Building on our ongoing efforts to expand liquidity for DOLA on new exchanges, we’re excited to share our latest Fed deployment, the Velo Fed! This new DOLA Fed is soon to pass through Inverse governance and is meant to support our DOLA-USDC pool on Velodrome. But first, some background…
Velodrome is an automated market maker (AMM) launched in early June 2022 on Optimism, adapted from Solidly (for Fantom) with built-in vote-locking and a bribing system similar to Votium. Layer 2’s such as Optimism are widely viewed as the future for Ethereum and as Velodrome already has taken position as the dominant stablecoin DEX on Optimism (TVL currently over $75M), it is poised to rival Curve. Establishing DOLA as one of the first stablecoins with deep liquidity on Velodrome will open up significant opportunities for Inverse Finance DAO to expand and partner with lending markets within the Optimism ecosystem.
Prior to launch, Inverse Finance DAO was offered one of Velodrome's initial veNFT’s, providing us with 1% of voting rights at the time of launch of the platform. Since then, we have been growing our position organically, claiming and reinvesting any rewards. Just this past month, Inverse increased it’s veVELO voting power by 10%. This has allowed us to grow and sustain two LPs on Optimism (DOLA/USDC with $656k and DOLA/ETH with $241k depth) at no cost to the DAO. These two LPs are now amongst our deepest, including the LP’s on Ethereum and Fantom chain.
By operating the VELO Fed successfully, the DAO will grow a long-term position in an emission-controlling token and thus will be able to significantly deepen DOLA liquidity on Velodrome. How? The Fed, aside from expanding DOLA supply in the pool, will also farm the VELO reward token, which in turn will be locked to increase the DAO’s voting power, meaning more rewards can be directed to DOLA gauges in the future. As of epoch 18, Inverse Finance is the 4th largest $veVELO holder amongst protocols and 7th largest holder overall. At this stage, we are confident we’ll be standing on the podium in no time!
We are paving the way for low slippage trades, fed deployments in partnering lending protocols, and reliable DOLA farming opportunities for our users. This will likely generate large, permanent revenue streams for both Inverse Finance and Velodrome.
We believe that the Velodrome team has successfully patched and improved the original functionality of Solidly, which despite initial success (reaching $2.29B TVL at one point) had evident flaws that ultimately led to its demise. The team has achieved a healthy balance between emissions, incentives for voters, trading fee distribution and good return per Dollar invested in bribes as a result of a logical initial distribution, a controlled overall reduction of emissions and rebases, control of token listings, an increase in non-emission rewards for voters, and the addition of a human layer to support the protocol.
We are proud to be one of a select few protocols to have received a veNFT at launch and are thrilled for all that’s to come with operating the Velo Fed.