The Leading DEX Velodrome Proposed As STG Hub On Optimism

Key Points:

• Velodrome incentivizes liquidity through its voting system and VELO emissions, offering a 4X+ impact on liquidity incentives for STG-USDC.
• Stargate can significantly reduce the need for STG emissions by locking VELO rewards as veVELO and qualify for a Lock Bonus.

Stargate proposes to move $1.5M of protocol-owned liquidity to Velodrome’s Layer 2 DEX, receiving additional VELO emissions and higher APR.

In a bid to expand its reach, Stargate is proposing to move $1.5 million worth of protocol-owned liquidity (POL) to Velodrome, the top Ethereum Layer 2 DEX. Velodrome’s voting system allows protocols to attract liquidity by directing VELO emissions to their liquidity pools, incentivizing voters with veVELO tokens or voter rewards. In the last voting round, VELO bribe multipliers offered by voters resulted in a $3.5 VELO reward for every $1 in bribes.

Velodrome has offered to match 40% of Stargate’s bribes under the “Tour de OP” incentive program to attract Stargate. This, combined with the bribe multiplier, can yield a 4X+ impact on liquidity incentives for STG-USDC. Stargate’s liquidity providers will still be able to use the LP and route it through all aggregators, resulting in the same execution. However, the APR paid will be higher than what is currently being offered on Uniswap.

If successful, Stargate can migrate more POL to Velodrome, adding to its liquidity while receiving additional VELO emissions. By locking VELO rewards as veVELO, Stargate can significantly reduce the need for STG emissions in the future while maintaining a robust liquidity layer on Optimism. Additionally, locking veVELO will automatically qualify Stargate for a Lock Bonus, typically worth 30%-40% of the VELO locked, paid in OP.

This proposal aligns Stargate with Velodrome’s large and engaged DeFi user community, as Velodrome will promote Stargate through its ecosystem, onboarding new users to the platform. Upon completing a voting epoch, VELO emissions will flow to Stargate’s LP, resulting in a higher APR for its liquidity providers and a reduction in STG emissions over time.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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