Velodrome surprises investors with Surge on Optimism Blockchain
Velodrome, a decentralized exchange distributed on the Optimism blockchain, gives Uniswap a run for its money.
Velodrome’s trading pair had four of the top ten tracks in terms of 24-hour volume on Optimism as of July 26, according to DEX Screener.
These four pairs accounted for $16.88 million in volume in the last day. That’s good for 39.1% of the $43.21 million in volume generated by the top 10 trading pairs on Optimism, which is a layer 2 network designed to improve the transaction speed and efficiency of Ethereum.
Top 10 trading pairs
Optimism reached $54 million in total 24-hour volume on July 26. Uniswap leads and accounts for the other 60.9% of the volume of the top 10 trading pairs on Tier 2.
Nevertheless, the Velodrome shows surprising strength for a project strengthened by a scholarship of 150,000 dollarsaccording to Gabagool.ETH, a member of Information Token, a venture studio that incubated a project that would later turn into Velodrome.
So Velodrome’s history is a bit complex, but recent results have been simple – DEX is on the rise. Velodrome’s volume hit $15 million for three consecutive days for the first time ever from July 18-20, according to a Dune Analytics query.
The total value locked on the decentralized exchange (DEX) has also skyrocketed, hitting a record high of $76.2 million on July 20 and staying above $70 million since then, according to another Dune query.
The VELO token has been on a hot streak of its own – it’s up 27.7% to $0.05 in the last 24 hours and up 544.4% in the last 30 days, according to CoinGecko. That’s almost good for the all-time high of $0.06 reached two days after the token went live on June 1.
Velodrome originated as a fork of Solidly, the flawed but innovative DEX designed by Yearn Finance founder Andre Cronje.
Velodrome’s key feature is that it incentivizes trading fees, rather than simply providing liquidity. The protocol does this by first rewarding liquidity providers with VELO tokens.
These tokens can then be locked, so they can be used to vote on which pools should also direct additional VELO emissions. Voters will receive 100% of the fees, and any so-called bribes, of the pools they vote for.
Velodrome’s team believes that this system will encourage the most valuable trading pairs to have the most liquidity. “Fees and bribes as incentives will naturally pull voting towards the most beneficial pairs for the ecosystem,” says the project’s Medium post outlining the mechanisms and token distribution.
Velodrome has also supported the increased value of assets at Optimism. Layer 2 (L2) is the only solution of its kind to see its value locked in the last seven days among the top five L2s, according to L2BEAT.
If Velodrome’s success continues, DEX designers and developers will undoubtedly be taking notes as its volume-incentivizing design could influence future iterations of trading protocols.
Read the original post on The Defiant
