Hi folks, I’m 0xFlow and I’m following MetalSwap since the first day.
MetalSwap has recently released its hedging swaps on the Optimism blockchain and after reading the article about the liquidity providing strategy within the Velodrome DEX I had an idea regarding a new use case that would be interesting to implement through the introduction of the VELO token into the dApp.
Inside the Velodrome DEX, the issue of bribes is highly developed, which involves incentives given to those who vote for certain pools.
To vote, it is necessary to lock the Velo token into the dApp, for a period that can be up to 4 years. Once locked, the voting power will be released in the form of veVelo.
The Velo token, since it’s all-time high, has lost about 55% of its value, which puts at risk the strategy of those following the bribes as it is very difficult to recover from this loss. Even by buying at the highest price, if one had opened a hedging position on MetalSwap, they would be in profit since the bribes would have exceeded the premium required by MetalSwap for this coverage.
Currently, 716,944,915 VELO tokens, corresponding to $118,990,854, are blocked to obtain veVelo and receive bribes. These tokens represent 75.5% of the circulating supply of the token, which is 949,249,557.
Those tokens are held by 30k different addresses.
I believe that MetalSwap should consider adding the Velo token to make this use case possible, especially now that they are distributing the OP token to all those who open hedging positions within the dApp.
If the community is interested in it, in my mind, the first steps to follow are:
- Create a paper/research that proves that this strategy helps those who bribe on Velodrome.
- Start to contact the Velodrome team to build a strategy together.
I will wait for the community’s reply. For now, I will conclude this post.