Velodrome (VELODROME) Research Report

Velodrome's Position and Significance

Velodrome Finance is a core infrastructure solution built on the Optimism protocol, designed to appropriately incentivize liquidity for decentralized finance applications within the Optimism ecosystem. As a decentralized exchange and liquidity protocol, Velodrome plays a critical role in the DeFi sector, enabling efficient token swapping and liquidity provision with optimized incentive mechanisms.

As of December 2025, Velodrome maintains a market position with a market capitalization of approximately $22.39 million USD and a fully diluted valuation of $49.02 million USD, serving as a key liquidity infrastructure for the Optimism layer-2 network. The protocol has attracted 57,957 token holders, demonstrating significant community engagement within the ecosystem.

This report provides a comprehensive analysis of Velodrome's technical architecture, market dynamics, tokenomics, and future prospects.

Origins and Development History

Genesis and Background

Velodrome Finance was developed as an enhanced iteration of the Solidly protocol, addressing core architectural issues from the first iteration to unlock its full potential. The protocol was specifically engineered to solve the critical challenge of liquidity fragmentation on the Optimism network by implementing an optimized incentive mechanism that rewards liquidity providers proportionally to their contribution and governance participation.

The protocol's design recognizes that layer-2 solutions require specialized DEX mechanisms that account for lower transaction costs and unique network dynamics, positioning Velodrome as the native liquidity solution for Optimism-based applications.

Key Milestones

• Solidly Foundation Era: The protocol built upon proven mechanisms established by Solidly, inheriting battle-tested AMM (Automated Market Maker) architecture while implementing critical improvements.

• Protocol Launch on Optimism: Velodrome went live on the Optimism network, introducing its dual-token governance and utility model to coordinate liquidity incentives across the ecosystem.

• Community Expansion: The protocol achieved significant user adoption with over 57,000 token holders, establishing itself as a primary liquidity venue within the Optimism ecosystem.

• Market Recognition: Velodrome achieved its historical peak price of $0.407515 USD on December 13, 2024, reflecting market confidence in the protocol's value proposition.

How Velodrome Works?

Decentralized Liquidity Infrastructure

Velodrome operates as a fully decentralized protocol across the Optimism blockchain network, eliminating dependency on central intermediaries or traditional financial institutions. The protocol functions through a distributed network of validators and participants who collectively maintain the system's integrity without centralized control, ensuring transparency and resilience against single points of failure.

Dual-Token Governance Model

Velodrome employs an innovative two-token system to balance utility and governance:

VELO Token (ERC-20 Utility Token)

• Serves as the protocol's primary utility token
• Distributed through liquidity mining emissions to reward liquidity providers
• Represents the economic value generated by protocol activities
• Can be locked to participate in governance

veVELO Token (ERC-721 Governance NFT)

• An NFT-based governance token operating as an ERC-721 standard token
• Acquired by locking VELO tokens through a voting escrow mechanism
• Grants holders the right to direct liquidity incentives and make protocol governance decisions
• Additional VELO tokens can be deposited into existing veVELO NFTs to increase voting power

Liquidity Incentive Mechanism

The protocol's core innovation lies in its ability to direct liquidity provider emissions efficiently:

• Emission Distribution: VELO tokens are regularly emitted and allocated to liquidity pools based on governance voting decisions
• Governance Direction: veVELO holders vote to determine which trading pairs and pools receive emissions in the upcoming period
• Alignment of Incentives: This mechanism ensures liquidity flows to the most valued trading pairs as determined by protocol governance, rather than through arbitrary allocations

Security and Consensus

Velodrome leverages Optimism's underlying security architecture and consensus mechanisms:

• Ethereum Security Inheritance: As a layer-2 solution, Velodrome inherits the security guarantees of Ethereum's base layer
• Smart Contract Verification: All protocol transactions are verified through Optimism's fraud-proof and sequencer mechanisms
• Cryptographic Protection: Token transfers and transactions utilize public-private key cryptography to ensure authenticity and prevent unauthorized access
• Transparent Audit Trail: All transactions are recorded immutably on the blockchain, providing complete transparency while maintaining transaction privacy through pseudonymity

Market Performance Analysis

Current Market Status (as of December 20, 2025)

Price Performance Trends

Analysis: The token has experienced significant long-term depreciation, declining 90.42% over the past year from higher valuations. However, short-term price action shows some recovery momentum with positive 24-hour performance.

