How to Buy Velodrome (VELO)

Beginner’s Guide

What Is Velodrome (VELO)?

Velodrome is a decentralized finance (DeFi) platform that is built on the Ethereum layer 2 scaling solution known as Optimistic Rollups. Optimistic Rollups are a type of sidechain that enables faster and cheaper transactions while maintaining the security and decentralization of the Ethereum network.

By building on Optimistic Rollups, Velodrome is able to offer users a more efficient and scalable DeFi platform. This is because Optimistic Rollups allow Velodrome to process a larger volume of transactions off the Ethereum mainnet, which reduces congestion and gas fees.

Velodrome on Rollup Optimism enables users to trade cryptocurrencies, including the Velodrome (VELO) token, on a decentralized exchange (DEX). The DEX is designed to offer high liquidity, low fees, and a seamless user experience. Velodrome also offers margin trading and lending services, allowing users to borrow or lend digital assets in a secure and efficient manner.

The Velodrome platform is governed by VELO token holders who have a say in the development of the platform and can earn rewards for staking their tokens. In summary, Velodrome on Rollup Optimism is a comprehensive DeFi platform that empowers users with the tools and resources they need to participate in the crypto economy and achieve their financial goals.

How to Buy Velodrome Summary

Get a Velodrome wallet (e.g. Ledger, Trezor , Exodus, Guarda, AtomicWallet)
Find an exchange that sells Velodrome
Deposit money and make the trade
Withdraw the Optimism to your wallet

Buying Velodrome in 3 Simple Steps

Step 1 – Get a VELO wallet

Ledger

Hardware Wallet

supported :

Desctop & Mobile

Trezor

Hardware Wallet

supported :

Desctop

Exodus

Software Wallet

supported :

Desctop & Mobile

Guarda

Software Wallet

supported :

Desctop & Mobile

Atomic Wallet

Software Wallet

supported :

Desctop & Mobile

Velodrome Hardware Wallets

Velodrome is built on the Ethereum layer 2 scaling solution known as Optimistic Rollups, which is compatible with Ethereum wallets. As such, any hardware wallet that supports Ethereum can be used with Velodrome on Optimistic Rollups.

Some popular hardware wallets that support Ethereum include:

Ledger Nano S and Nano X
Trezor Model T
KeepKey
Ellipal Titan
BitBox02

These hardware wallets are designed to provide users with a secure and convenient way to store and manage their private keys, which are used to sign transactions on the Ethereum network, including Velodrome on Optimistic Rollups.

It is important to note that when using a hardware wallet with Velodrome on Optimistic Rollups, users will need to connect their wallet to a compatible Ethereum wallet interface, such as MetaMask or MyEtherWallet, in order to interact with the platform. By doing so, users can securely manage their Velodrome assets while also enjoying the benefits of hardware wallet security.

The best option for storing any cryptocurrency would be to use a hardware wallet. These are pieces of hardware that store the private key to your coins offline.

Today, there are two leading hardware manufacturers to choose from – Ledger and TREZOR. Both companies have different models of hardware wallets that will get the job done.

If you want deeper insights on specific models, you can read my Ledger Nano X review or my TREZOR Model T review.

Velodrome Software Wallets

Velodrome is a decentralized finance (DeFi) platform that is built on the Ethereum layer 2 scaling solution known as Optimistic Rollups. As such, any software wallet that is compatible with Ethereum can be used with Velodrome on Optimistic Rollups.

Some popular software wallets that support Ethereum include:

MetaMask
MyEtherWallet
Trust Wallet
Coinbase Wallet
Exodus

These software wallets allow users to store and manage their private keys, which are used to sign transactions on the Ethereum network, including Velodrome on Optimistic Rollups. Additionally, some of these wallets offer advanced features such as decentralized exchange (DEX) integration and staking, which can be used to trade and earn rewards on Velodrome.

When using a software wallet with Velodrome on Optimistic Rollups, users should ensure that they are connecting to the platform securely by verifying the website URL and checking for any warnings or notifications from their browser. It is also recommended to enable two-factor authentication and other security measures to protect against potential hacks or unauthorized access.

In summary, software wallets provide a convenient and flexible way to manage Velodrome assets on Optimistic Rollups, and users can choose the wallet that best suits their needs and preferences.

Hardware wallets cost money, so if you’re not sure how serious you are about cryptocurrencies and just want to get a taste of what they feel like, perhaps you would be better off starting with a software wallet.

A software wallet is a free program that lets you store your coins on your computer or mobile phone.

The easiest Optimism software wallets to get started with are undoubtedly Exodus, AtomicWallet and Guarda . All wallets are very intuitive. Exodus, Atomic Wallet and Guarda is available on desktop for Windows, Mac and Linux, as well as on mobile for both iOS and Android. If you want more information you can read my Exodus, AtomicWallet and Guarda review.

