The Optimist Twitter Space - The Future of Velodrome w/ Alexander

In The Optimist’s Twitter Spaces which took place on March 7, 2024, Charlie hosted Alexander from Velodrome to discuss MetaDEX, DEX Models, Velodrome, Superchain, innovation, challenges, future visions, and more! Read our notes below to learn more.

Background

Charlie (Host) – Co-Leader at The Optimist

Alexander (Guest) – Founder of Velodrome

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

Velodrome’s Rise: Pioneering the Next-Gen DEX Landscape

Alex mentions that it’s been the biggest week in ve(3,3) history, marking a significant milestone since the launch of Solidly on Fantom, highlighting the continuous growth and impact of ve(3,3) or MetaDEX style of DEXs.
Alex provides a detailed history of Velodrome and the Solidly model, discussing the vision behind combining the best features of previous decentralized exchange designs to create a next-generation DEX.
Alex acknowledges the initial failure of Solidly due to various issues but highlights the underlying vision and potential improvements that could make the model successful.
The decision to launch Velodrome on Optimism is explained as a strategic move to address liquidity issues and support growth, despite skepticism about choosing a chain with relatively low activity at the time.
Alex describes the challenges Velodrome faced during its launch coinciding with the Luna collapse but highlights the perseverance and growth that followed, leading to Velodrome becoming one of the top DEXs.
The success of Velodrome is credited to its effective model, onboarding of new projects to Optimism, and engagement with existing projects, with plans to expand towards the Superchain.
Charlie remarks on the pivotal role Velodrome has played in the growth and development of the Optimism chain, recalling a particularly challenging week during the market downturn. He commends the team for their perseverance and conviction in their model despite facing significant criticism and market challenges.
Alex points out that before Velodrome, there were several unsuccessful forks of the Solidly project on other chains, which led to a general skepticism about the viability of Solidly’s model.
Velodrome’s launch, with adjustments to the economics and codebase, not only succeeded but also revitalized interest in the model, leading to its significant adoption and the thriving of Velodrome-inspired forks in various ecosystems.
Charlie views the successful execution of Velodrome’s model as a protocol-to-protocol service, highlighting its positive impact on user experience and ecosystem growth.
Alex explains the MetaDEX concept, comparing it to the evolution of the Curve ecosystem. He critiques the complexity and inefficiency of needing to interact with multiple protocols and layers to achieve optimal outcomes in DeFi.
The MetaDEX model proposed by Velodrome aims to consolidate the best DeFi primitives into a single platform, eliminating the need for multiple tokens, protocols, and interfaces, thereby streamlining the user experience and maximizing efficiency.
This approach has led to Velodrome and Aerodrome achieving significantly higher TVL compared to other DEXs in their respective ecosystems.

Velodrome’s Slipstream: Live Status, Concentrated Liquidity Model, and Future Plans