Historical Price Range

• All-Time High (ATH): $0.407515 USD (December 13, 2024)
• All-Time Low (ATL): $0.00557275 USD (July 5, 2022)
• 24-Hour High: $0.02143 USD
• 24-Hour Low: $0.0203 USD

Tokenomics Overview

Token Distribution

• Circulating Supply: 1,055,446,809.55 VELODROME (representing 45.66% of total supply)
• Total Supply: 2,311,368,194.46 VELODROME
• Maximum Supply: Unlimited (infinite supply model)

The protocol implements an inflationary emissions model where new VELO tokens are continuously minted and distributed to liquidity providers through governance-directed incentive mechanisms. This design prioritizes sustainable liquidity incentivization over fixed supply constraints.

Utility Functions

VELO Token Utility:

• Liquidity mining rewards distribution
• Protocol participation incentives
• Governance participation (via locking)
• Economic value representation

veVELO Governance Rights:

• Direct voting on liquidity emissions allocation
• Protocol parameter adjustment authority
• Proportional decision-making power corresponding to locked VELO amounts
• NFT-based permanent ownership of governance position

Trading and Accessibility

Exchange Availability

Velodrome is traded on 5 major cryptocurrency exchanges, with availability on Gate.com providing comprehensive trading pairs and liquidity access for global participants seeking exposure to the protocol's token.

On-Chain Information

• Blockchain: Optimism (OPETH)
• Contract Address: 0x9560e827aF36c94D2Ac33a39bCE1Fe78631088Db
• Token Standards: ERC-20 (VELO), ERC-721 (veVELO)
• Verification: Optimistic Etherscan blockchain explorer

Ecosystem and Resources

Official Channels

• Website: https://www.velodrome.finance/
• Documentation: https://docs.velodrome.finance/
• Twitter: https://twitter.com/VelodromeFi
• Block Explorer: https://optimistic.etherscan.io/address/0x9560e827aF36c94D2Ac33a39bCE1Fe78631088Db

Community Engagement

With 57,957 token holders actively participating in the protocol, Velodrome maintains a growing community of liquidity providers, traders, and governance participants within the Optimism ecosystem.

Conclusion

Velodrome Finance represents a sophisticated approach to solving liquidity fragmentation within layer-2 ecosystems through its innovative dual-token governance model and incentive mechanisms. While experiencing significant price depreciation over the past year, the protocol maintains fundamental value as core infrastructure for Optimism-based decentralized finance activities.

The protocol's structural design—combining utility-focused VELO emissions with governance-directed veVELO NFTs—creates alignment between token holders and ecosystem health, positioning it as a critical component of Optimism's DeFi infrastructure for long-term sustainability and growth.

Velodrome Market Performance Report

Velodrome's Market Performance

Circulating Supply Overview

As of December 20, 2025, Velodrome's circulating supply stands at 1,055,446,809.55 tokens, with a total supply of 2,311,368,194.46 tokens and an unlimited maximum supply. The circulating supply represents approximately 45.66% of the fully diluted supply, indicating a phased token release model that manages market dynamics over time.

New tokens enter the market through emission rewards distributed to liquidity providers via the VELO protocol, creating an inflationary mechanism designed to incentivize network participation and liquidity provision on the Optimism blockchain.

Price Fluctuation

Velodrome reached its all-time high price of $0.407515 on December 13, 2024, reflecting strong market sentiment and increased adoption of the Optimism-based decentralized exchange protocol. Conversely, the token's all-time low price of $0.00557275 occurred on July 5, 2022, likely during the broader cryptocurrency market downturn and early-stage volatility.

Currently trading at $0.02121 (as of December 20, 2025), Velodrome has experienced significant price compression, declining approximately 90.42% over the past year. Short-term performance shows mixed signals, with a 3.31% gain over the last 24 hours, but substantial losses of 20.87% over 7 days and 37.03% over 30 days, reflecting ongoing market pressure and investor caution.

Access current VELODROME market price on Gate.com

Market Capitalization and Valuation

• Market Capitalization: $22,386,026.83
• Fully Diluted Valuation (FDV): $49,024,119.40
• Market Dominance: 0.0015%
• 24-Hour Trading Volume: $22,439.93

The gap between market cap and FDV reflects the substantial portion of tokens yet to enter circulation, which will continue to influence price dynamics as the protocol distributes additional incentives.

Token Economy

Velodrome employs a dual-token model:

• VELO: An ERC-20 utility token used to reward liquidity providers through protocol emissions, creating incentive alignment for network participants.
• veVELO: An ERC-721 governance token issued in NFT form, enabling VELO holders to lock their tokens and participate in protocol governance. Additional tokens can be added to veVELO NFTs at any time, allowing flexible participation strategies.

