Velodrome Finance (VELO)

Tokenomics & Utility

VELO and veVELO

VELO is the protocol’s transferable ERC-20 token. Locking it creates veVELO, a governance position represented by an ERC-721 non-fungible token, or NFT. The NFT records a holder’s voting power. A longer lock gives more power for the same amount of VELO: the maximum lock lasts four years, while a one-year lock begins with one-quarter of the voting weight of a four-year lock. Voting power normally declines as the unlock date approaches. Velodrome also supports permanent maximum-duration locks. (velodrome.finance)

Voting determines where liquidity-provider emissions go. Voters can receive trading fees and incentives associated with their participation. A project seeking liquidity for its token can offer an incentive to encourage votes for a particular pool. That creates a connection among three groups: traders need usable markets, providers supply the tokens in those markets, and voters direct rewards toward them. (velodrome.finance)

Velodrome began with 400 million VELO. The initial allocation assigned 60% to community participants, 24% to partner protocols, 10% to the Velodrome Foundation, 5% to Optimism, and 1% to foundational liquidity pools. Weekly emissions began after launch and follow a schedule that reduces issuance over time; the V2 launch reset the weekly starting amount under its updated schedule. VELO’s economic role therefore includes both an initial distribution and continuing rewards for protocol activity. (velodrome.finance)