity mining programs are beneficial to boostrap some initial liquidity, but after the initial couple of weeks it’s best to let the protocols organically find their equilibrium. As such, we should focus more on user onboarding and diverse activity, rather than liquidity mining and chasing TVLs repeatedly - particularly given other factors like the high risk of Optimism’s current centralized state. Earlier, I had written my personal guidelines for what would qualify a project for a repeat grant: Polynya - Delegate Communication Thread - :classical_building: Governance / Delegate Updates - Optimism Collective 5 Having mulled over it, Velodrome does not meet my criteria. a) Rises in liquidity and adoption was largely frontloaded in July & August and growth has flatlined over time. Even if it had continued growing linearly, I would expect a gradual wind-down of incentives over time. b) Time has not passed yet without incentives to assess the effects. And c) there’s no new approaches - it’s still mostly about liquidity irrespective of adjacent narratives. As such, I have now voted Against. I’ll be following along the conversation, and I’ll be open to changing my vote to Abstain if more compelling arguments emerge. My hope would be to assess the effects of Velodrome without incentives, and to see a more compelling proposal in the future based on a) what’s learned from that and b) new strategies to onboard users beyond focusing on liquidity - already been there, done that with the first grant. If the vote passes, I would expect significant increase in activity on Velodrome & the wider Optimism community versus what has come before. If all I see is status quo or mild growth, it’s not good enough for a repeat grant.
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  • alexcutlerdoteth: gm ser polynya: we should focus more on user onboarding and diverse activity This seems to be our biggest disconnect. This is exactly what we think we are doing and we’ve been trying to demonstrate that we’re doing it more effectively and efficiently than (possibly) anyone else. Can you describe what kind data or evidence you’d need to see to persuade you on this point? polynya: If all I see is status quo or mild growth, it’s not good enough for a repeat grant. To be honest, this hurts. We’ve driven more growth than any grant to date across nearly every KPI while attracting more net-new protocols to Optimism (20) than the entirety of the Governance Fund (18). And we’ve done so with a fraction of the funds distributed by this body (ostensibly) to drive ecosystem growth. To have a delegate of your stature call that kind of impact “mild” is frankly a bit chilling.
  • tao: @polynya, Upstream of user onboarding is development on the ecosystem. Our focus from day 1 has been to attract talent to come build on Optimism, and tbh we’ve done an excellent job. Just look at the teams we’re working with, including many of which have taken the time to express their support in this proposal. This grant is designed to incentivize protocols first and foremost by rewarding projects that take a stake in the ecosystem (bribing and/or locking). We believe that by increasing the diversity of protocols on Optimism, we’ll be able to accelerate the overall network flywheel of more users > more protocols > more users. But onboarding protocols takes time. Our ask here is to extend a program that has had incredible success attracting teams willing to build. We’re in active communication with dozens of teams that are planning to launch on Optimism or have already done so through us. Consider the case of Sonne Finance, a protocol with >$28M TVL and growing. They leveraged Velodrome’s mechanics to design a sustainable token launch strategy: Paired USDC raised from TGE to create SONNE-USDC LP Staked SONNE-USDC LP on Velodrome and bribed the pool with more SONNE Redirected VELO emissions collected from their staked LP to their own platform as rewards By redirecting VELO rewards, they were able to majorly reduce their SONNE burn rate during a crucial period and demonstrated that Velodrome really is a base layer protocol. This is the type of novelty we want to enable. I believe we’ll see similar fascinating experiments arise over the next few months.
• alexcutlerdoteth - No Role