Step 2 – Find an Velodrome (VELO) Exchange

MEXC

Payment methods:

Credit/debit card,

SEPA,Wire,ACH

GATEIO

Payment methods:

Credit/debit card,

Bitfinex

Payment methods:

Credit/debit card,

Velodrome

Decentralized Finance

Uniswap

Decentralized Finance

Step 3 – Withdraw Your Velodrome (VELO)

Once you decide on an exchange, open an account and buy your Velodrome. Make sure to withdraw the Velodrome from the exchange to your personal wallet.

Never leave coins on an exchange, as you risk losing them all if that exchange gets hacked or shuts down (which has happened in the past) and always double check address before send coins because you can send the coins to wrong address .

How Does Velodrome Work?

Velodrome is an automated market maker (AMM) protocol aiming to provide deep liquidity and low slippage swaps. It was designed off Solidly’s design with a few key modifications to avoid the pitfalls that Solidly fell to. Velodrome also aims to be a public good for the Optimism ecosystem to support its growth.

The key problem with most AMMs was that emissions were often tied to liquidity, rather than to trading volume, which generates fees for the protocol. To circumvent this, Velodrome allows holders of their native token, VELO, to lock them for a selected duration between 1 week to 4 years. The longer the lock, the more veVELO the user receives, which grants them more voting power.

Source: Velodrome

Their position in locked VELO will be represented as an NFT (also known as veNFT) which can then be traded on NFT marketplaces. Rebasing is also used to ensure that VELO lockers were not significantly diluted, where veVELO is distributed to VELO lockers, proportionate to their locked amount.

Source: Quixotic, an Optimism-based NFT marketplace

Once the user locks their VELO, they are able to use their voting power to direct liquidity emissions to specific pools. Liquidity emissions from Velodrome are distributed proportionally based on votes received by each pool. In return, these voters receive 100% of all fees and bribes received by the specific pools that they voted for.

Source: Velodrome

Bribes come from external parties such as protocols looking to incentivize specific pools. For example, an emerging project might want to incentivize a liquidity pool of their native token to create sufficient liquidity for their token.

Bribes flow to voters which incentivizes them to vote for the pools with the highest combined value of bribes and fees. Consequently, this directs VELO emissions to these pools which benefits liquidity providers, hence attracting more users to deposit liquidity into said pools.

Through such a mechanism, protocols paying out bribes can incentivize more than $1 of liquidity to be provided for every $1 in bribes spent.

Source: Velodrome

VELO Tokenomics

Velodrome sought to surpass Solidly by fixing the issues in Solidly’s design. Many of these issues were in tokenomics, which Velodrome was quick to address. The first of these was emissions.

Solidly distributed a significant portion of its tokens in its initial airdrop. This left little to incentivize future growth for the protocol, preventing the positive flywheel from creating long term ecosystem growth. Velodrome lowered initial emissions and released VELO tokens over a longer timeframe. Moreover, while rebasing was still a feature, it was reduced so that token lockers were still diluted but at a very slow rate compared to Solidly, which did not dilute lockers at all.

Source: Velodrome Docs

The second issue was in the distribution of tokens. 100% of SOLID tokens were distributed based solely on TVL. With Solidly’s rebasing feature, these protocols could easily consolidate control with their tokens, making it hard for new entrants to take any significant control. Velodrome, however, structured their airdrops to focus on protocols and users that would likely benefit the overall Velodrome ecosystem instead. Such users included Optimism power users as well as DeFi users from other chains holding specific locked tokens such as veCRV, vlCVX, vePTP and more.

True to their public goods angle, the Optimism team also received 5% of the total supply in veVELO to support and incentivize necessary pools. Velodrome further supported this by matching bribes on “public good pools” (such as sETH-WETH), established projects and emergent projects in varying degrees.

Velodrome V2.0

In December 2022, Velodrome announced Velodrome V2.0, which is expected to launch in Q1 2023. Aside from a slew of improvements to better the user experience, Velodrome V2.0 also boasts 3 key additional features: concentrated liquidity pools, adjustable trading fees, and VELO Fed.

Concentrated liquidity pools, a concept popularized by Uniswap with their V3 model, allows Velodrome to achieve much greater capital efficiency, especially with identically-pegged assets such as stablecoins or liquid staking derivatives (LSDs).

Adjustable trading fees allow external protocols to set their own trading fees on their own pools, which can be used to incentivize voters to direct emissions to said pools as voters can earn more from the fees of these pools. Higher fees, more votes, simple.

Lastly, VELO Fed puts power in the hands of VELO lockers, empowering them to vote on the monetary policy of Velodrome. In the initial launch of this feature, voters will be given 3 options: to increase, decrease or maintain current emissions with limits on the high and low ends. This gives greater utility to locking VELO tokens and enables more proactive governance over Velodrome.

Conclusion

One year on from Fantom Solidly’s rapid rise and fall, Solidly forks have become some of the best performing forks by TVL.

Source: DeFiLlama

Despite the bear market in 2022, Velodrome continued to build and ship features to users in the expanding Optimism ecosystem. In 2023, many eyes will be watching the Velodrome V2.0 deployment closely and the future developments to come from one of the most exciting teams in DeFi today.