Velocimeter DEX is moving DeFi narrative forward with our improvements and fixes in v3 contracts. This blog post will delve into several improvements and new features introduced in the latest version of protocol smart contracts.
Improvements
Voting on killed gauge and killing gauge totally
The first notable improvement is the killing/killed gauges interactions. We are now able to kill gauge completely as it has never existed which let's us create gauges of new types for our existing pairs. Moreover, even if the gauge paused you wouldn't be able to vote for it causing misdirection of the emissions.
Reset NFT doesn't count as vote anymore
Previously users could not vote after veNFT has been reseted in the same epoch, causing disruption in transferring and selling veNFT. In v3 reset does not count as vote anymore. You are now able to reset veNFT and vote with it in same epoch.
Note, that you can't reset veNFT after you voted with it in the epoch as it will result in votes miscalculation.
Split veNFT
Yes, you are now able to split an NFT same way as you were able merge NFTs. When you split an NFT you define the amounts you want to receive. The lock duration of whole bunch will equal the initial lock duration.
New features
Adjustable fee per pool
We believe that this is one of the most important feaures of v3 contracts. We can now set an override fee parameter on per pool basis. This essentially allows us to control fees on compounder dumping pools as well as adjusting fees for specific scenarios keeping in mind volumes such pool produces.
Set emissions in Minter
Another important addition to this new version is settable emissions in Minter contract within predefined MIN/MAX range. Basically, this means we can reduce or increase amount of emissions on per epoch basis. This becomes especially handy in periods we think we need to incentivise LP more.
Stable pools mess resolved
Besides fees and emissions improvements, we have come to conclusion on stable pools mess. Previously, When we whitelist tokens anybody can create pools and gauges for it of any type. In the new version of contracts only protocol can create stable pool.
veNFT max lock duration
Maximum duration of veNFT lock has been reduced to 6 months.
Multiple Pair/Gauge/Bribe factories
Velocimeter v3 is still 100% immutable. However it comes with possibility for constants improvements and new feature implementations without redeploys.
a liquidity pool factory registry, which allows us to add new liquidity pool types (eg. concentrated, multi-tokens, custom pools);
a gauge factory registry, to allow us support maintenance for these new pool type gauges and reward contracts;
a bribe factory registry.
Pushing new LP reward DeFi narrative - $optionTOKEN
Instead of using FLOW as the reward token, Velocimeter uses call option tokens for FLOW as the reward token. This has the benefit of enabling the protocol to accumulate a large cash reserve regardless of market conditions, as well as letting loyal holders buy FLOW at a discount.
It’s best to illustrate this mechanism with an example. Let’s say the price of FLOW is $100, and there is a call option token oFLOW that gives its holder a perpetual right to buy FLOW at 90% of the market price. The protocol issues 1 oFLOW to a farmer Alice, who immediately exercises the option to buy 1 FLOW for $90 and sell it on a DEX for $100. The tally of gains & losses are as follows:
The protocol: -1 FLOW, +$90
The farmer Alice: +$10
The DEX LPs: +1 FLOW, -$100
Compare this to regular liquidity mining where the farmer doesn't pay anything to the protocol:
The protocol: -1 FLOW
The farmer Alice: +$100
The DEX LPs: +1 FLOW, -$100
We have the following observations:
Reallocation of cash: Using oFLOW instead of FLOW as the reward token effectively transfers cash gains from the farmers to the protocol, and the LPs for the token are not affected.
Trading off incentivization efficiency for protocol cashflow: In our example, for each FLOW token issued by the protocol, the farmer Alice only gets $10 of rewards instead of $100 in the case of regular liquidity mining, which is less efficient. The higher the discount is, the more efficient the incentivization is, but the less cash the protocol gets.
Effectively a continuous token sale: Instead of giving away tokens for free in regular liquidity mining, we effectively turn incentivization into a continuous token sale at the current market price, which enables the protocol to potentially capture a lot more cash compared to a one-off token sale since the protocol would be selling tokens at a higher price when the market price goes up.
We believe that there're a lot of use cases for option tokens. Velocimeter aims to incentivise FLOW LP with new FLOW MAXXING Gauge.
FLOW MAXXING Gauge
New Gauge type is a WIP. All following numbers are for demonstration purposes only.
We are currently in work of new gauge type. This gauge will allow us to provide better (higher) discount for redeeming optionTOKEN directly into the LP.
Let's illustrate this mechanism with another example. Let’s say the price of FLOW is $100, and there is a call option token oFLOW. oFLOW gives its holder:
a perpetual right to buy FLOW at 90% of the market price;
a perpetual right to buy max locked veFLOW at 10% or even 0% of the market price;
a perpetual right to LP into FLOW/WPLS pool with 50% discount. In this case holder is restrained to withdraw liquidity for
xperiod of time. Whenxamount of time passes holder becomes allowed to initiate liquidity withdrawal.
The protocol issues 1 oFLOW to a farmer Alice, who immediately exercises the option to buy 1 FLOW for $90 and sell it on a DEX for $100. The tally of gains & losses are as follows:
The protocol: -1 FLOW, +$90
The farmer Alice: +$10
The DEX LPs: +1 FLOW, -$100
Compare this to second possible choice of Alice:
The protocol: -1 veFLOW
The farmer Alice: +$100 worth of veFLOW max locked giving a right to claim voting bribes and fees
The DEX LPs: 0 change
Compare this to third possible choice of Alice:
The protocol: 0 change
The farmer Alice: +100$ worth of FLOW/WPLS LP giving LP rewards in more oFLOW AND WPLS claimed from people who choose to redeem oFLOW immediately.
The DEX LPs: +1 FLOW/WPLS, +100$
We have the following observations:
Reallocation of cash: Using oFLOW instead of FLOW as the reward token effectively transfers cash gains from the mercenary farmers and notorious dumping bandits to those who like the protocol and see long term value in earning passive income from veFLOW.
Trading off incentivization efficiency for protocol tokens LP depth: In our example, for each FLOW token issued by the protocol, the farmer Alice can choose option 3 and provide liquidity for fixed minimum amount of time which is crucial for protocol long term sustainability.
Effectively a continuous token sale: Instead of giving away tokens for free in regular liquidity mining, we effectively turn incentivization into a continuous token sale with options to redeem into liquid FLOW with less discounts increasing protocol own treasury funds, to redeem into locked FLOW with near-to-zero price decreasing circulation of token and short-term selling pressure, to redeem into LP with higher discount and ability to collect liquid reward gained from those who chose option 1.
In this latest update of Velocimeter v3, we're excited to share numerous improvements and features that will enhance user experience and provide more flexibility for our community. Among these enhancements are adjustable fees per pool, settable emissions in the Minter contract, and the introduction of $optionTOKEN as a reward mechanism. These updates not only provide better control over the protocol but also allow for continuous token sales and cash flow management, ultimately benefiting both the protocol and its loyal holders. As we continue to push the DeFi narrative forward, stay tuned for even more innovations in the coming months.