This mechanism ensures that long-term stakeholders maintain governance power while the protocol distributes utility rewards to active liquidity providers.

Network Participation

• Total Token Holders: 57,957
• Supported Exchanges: 5 (including Gate.com)

Velodrome (VELODROME) Comprehensive Analysis Report

Core Market Data

Velodrome is a decentralized finance protocol built on Optimism, currently ranked #821 in the cryptocurrency market by market capitalization. As of December 20, 2025, the following market metrics apply:

Price Performance Trends

• 1-Hour: +0.24%
• 24-Hour: +3.31%
• 7-Day: -20.87%
• 30-Day: -37.03%
• 1-Year: -90.42%

Protocol Architecture and Tokenomics

Velodrome Finance operates as an Optimism protocol solution designed to appropriately incentivize liquidity provision within its ecosystem. Building on the foundation established by Solidly, the Velodrome team has addressed core issues from the first iteration to achieve full protocol potential.

Dual Token Model

Velodrome Finance employs two complementary tokens to manage utility and governance:

VELO (ERC-20 Utility Token)

• Functions as the protocol's primary utility token
• Used for emitting rewards to liquidity providers
• Forms the foundation of the protocol's incentive mechanism

veVELO (ERC-721 Governance Token)

• Implemented as an NFT-based governance token (veNFT)
• Created through locking mechanisms
• Any VELO holder can vote to lock their tokens and receive veVELO in exchange
• Additional tokens can be added to veVELO NFT at any time
• Provides voting power in protocol governance

Ecosystem Integration

Velodrome operates as a liquidity incentive protocol on Optimism Layer 2, functioning as critical infrastructure for the Optimism ecosystem. The protocol facilitates efficient capital allocation through its voting-locked tokenomics model, enabling liquidity providers to optimize yield while governance participants direct protocol incentives.

Project Information and Resources

Official Channels

• Official Website: Velodrome Finance
• Documentation: Velodrome Docs
• Smart Contract: Deployed on Optimism Ethereum (OPETH) at address 0x9560e827aF36c94D2Ac33a39bCE1Fe78631088Db
• Block Explorer: Optimistic Etherscan
• X (Twitter): @VelodromeFi

How to Participate in Velodrome

1. Purchase Options: Acquire VELODROME tokens on Gate.com and other supported exchanges

2. Token Management: Store tokens securely using compatible Ethereum wallet solutions

3. Governance Participation: Engage in protocol governance by locking VELO tokens to obtain veVELO voting power

4. Liquidity Provision: Provide liquidity to supported trading pairs and earn protocol rewards based on veVELO voting allocation

Market Position and Outlook

Velodrome maintains an important position within the Optimism Layer 2 ecosystem as a liquidity optimization protocol. With a circulating market capitalization of approximately $22.4 million and significant price decline over the past year (-90.42%), the protocol continues to serve the DeFi infrastructure needs of the Optimism network.

The protocol's success depends on sustained demand for Optimism-based liquidity provision and continued development of the Layer 2 ecosystem. Traders and participants should monitor protocol governance updates, Optimism network developments, and broader market conditions affecting Layer 2 adoption.

Data Current as of: December 20, 2025, 11:36:44 UTC

FAQ

Why is it called a velodrome?

Velodrome derives from French, combining 'vélo' (bicycle) and '-drome' (racing place). The name reflects its function as a high-speed circular racing track, similar to a bicycle racing venue, symbolizing fast and efficient trading velocity in DeFi.

What is a velodrome in slang?

A velodrome is an oval, banked track designed for professional bicycle racing. In slang, it's commonly referred to as a bike track, where cyclists compete at high speeds on the curved surface.

What are the key features and dimensions of a velodrome track?

A velodrome track measures 250 meters in length with a 7.2-meter width. It features banking angles ranging from 13 to 42 degrees, with outside dimensions of 115 x 55 meters, designed for optimal cycling performance.

What sports and events are held in a velodrome?

A velodrome hosts track cycling events including sprints, endurance races, and team pursuits. Common events are the sprint, keirin, and team sprint, testing speed, endurance, and strategy on the circular track.

What is the history and origin of velodrome racing?

Velodrome racing originated in 1881 with the first official race held in Paris, won by French cyclist Charles Terront. It has remained a popular form of track cycling ever since.