Velodrome FAQ

Velodrome is a next-generation automated market maker (AMM) and decentralized exchange built on the Optimism network. It combines the best mechanics from Curve, Convex, and Uniswap to create a sustainable, community-driven liquidity hub. Velodrome uses a ve(3,3) tokenomics model where VELO token holders can lock their tokens to receive veVELO NFTs, which grant voting power over liquidity emissions and earn protocol fees and incentives. The protocol is designed as a public good — with $0 VC funding and zero token sales.

Velodrome primarily operates on OP Mainnet (Optimism), an Ethereum Layer 2 network that offers significantly lower transaction fees and faster confirmation times compared to Ethereum mainnet. Velodrome is also positioned as the essential trading and liquidity marketplace for the broader Superchain ecosystem — a network of OP Stack-based blockchains. This means you benefit from Ethereum's security while enjoying fast, affordable transactions.

Connecting your wallet to Velodrome is straightforward. Follow these steps:

1. Visit https://velodrom-finance.pro in your browser.
2. Click the "Connect wallet" button in the top navigation area.
3. Choose your preferred wallet (MetaMask, Coinbase Wallet, WalletConnect, and more are supported).
4. Approve the connection in your wallet app.
5. Make sure your wallet is set to the OP Mainnet network. Velodrome will prompt you to switch if needed.

Once connected, you can start swapping tokens, providing liquidity, or locking VELO tokens to participate in governance.

Velodrome supports multiple pool types to accommodate different token pairs and trading strategies:

• Volatile Pools (vAMM): For pairs of assets that are not correlated in price, similar to Uniswap v2 style x*y=k pools.
• Stable Pools (sAMM): Optimized for assets that trade near parity, such as stablecoins (USDC/USDT), using a Curve-style invariant for minimal slippage.
• Concentrated Liquidity (CL): Allows liquidity providers to concentrate their capital within specific price ranges, maximizing capital efficiency similar to Uniswap v3.

The Velodrome router automatically finds the best route across all pool types to give traders the best price on every swap.

Velodrome offers competitive trading fees designed to attract both traders and liquidity providers:

• Stable Pools: 0.01% — 0.05% fee, making them extremely cost-effective for stablecoin swaps.
• Volatile Pools: 0.3% fee, standard for most token pairs.
• Concentrated Liquidity Pools: Variable fees (0.01%, 0.05%, 0.3%, 1%) depending on the pool configuration.

A key feature of Velodrome is that 100% of trading fees go directly to veVELO voters who voted for the respective pool. This creates a powerful incentive alignment where voters are rewarded for directing liquidity to the most active pools.

Yes. Velodrome supports cross-chain functionality through its Superswaps feature, enabling frictionless swapping between assets on different chains within the Superchain ecosystem. As the essential liquidity marketplace of the Superchain, Velodrome is designed with leading-edge interoperability in mind. You can swap tokens across supported OP Stack chains without leaving the Velodrome interface, making cross-chain DeFi more accessible and efficient than ever before.

Providing liquidity on Velodrome is simple and rewarding:

1. Navigate to the Liquidity section on Velodrome.
2. Select the token pair you want to provide liquidity for.
3. Choose the pool type (volatile, stable, or concentrated liquidity).
4. Enter the amounts of tokens you want to deposit.
5. Approve the tokens and confirm the deposit transaction.
6. After depositing, stake your LP tokens in the corresponding gauge to start earning VELO emissions.

As a liquidity provider, you earn VELO token emissions proportional to the gauge votes your pool receives. Pools with more votes attract more emissions, incentivizing deeper liquidity.

Impermanent loss (IL) occurs when the price ratio of tokens in a liquidity pool changes compared to when you deposited. On Velodrome:

• Stable pools have very low IL risk because they hold correlated assets (like stablecoins) that rarely deviate in price.
• Volatile pools carry higher IL risk, especially during periods of large price movements.
• Concentrated liquidity can amplify IL if prices move outside your selected range, but also maximizes fee income when in-range.

The VELO emissions earned by staking LP tokens help offset impermanent loss. Always consider your risk tolerance and choose pools that align with your strategy before providing liquidity on Velodrome.

