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Understanding Velodrome and What’s New in Velodrome V2 

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  • With V2, Velodrome aims to revolutionize the DeFi space.
  • Velodrome is putting in constant effort to offer its users a space for efficient management of their assets.

What is Velodrome Finance?

Built on the blockchain network Optimism, Velodrome is a decentralized finance protocol that focuses on providing users with various decentralized finance services such as lending and borrowing, staking, and more. 

In today’s fast-paced decentralized finance space, Velodrome is aiming to offer users solutions to grow and manage their assets. Velodrome is the flagship offering of Optimism, which is a layer 2 extension to Ethereum that allows cheaper and faster transactions as compared to Ethereum.

Velodrome Finance aims to provide liquidity and swap functions to Optimism as it has gained traction by being a highly anticipated L2 development in the blockchain space.

Andre Cronje, also known as, “Dad of DeFi” introduced the idea of building on Solidly but due to poor execution, the feat could not be achieved. The makers of Velodrome took inspiration from this and developed an idea by rehashing Andre’s idea with Solidly and deployed a liquidity pool on Optimism, allowing only the use of VE tokens and transforming it as a liquidity station on the network.

Velodrome’s Tokenomics

Velodrome has 2 tokens, which are:

  1. VELO – VELO is the utility token of Velodrome. It consists of 2 components: Vote-escrow, and 3,3 game theory. The VELO token holders are allowed to vote-escrow in return for which they get veVELO tokens. These veVELO tokens have the power to vote for the support of any particular liquidity pool and can even be bribed by those pool participants. The veVELO token holders vote to decide in which manner the VELO tokens will be distributed, and as a result, these token holders get fees and bribes to vote in favor of the one doing the bribing.
  1. veVELO – veVELO or veNFT is the second governance token that is used on the platform. This can prove to be advantageous because the veVELO tokens can be converted into veNFT which allows it to be traded on the secondary market. This allows the token holders to use this NFT as collateral for other liquidity pools and also provides them with an alternative exit option

What is Velodrome V2?

Velodrome V2 is a new finance protocol that has been specially designed to provide enhanced user experience, enhanced smart contract structure, and improved security measures. Velodrome V2 will not only benefit users but it will also enable developers to create new L2 solutions. 

Let us take a look at a few of the many products that Velodrome V2 offers:

  1. Nightride dApp – is the frontend of V2 which has been equipped with better UX/UI features. It was built from the ground up and is claimed to be more user-friendly and more decentralized, and that too without any intermediaries.
  2. Pool fees – in order to expand the voting reward spectrum and to make it more dynamic, the pools will have a wider range of fees (up to 1%), which will be customizable on the basis of pools.
  3. Customization of Pools – Velodrome V2 will allow users to customize the pool’s name and symbol in order to minimize confusion. 
  4. Permalocked veNFT – the V2 veNFTs will now be available to be locked for 4 years. In the locked state, veNFTs’ veVELO will reflect a constant balance of the VELO token.
  5. New governing functions – in Velodrome V2, the veVELO holders will soon have a say in governance decisions like token whitelisting. 

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