Velodrome Health (Redux)
Introduction
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In this analysis, You will read about Velodrome, one of the popular projects on Optimism. We want to know how Healthy this project is over the last 180 days.
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I went through this platform and analyzed these parameters:
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TVL
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Deposits and Withdraws
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Swaps
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Velo Token
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Swaps from and to Velo token
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Locks
Analyzed by Hess - Reading Time Almost 12 Min.
What is Velodrome?
- The velodrome is an AMM designed as the trading and liquidity marketplace on the Optimism network, launching on May 31st, 2022. Their mission is to be the liquidity base layer of Optimism, allowing users to trade digital assets in a secure way, with very low fees and low slippage.
- Swaps
:key: Insights
- The highest swap volume was 343M US dollars which happened in August.
- The highest number of swappers was On the last week of September which was 10.5K.
- The highest number of transactions was 294K which happened in November.
- The highest average volume was during July.
:bar_chart: Charts
- If I ignore the first week of June, Until August, The swap volume was below 50M US dollars and the total number of weekly swappers was below 3K. Between July and August, the highest swap volume went through Velodrome. Also, During that time, The highest number of swaps happened.
- After August, The swap volume decreased but what is interesting is that the total weekly number of swappers increased in October. Also, The weekly number of active pools on Velodrome increased from 50 pools to 171 pools.
- In October, The total number of swaps and volume increased too.
4. Velo Token
The average daily price of the Velodrome native token, Followed the OP price. The Optimism native token. After August, OP and Velo's prices decreased. Because of a similar pattern with OP, We can not say the Velo token lose its value. We are in a bear market these days and in previous months. So Again, I can say that based on Velo token price, Velodrome and its tokens are healthy.
- Locks
:key: Insights
- Lock transactions had the highest number of transactions in comparison to other types of locks.
- Velodrome has 6.4k Unique Lockers.
- The total number of transactions is 21.5K.
- The average lock amount is 18K Velo.
:bar_chart: Charts
- 49% of transactions were locked/deposited. 28K of transactions was deposited and only 2199 transactions were withdrawn. Also, over time, Some users increased their Velo Amounts.
- The highest number of transactions and lockers was between July and August.
- The highest average Velo amount was between July and August but after August, The average Velo amount decreased.
- New Users
- In the last 6 months, Velodrome had nearly 134K new users. It is interesting, unlike other parameters, The total weekly number of new users increased over time. The highest number of new users joined Velodrome in September and October.
How does the Velodrome work?
Solidly inspired Velodrome
Velodrome was inspired by Solidly, which was designed as a next-gen AMM optimized to facilitate the swapping of both correlated and uncorrelated assets. Similar to Curve, those who lock their tokens are able to vote to steer emissions to desired pools and receive a cut of protocol fee revenue.
However, unlike Curve, where CRV stakers could stake CRV and direct future CRV emissions to non-productive pools which didn’t produce fees, Solidly was initially made to focus on incentivizing trading fees rather than passive liquidity.
Vote lockers on Solidly would receive 100% of fees for only the pools they voted for, and this behaviour incentivizes the highest fee-earning pools.
Solidly’s launch failed due to many reasons, including bugs, a bad emissions structure that was overly front-loaded and poorly distributed, and more.
VELO token
Velodrome uses two tokens to manage its utility and governance:
$VELO
— ERC-20 utility token of the protocol$veVELO
— ERC-721 governance token in the form of an NFT (non-fungible token)
The protocol’s native token, VELO, has a weekly emission that is distributed to liquidity providers. It can be locked for veVELO, which has voting power over what liquidity pools receive the weekly emissions.
The lock period can be up to 4 years with the following relationship:
- 100
$VELO
locked for 4 years will become 100$veVELO
- 100
$VELO
locked for 1 year will become 25$veVELO
The longer the vesting time, the higher the voting power (voting weight), and the rewards the $veVELO
holder receives.
Voters receive the trading fees and bribes collected from the liquidity pools they vote for, as well as an anti-dilutive, rebase.
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Full Analysis
- TVL
- For a short time, The Velodrome TVL increased from 16M US dollars up to 126M US dollars. But After August, Velodrome decreased. The Velodrome TVL decreased from 126M to 41M US dollars in November. As you can see, The Velo token price and TVL moved in the same pattern. Since August 2022, The Velodrome TVL dropped by 60% in four months. But As you know we are in a bear market. The TVL of all platforms decreased. So, We can not say Velodrome Health is not good based on TVL.