Charlie discusses Slipstream, inquiring about its status as a concentrated liquidity model, its live status, and the launch details.
Alex confirms Slipstream went live recently, noting emissions have begun flowing to the pools with a phased-release approach. He highlights upcoming UI and UX improvements to ease liquidity provision, highlighting Slipstream’s live status.
Alex explains Velodrome’s role as a significant liquidity hub in the Optimism ecosystem, contrasting it with Uni V3‘s volume dominance due to concentrated liquidity allowing for efficient swaps. He mentions Velodrome’s success without concentrated liquidity but highlights the ambition to capture more of the ecosystem’s activity.
Alex describes developing Velodrome’s concentrated liquidity approach, inheriting Uni V3’s security features while introducing unique elements to simplify the LP experience.
He highlights the commitment to decentralization, avoiding centralized APIs and off-chain dependencies, which distinguishes their approach from others.
Alex mentions the forthcoming development blog for those interested in technical details and acknowledges the security focus, mentioning an audit by Spearbit. He encourages for feedback on the newly launched Slipstream and hints at further developments and UI/UX enhancements.
Charlie notes the trade-off between efficiency gains in DeFi through concentrated liquidity and the complexity that comes with it, mentioning the challenges retail LPs face, including loss of TVL, difficulty managing CL positions, and impacts on liquidity provision.
Charlie appreciates Velodrome’s deliberate approach to introducing concentrated liquidity, easing users into it as an addition rather than a replacement, and maintaining a user-friendly experience despite the complexity barriers in other platforms.
Alex highlights the leadership of their product development lead, highlighting his background in open source and frontend engineering, his role from the beginning of Velodrome, and his focus on delivering a decentralized and user-friendly application without compromises.
Alex mentions their commitment to decentralization and user experience, driven by their product development lead’s insistence on not taking shortcuts, resulting in a product that balances decentralization with a smooth web2 app experience.
Alex encourages checking out Velodrome’s developer blog for insights from the product development lead, promising it would provide a valuable reading on their approach.
Charlie asks about Velodrome’s plans for automated liquidity management integration and mentions potential collaborations with names like Mellow and Beefy Finance for passive liquidity provision options.
Alex confirms Velodrome’s integration with an automated liquidity manager, Mellow, highlighting their security focus and additional audits before launch. He mentions discussions with other ALM providers and the development of an ALM by Beefy Finance to offer various options for liquidity providers.

Velodrome’s Expansion and Future in the Superchain Ecosystem

Charlie asks about the expansion and future of Velodrome in relation to the success seen with Aerodrome, inquiring about plans to expand across any Superchain network and the potential similarity in branding to Aerodrome.
Alex explains that Velodrome’s approach will not mirror Aerodrome’s and highlights a non-discriminatory stance towards any Superchain networks, compared with the Cosmos ecosystem‘s network of IBC chains.
He explains that those building on layer-2 Ethereum are inclined to use the stack to build their chains, contributing to the rapid growth of technology upgrades.
Alex mentions that joining the Superchain ensures access to all technological upgrades and outlines the mutual benefits of contributing to the Superchain, highlighting the aim for seamless operation across various chains similar to internet usage.
He describes Velodrome’s role in ensuring liquidity incentives remain efficient across chains in the short to medium term, and longer-term plans to establish Velodrome as a central liquidity access point across the Superchain. He teases an announcement regarding the first Superchain deployment and partnership.
Alex contrasts Velodrome’s strategy with Aerodrome, noting that Aerodrome will integrate vertically within Base due to unique offerings by Coinbase, while Velodrome will integrate horizontally across the Superchain for broader accessibility.
Charlie reflects on Alex’s explanation, imagining Velodrome as an index for liquidity across networks, with a core chain facilitating access to these liquidity hubs, aiming to keep liquidity interconnected rather than fragmented.
Alex envisions an end state where Velodrome enables seamless liquidity access across different chains, enhancing user experience without the perception of interacting with multiple chains.
Charlie asks about the intermediate steps for Velodrome as the Superchain general message passing standard develops and how Velodrome can position itself for future advancements.
Alex says that short-term, the technology exists for Dexs to extend Velodrome operations onto multiple chains with infrastructure like bridges and messaging. They aim to launch minimum viable product Superchain velodromes on these chains.
Alex mentions Velodrome’s plan to offer deep liquidity pools, gauges, and rewards on new chains, highlighting a user-friendly experience for managing rewards across chains.
Alex notes that medium-term developments depend on advancements from Optimism, with Velodrome closely advising on requirements for a superior liquidity experience.
Alex envisions a long-term future where multiple entities operate on a hyper-optimized Superchain, benefiting from the network effects of multiple chains seamlessly.
Alex expresses his excitement about the current state of growth on Ethereum layer-2s and the completion of core designs including Slipstream and Relay by Velodrome. He notes the significance of discussing these developments as they happen, especially with recent rewards flowing as voting incentives.

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Show Information

Medium: Twitter (Audio)
Show: The Optimist Twitter Space
Show Title: The Future of Velodrome w/ Alexander
Show Date: March 7, 2024