Building on our efforts to expand liquidity for DOLA on new exchanges, this proposal aims to authorize the launch of the “Velo Fed” meant to support our DOLA-USDC pool on Velodrome.
Background:
Velodrome is an automated market maker (AMM) launched in early June 2022, adapted from Solidly (for Fantom) with built-in vote-locking and a bribing system similar to Votium. Prior to launch, Inverse Finance DAO was offered one of the initial veNFT’s, providing us with 1% of voting rights at the time of launch of the Velodrome platform. This has allowed us to grow and sustain two LPs on Optimism (DOLA/USDC with $750k and DOLA/ETH with $213k depth) at no cost to the DAO. These two LPs are now amongst our deepest, including the LP’s on Ethereum and Fantom chain.
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 a 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.
Motivation
Layer 2’s 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 $55M), it is poised to rival Curve. Establishing DOLA as one of the first stablecoins with deep liquidity on Velodrome would open up significant opportunities for Inverse Finance DAO to expand and partner with lending markets within the Optimism ecosystem. By launching a VELO Fed, the DAO will be able to significantly deepen liquidity in the DOLA-USDC pool on Velodrome. Furthermore, the fed will be able to farm the VELO reward token for doing so, which in turn will be locked to increase the DAO’s voting power, meaning more rewards can be directed to the gauges in the future… 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.
On Chain Actions:
grant DOLA minting rights to the fed contract