  Nov. 5, 2022, 2:09 p.m.
  gm ser polynya: we should focus more on user onboarding and diverse activity This seems to b… gm ser polynya: we should focus more on user onboarding and diverse activity This seems to be our biggest disconnect. This is exactly what we think we are doing and we’ve been trying to demonstrate that we’re doing it more effectively and efficiently than (possibly) anyone else. Can you describe what kind data or evidence you’d need to see to persuade you on this point? polynya: If all I see is status quo or mild growth, it’s not good enough for a repeat grant. To be honest, this hurts. We’ve driven more growth than any grant to date across nearly every KPI while attracting more net-new protocols to Optimism ( 20 ) than the entirety of the Governance Fund ( 18 ). And we’ve done so with a fraction of the funds distributed by this body (ostensibly) to drive ecosystem growth. To have a delegate of your stature call that kind of impact “mild” is frankly a bit chilling.
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  • polynya: alexcutlerdoteth: To have a delegate of your stature call that kind of impact “mild” is frankly a bit chilling. I was talking about a future scenario if the proposal is approved, apologies if it’s poorly worded. If the vote passes, I would expect significant increase in activity on Velodrome & the wider Optimism community versus what has come before. If all I see is status quo or mild growth, it’s not good enough for a repeat grant. Perhaps better wording would be “it would have proven to not be good enough for a repeat grant”
• tao - No Role

  Nov. 5, 2022, 3:50 p.m.
  @polynya, Upstream of user onboarding is development on the ecosystem. Our focus from day 1 has b… @polynya, Upstream of user onboarding is development on the ecosystem. Our focus from day 1 has been to attract talent to come build on Optimism, and tbh we’ve done an excellent job. Just look at the teams we’re working with, including many of which have taken the time to express their support in this proposal. This grant is designed to incentivize protocols first and foremost by rewarding projects that take a stake in the ecosystem (bribing and/or locking). We believe that by increasing the diversity of protocols on Optimism, we’ll be able to accelerate the overall network flywheel of more users > more protocols > more users. But onboarding protocols takes time. Our ask here is to extend a program that has had incredible success attracting teams willing to build. We’re in active communication with dozens of teams that are planning to launch on Optimism or have already done so through us. Consider the case of Sonne Finance, a protocol with >$ 28 M TVL and growing. They leveraged Velodrome’s mechanics to design a sustainable token launch strategy: Paired USDC raised from TGE to create SONNE-USDC LP Staked SONNE-USDC LP on Velodrome and bribed the pool with more SONNE Redirected VELO emissions collected from their staked LP to their own platform as rewards image 1920 × 1080 54 . 7 KB By redirecting VELO rewards, they were able to majorly reduce their SONNE burn rate during a crucial period and demonstrated that Velodrome really is a base layer protocol. This is the type of novelty we want to enable. I believe we’ll see similar fascinating experiments arise over the next few months.
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• Romy - No Role

  Nov. 5, 2022, 4:48 p.m.
  Hey Guys! Romy from https://abracadabra.money/ here! I just wanted to share our experience on how a… Hey Guys! Romy from https://abracadabra.money/ here! I just wanted to share our experience on how amazing was our experience with Velodrome. Velodrome was the first project we dealt with when coming to Optimism, and not only they were super helpful in helping us understand better how to join the community, but they also been extremely supportive in brining $MIM liquidity. If it was not for velodrome, I highly doubt we would have ever been able to deploy on Optimism! On behalf of the Abracadabra team, I dont think there would be any proposal more appropriate than this. gg sers
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• polynya - No Role

  Nov. 5, 2022, 4:54 p.m.
  alexcutlerdoteth: To have a delegate of your stature call that kind of impact “mild” is frankl… alexcutlerdoteth: To have a delegate of your stature call that kind of impact “mild” is frankly a bit chilling. I was talking about a future scenario if the proposal is approved, apologies if it’s poorly worded. If the vote passes, I would expect significant increase in activity on Velodrome & the wider Optimism community versus what has come before. If all I see is status quo or mild growth, it’s not good enough for a repeat grant. Perhaps better wording would be “it would have proven to not be good enough for a repeat grant”
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• homelukai - No Role

  Nov. 7, 2022, 2:21 a.m.
  This is a great proposal and It explain in fully details I will go for it This is a great proposal and It explain in fully details I will go for it
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• Justin_Stables - No Role