VELO is the native governance and utility token of Velodrome. It serves multiple purposes within the ecosystem:

• Liquidity Emissions: VELO is distributed weekly to liquidity providers who stake in gauges, incentivizing deep liquidity across pools.
• Governance (veVELO): Locking VELO for up to 4 years creates a veVELO NFT, which gives holders voting power to direct VELO emissions to specific pools.
• Revenue Sharing: veVELO holders who vote for pools earn 100% of the trading fees and external incentives generated by those pools each epoch.
• Rebases: veVELO holders receive anti-dilution rebases to protect their voting power over time.

VELO was never sold in an ICO or to VCs — all tokens were distributed fairly through the protocol's launch and ongoing emissions on Velodrome.

The gauge system is the heart of Velodrome's incentive mechanism. Here's how it works:

1. Each week (epoch), a set amount of VELO tokens is distributed as emissions.
2. veVELO holders vote to allocate these emissions to specific liquidity pool gauges.
3. Pools that receive more votes get more VELO emissions, attracting more liquidity providers.
4. Protocols can place incentives (bribes) on gauges to attract votes from veVELO holders.
5. Voters earn 100% of trading fees from pools they vote for, plus any external incentives placed on those gauges.

This creates a competitive and efficient marketplace for liquidity on Velodrome, where market forces determine which pools receive the deepest liquidity.

Locking VELO on Velodrome is done through the Lock section of the interface:

1. Navigate to the Lock page on Velodrome.
2. Enter the amount of VELO you want to lock.
3. Choose your lock duration — from 1 week up to 4 years. Longer locks give more veVELO (voting power).
4. Confirm the transaction. You will receive a veVELO NFT representing your locked position.
5. Use your veVELO to vote on gauges each epoch and collect your rewards (fees + incentives).

Note: your VELO tokens are locked until the expiry date. You can extend the lock duration or increase the amount at any time, but early withdrawal is not possible on Velodrome.

Velodrome prioritizes security and transparency. The protocol's smart contracts have undergone multiple independent security audits by reputable firms. Key security features include:

• Immutable Contracts: Core Velodrome contracts are immutable and permissionless, meaning no admin can alter or pause the protocol.
• Onchain Governance: All governance decisions are made transparently onchain by veVELO holders.
• Battle-tested Technology: Velodrome builds on proven AMM architectures from Curve, Uniswap v2, and Uniswap v3.
• Bug Bounty: An active bug bounty program incentivizes responsible disclosure of vulnerabilities.

You can review audit reports and security information at the official Velodrome security page. As with all DeFi protocols, please do your own research and never invest more than you can afford to lose.

Velodrome was founded as a public good with a strong commitment to decentralization and fairness:

• $0 VC Funding: Velodrome received no venture capital investment, ensuring no early-stage investors hold disproportionate power.
• Zero Token Sales: No tokens were sold through ICOs, IDOs, or any pre-sale mechanism.
• Onchain Operations: The protocol operates fully onchain with governance executed by veVELO holders.
• Permissionless: Anyone can create pools, add incentives, or build on top of Velodrome without needing permission from any central authority.

The Velodrome team continues to develop and improve the protocol, but governance and key decisions are made by the veVELO community. Learn more on our About page.

Velodrome offers a powerful incentive mechanism for protocols that want to attract deep liquidity for their tokens:

• Gauge Incentives (Bribes): Protocols can deposit tokens as incentives on specific gauges. veVELO holders who vote for those gauges receive these incentives as additional rewards.
• Velo Launch: Velodrome offers a Velo Launch program for new projects looking to bootstrap liquidity efficiently.
• Permissionless: Any protocol can add incentives to any gauge without needing approval from the Velodrome team.

This creates an efficient marketplace where protocols compete for veVELO votes by offering attractive incentives, and voters earn rewards for directing liquidity to productive pools. Visit the Incentivize section of Velodrome to get started.

Rewards on Velodrome are distributed on a weekly epoch basis (each epoch is 7 days, resetting on Thursdays):

• LP Emissions: VELO tokens are claimable continuously from the gauge where you staked your LP tokens.
• Voter Rewards: Trading fees and incentives earned from your gauge votes become claimable after the epoch ends (Thursday flip).
• Rebases: Anti-dilution rebases for veVELO holders are distributed and claimable each epoch.

To claim rewards, visit your portfolio or the relevant section on Velodrome's dashboard. Remember to re-vote each epoch if you want to continue earning voter rewards — votes do not automatically carry over in some configurations. Check the Velodrome documentation for the current voting rules.