Revelo Roundtable #8 - ve(3,3) Landscape

In Revelo Intel’s Twitter Spaces which took place on April 4, 2024, Kirk hosted Alexander from Velodrome, North from Ramses Exchange, and Gorgory from Equalizer to discuss ve(3,3) Landscape, the evolution of DeFi strategies, collaboration, and more! Read our notes below to learn more.

Background

Kirk (Host) – Head of Business Development at Revelo Intel

Alexander (Guest) – Founder of Velodrome

North (Guest) – Contributor at Ramses Exchange

Gorgory (Guest) – BD & Community Manager at Equalizer

Velodrome – a next-generation AMM that combines the best of Curve, Convex, and Uniswap, designed to serve as Optimism’s central liquidity hub

Ramses Exchange – a protocol that pairs incentives with concentrated liquidity for next-level capital efficiency

Equalizer – a DEX that uses a vote escrowed model to drive Liquidity to the highest volume pairs

ve(3,3) Landscape Evolution: Strategic Transformations

Alexander shares his journey from politics and big tech to DeFi during DeFi summer. He describes his transition from a traditional career path to engaging deeply in DeFi.
Gorgory shares his path from community management to BD and product development within DeFi. He recounts entering DeFi in 2021, his entrepreneurial background, and building Equalizer after meeting colleagues during Solidly‘s launch.
North explains Ramses’s growth and expansion across multiple blockchains. He shares his journey from early Bitcoin interest in 2013 to becoming a FinTech entrepreneur and ultimately focusing on DeFi, driven by experiences with Solidly V1 on Fantom.
North acknowledges the bear market crash as a significant headwind during the project’s early stages, expressing gratitude for the resilience it fostered among their teams. He mentions technology as a challenge, requiring extensive work and audits to advance beyond initial shortcomings.
Kirk comments on the return of community members highlighting the positive shift as the Solidly model starts to prove its effectiveness through increased TVL, volume, and fees.
Alexander reflects on the Solidly model, attributing its foundational elements to the amalgamation of the best features from previous DeFi cycles, like Curve, Uniswap, and Convex. He acknowledges initial issues within the code and economic incentives that needed refinement.
Alexander explains their approach to revitalizing the model through significant adjustments and targeting ecosystems in need of its liquidity functions, specifically mentioning the success of Velodrome on Optimism. He says this success reignited interest in the model and led to various DEXs innovating upon the Solidly foundation with their unique modifications.
Alexander praises the Solidly model’s disruptive potential in DeFi, validated by Velodrome and Aerodrome‘s performance, and credits Andre‘s initial design for this success.
Gorgory discusses their experiences with both positive and negative aspects of Fantom, noting the Multichain fiasco as a significant challenge. He mentions a successful launch period that provided a good foundation for continued development, despite liquidity resets.
Gorgory credits the early days of collaboration among developers and teams, highlighting the importance of community and shared learning during the post-Solidly launch period. He reflects on the mutual respect and cooperative spirit among builders.
Gorgory talks about the technical challenges faced, including the adoption and modification of Velodrome’s solutions to bugs and issues. He highlights a period of close collaboration with various teams to address these problems and improve their platform.

Revamping DeFi Rewards: Beyond Curve’s Model Towards Productivity-Aligned Incentives

Alexander acknowledges that some DeFi purists might reject emission-based token models, favoring systems where all fees go directly to liquidity providers (LPs) without a separate value accrual mechanism for tokens. He considers this viewpoint valid but limited.
Alexander notes that their model iterates on Curve’s approach by creating an incentive token with controlled emissions, enhancing it to reward directing emissions towards more productive pools, unlike Curve, where rewards do not distinguish between productive and unproductive pool support.
He points out a major flaw in Curve’s system where rewards are not aligned with pool productivity, allowing some to benefit without optimizing for overall protocol productivity.
Alexander highlights another difference: their model rewards pools based on their productivity in generating fees and incentivized activities, whereas systems like Curve divide rewards between LPs and token holders, potentially diluting the benefits for the latter.
He criticizes complex tokenomics that obscure reward flows and often disproportionately benefit team members through mechanisms like direct allocations, buybacks, and burns.
Alexander appreciates their model for directing all economic activity towards incentivizing token participation, creating an equitable system where all participants, including the team, must lock tokens and vote to benefit, fostering an even playing field.
Kirk discusses the importance of incentivizing people to buy and lock Dex tokens, questioning the impact of token price volatility on the model’s success.
Gregory explains that the price of tokens usually reflects the activity in the system, with increases in volume leading to price increases. He highlights the need for simplicity in the system to allow for natural price fluctuations and mentions strategic actions to reignite the system’s flywheel during downturns. He highlights the utility of tokens with 100% revenue sharing.
North points out the success of models like Uniswap V3 and emphasizes the role of concentrated liquidity in achieving high volume-to-TVL ratios. He notes the importance of combining concentrated liquidity with incentives infrastructure to enhance capital efficiency and incentivize participation.