  Nov. 7, 2022, 8:02 a.m.
  On behalf of the Lido Finance team I want to share how impressed we are by the level of detail prov… On behalf of the Lido Finance team I want to share how impressed we are by the level of detail provided by the Velodrome team in their proposal. Totally aside from the merits of the proposal (which we believe are significant) it is really exciting to see proposals taken so seriously be DeFi protocol teams. I’ll be sharing this one as an example to other protocols seeking grants and partnerships with Lido going forward. Lido fully supports this proposal. As many have attested to, Velodrome has been a great advocate and resource for the Optimism ecosystem. They’ve been super helpful to us as we planned the migration of wstETH to Optimism and have proven to be reliable, smart partners to us so far. In case it is helpful - I offer Lido Analytics’ Dune dashboard for wstETH on Optimism: wstETH on Optimism 11 We encourage the Optimism community to approve the Velodrome team’s proposal and have faith that their work in supporting the growth of the Optimism network will be worth every penny.
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• Butterbum - No Role

  Nov. 8, 2022, 12:45 p.m.
  Voted Against I share the same concerns as other. Sustainability should be top priority. Voted Against I share the same concerns as other. Sustainability should be top priority.
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• lefterisjp - No Role

  Nov. 9, 2022, 12:20 p.m.
  This is a difficult vote and I am conflicted about it. I will be voting against it for now though I… This is a difficult vote and I am conflicted about it. I will be voting against it for now though I am quite torn. Cons The amount asked is huge. They are asking for $ 4 m $OP They already received $ 3 m $OP back in July We perpetuate the unsustainable cycle of yield hunting by making people move to optimism to get extra incentives with the foundation footing the bill. Pros The project is definitely a good one for optimism. Most protocols that have worked with velodrome have only good things to say about them I have used velodrome. Pretty smooth experience. Definitely good for the ecosystem They responded to most feedback here in the forums. Just like @polynya stated I would like to see velodrome without incentives for a bit to see how such a protocol can stand on its own without someone else injecting artificial yield to attract users. At some point we really need to consider sustainability of the ecosystem.
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  • Griff: I think velodrome is really really cool, and this is a fantastic proposal, but I chose to vote against this proposal for similar reasons as Lefteris. The main thing is that 4m $OP (even if it is broken into 2 parts) is just too large of a proposal, despite that, from the metrics, it is a totally legitimate ask. I think @polynya nails it here: polynya: we have reached a point where liquidity isn’t the bottleneck on Optimism - we need to focus on growing other applications and onboard more users who can actually leverage all this excess liquidity. It would be good to see the $OP in our coffers focus more towards onboarding new projects with diverse users outside instead of bribing more LPs that will likely leave when the incentives dry up.
  • DanieleSalatti: In the end, because of the reasons I gave above, I decided to vote against.
• Griff - No Role

  Nov. 10, 2022, 2:55 a.m.
  I think velodrome is really really cool, and this is a fantastic proposal, but I chose to vote agai… I think velodrome is really really cool, and this is a fantastic proposal, but I chose to vote against this proposal for similar reasons as Lefteris. The main thing is that 4 m $OP (even if it is broken into 2 parts) is just too large of a proposal, despite that, from the metrics, it is a totally legitimate ask. I think @polynya nails it here: polynya: we have reached a point where liquidity isn’t the bottleneck on Optimism - we need to focus on growing other applications and onboard more users who can actually leverage all this excess liquidity. It would be good to see the $OP in our coffers focus more towards onboarding new projects with diverse users outside instead of bribing more LPs that will likely leave when the incentives dry up.
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• DanieleSalatti - No Role

  Nov. 10, 2022, 4:32 a.m.
  In the end, because of the reasons I gave above, I decided to vote against. In the end, because of the reasons I gave above, I decided to vote against.
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• lavande - This user is a moderator

  Nov. 14, 2022, 5:45 p.m.
  @tao can you provide a Telegram handle or other contact method so the Optimism team can get in touc… @tao can you provide a Telegram handle or other contact method so the Optimism team can get in touch about paying out this grant! Feel free to comment on this thread, DM, or email palash@optimism.io
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• lavande - This user is a moderator

  Nov. 14, 2022, 5:45 p.m.
  Snapshot vote 15 - passed Snapshot vote 15 - passed
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