- Deposits and Withdraw
:key: Insights
- Since August, Most weeks, The Net volume was negative.
- The Highest Deposit Volume was 77M US dollars which was on July 25 and The Highest Withdraw volume was 56M US Dollars which happened on August 8.
- Since September 2022, The total number of deposit and withdrawal transactions increased.
- The highest number of deposit transactions was 19.8K and withdraw transactions were 11.5K.
:bar_chart: Charts
- After three weeks at the beginning of June the Net volume was negative, After that, the deposit volume increased until the end of July. For two months, The weekly net volume was positive.
- The highest deposit volume happened on July 25 which was 77M US dollars and the highest withdrawal volume was 56M US dollars on August 8.
- After August, The total weekly deposit volume decreased.
- Let’s check the transactions. The total number of deposit transactions increased over time. On the other hand, The total number of withdrawal transactions increased too. The highest number of deposit and withdrawal transactions happened in September and November.
- If we compare the total transactions Between June and November, The total number of transactions became 10x higher than in November.
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- We have seen weekly changes on Velodrome. We already know that most weeks were negative But overall, All parameters are positive. The total deposit volume is 426M US dollars and the total withdrawal volume is 380M US dollars. About 46M US dollars is on Velodrome pools.
- 75% of the transaction was deposit and 25% of transactions were withdraw.
- In the last 6 months, The total number of unique depositors on Velodrome is 98.8K wallets and the total number of unique withdrawers is 74K wallets.
Top Pools based on Deposit Volume
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USDC/sUSD with 78M US dollars is the most popular pool.
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USDC/DAI 56M US dollars
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WETH/USDC 54N US Dollars
Almost Stable pools are more popular
Top Pools based on Withdraw Volume
- USDC/sUSD with 65M US dollars, USDC/DAI 52M, and WETH/USDC 51M US dollars
All top pools based on deposit are top pools based on withdrawal too.
:key: Insights: Most Users close their Position when the day is deposited.
Almost 43K transactions closed on the same day of the deposit
:bar_chart: Charts
Until September, The average days of holding positions increased to 36 days. But after that time dropped. The average Days of holding in October decreased to 7 days.
- In November, The average days of holding decreased to 2.9 days. The highest number of transactions closed on the same day of deposit. The second large number of transactions closed +20 days.
- OP/USDC is the most popular pair on Velodrome based on transactions.
- Over Time, The weekly volume share of USDC/DAI and OP/USDC increased.
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The large group of users on Velodrome had 1-5 swaps. The second large group of users had 6-10 Swaps.
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Based on Volume, The large group of Velodrome users swapped 1-10K. Also, with a similar number of users, The swap volume was 100-250 US dollars.
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The third group of users swapped between 1-10$ and 250-500%.
:key: Insights
- 54% of transactions were swapped from Velo and 46% of transactions were swapped to Velo.
- The swap volume from Velo is 117M US dollars and The swap volume to Velo is 116M US dollars.
- The highest swap volume from and to Velo was during July and August.
- The highest number of swaps from and to Velo was in November.
:bar_chart: Charts
- Until July, The total number of swaps from Velo was much higher than swaps to Velo. But over time, The total number of swaps to Velo increased. Between September and October, Again both swaps from and to Velo decreased. Again In November, The total number of swaps to Velo increased significantly.
- The total number of swap transactions from Velo is 930K and the total number of swaps to Velo was 780K.
:key: Insights
- Users deposited 399M Velo in the last 6 months.
- The total deposited volume is 11M US dollars.
- The highest deposit volume was 2M or 35M Velo tokens which happened in July.
- Most users locked their Velo for more than 3 years.
:bar_chart: Charts
- Since July 4, The total lock or deposit volume increased significantly. The swap volume increased up to 2M US dollars on July 25. After that time, The swap volume or Velo amount decreased.
- The large group of users locked for more than 3 years. The second large group of users locked their Velo for one month.
THANK YOU FOR READING!
ALL CODES AND CONTENTS WERE WRITTEN BY HESS.
Conclusion
- The main question of this bounty is Velodrome's health. From my findings, I can say Velodrome is healthy. It is true that the Velo token decreased, The weekly net deposits volume was negative and Also TVL decreased but Overall, We are in the bear market. The velodrome is not in a bad situation. Still are parameters are positive. Their swap volume to Velo is high, The total number of new users increasing and so on.