DeFi Token Models: Productive Incentives and Equitable Participation

Kirk discusses the concept of concentrated liquidity and Slipstream, noting the comparison to Uniswap’s LP experience and potential earnings from a sophisticated concentrated liquidity model.
Alexander acknowledges the discussion’s focus on concentrated liquidity, stating the growth of Velodrome-style DEXes has proven the value of Uniswap V2 and Curve-style pools by generating significant fees and rewards without solely relying on concentrated liquidity pools.
Alexander suggests Uniswap’s expansion to L2s like Base and Optimism reflects a broader understanding of different AMMs’ benefits for sustainable liquidity strategies.
He explains Velodrome’s success in attracting substantial TVL compared to Uniswap and theorizes combining this ability with concentrated liquidity could dramatically improve fee generation and volume from Uniswap pools.
He says this combination could create a compounding effect, attracting more liquidity providers to Velodrome’s more efficient pools.
Alexander describes the early success of Slipstream on the Optimism network, outperforming both Balancer and Curve in volume with minimal support. He notes the shift of incentives from protocols like Synthetix and Lido to concentrated pools, leading to significant APRs and equivalent TVLs to Uniswap, expecting continued growth.
He highlights the potential market opportunity, comparing current volumes on Uniswap with Velodrome’s TVL advantage, suggesting significant volume shifts towards Velodrome as integrations with aggregators like 1inch and 0x protocol mature.

Future of DEXes: From Concentrated Liquidity to Derivatives Trading and User Onboarding Innovations

Kirk comments on the potential future where DEXes like Velodrome could compete with centralized exchanges by attracting more on-chain trading volume and users.
He questions whether Velodrome will explore derivatives trading, positioning concentrated liquidity as an attractive feature for future developments.
Gorgory highlights the importance of focusing deeply within one’s vertical before expanding to others, noting the significance of building foundational aspects like future onboarding, account abstraction, and innovations to simplify complex DeFi concepts for new participants. He mentions Equalizer‘s efforts in education to make complex DeFi models understandable.
Gorgory discusses the work on concentrated liquidity, highlighting the success of their Uniswap V3 fork called Thick on Fantom and other platforms. He describes the integration of concentrated liquidity protocols through vaults as a strategic approach for the future, including partnerships with automated liquidity managers like Ichi and Gamma to integrate their farms into the system.
Gorgory explains the initial lack of focus on manual concentrated liquidity for users, outlining the plan to delve deeper into manual concentrated liquidity while emphasizing the vault system’s role in driving liquidity and positioning as a liquidity hub. He mentions the continued relevance of Uniswap V2 for volatile assets and the efficiency of Uniswap V3 or concentrated liquidity for high-volume pairs.
He mentions the approach towards derivatives, with a specific example of disabling margin trading for a derivative on Fantom, aiming to integrate derivatives protocols through vaults to enhance governance system revenue and scale emissions.
Gorgory mentions the focus on housing liquidity as their primary vertical and the importance of maintaining focus on the core business that generates revenue for users.

Blockchain Innovations and Expansions in DeFi Ecosystem

Alexander shares his enthusiasm for the potential of the MetaDEX model and Slipstream to challenge Uniswap’s dominance, along with Velodrome’s expansion to the Superchain.
He expresses anticipation for the decentralization of the stack and the beginnings of interoperability between super chains, seeing these developments as significant growth catalysts.
Gorgory expresses excitement about Fantom’s new approach, praising its technology, user experience, and the resilience of its community.
He notes Fantom’s previous lack of a native connection to the Ethereum ecosystem as a shortcoming that is being addressed with the upcoming introduction of a layer-2 bridge to Ethereum, enhancing its appeal as a DeFi playground.
North mentions looking forward to growth and leveraging the model seen with Velodrome and Aerodrome for scaling. He highlights the community aspect, suggesting that starting with Ramses on Arbitrum offers exposure to various markets and ecosystems, allowing for expansion from a familiar base.

Check out these important links

Show Information

Medium: Twitter (Audio)
Show: Revelo Intel Twitter Space
Show Title: Revelo Roundtable #8 – ve(3,3) Landscape
Show Date: April 4, 2024