Optimistic DeFI - Velodrome Liquidity And Voting

I am a fan of decentralized finance, along with yield farming and liquidity rewards. I use PoolTogether and Velodrome on the Optimism layer2, as both have a focus towards fair crypto opportunities. It's farming bonanza!

Velodrome Finance is a next-generation AMM that combines the best of Curve, Convex and Uniswap, designed to serve as Optimism's central liquidity hub. Velodrome uses locked $VELO NFTs to vote on token emissions and receive incentives and fees generated by the protocol.

I have two positions that farm $VELO emissions, which I perpetually claim and add into the two locks I've created. The POOL - wETH LP farms more rewards, as the APR emissions are often above 100%. The ACX - wETH was my initial LP, and it farmed a fair share of $VELO in the last year.

The key problem with most AMMs was that the emission rate is often tied to liquidity, rather than to trading volume. Velodrome allows holders of their native token, VELO, to lock them for a selected duration between 1 week to 4 years and solve the issue. Any VELO holder can lock their tokens to convert to veVELO, and this was the path that I choose!

The longer the lock, the more veVELO the user receives, which grants them more voting power. I initially locked 136.67 $VELO for 4 years, and convert them into veVELO and voting power. I decided to play the long term game, receiving the maximum amount of voting power. The system is simple and efficient! The user locks $VELO for voting power, and can to use it to direct liquidity emissions to specific pools.

The position in locked VELO will be represented as veVELO, a non-fungible token which can then be traded on NFT marketplaces. Rebasing is used to ensure that VELO lockers were not significantly diluted, where veVELO is distributed to VELO lockers, proportionate to their locked amount.

My strategy is simple... vote on Wednesday for the highest voting rewards! Most of the times the rewards are decent... while sometimes are beyond expectations. One week I stumbled across the wstETH/FOX pool with 832% voting APR, and received approximately $20 worth of crypto from fees and bribes!

Liquidity emissions from Velodrome are distributed proportionally based on votes received by each pool, and in return the voters receive 100% of all fees and bribes received by the specific pools that they voted for. Bribes flow to voters which incentivizes them to vote for the pools with the highest combined value of bribes and fees.

I am letting the voting reward accumulate for several weeks, as sometimes the same pool gets my votes in different weeks. I claim and convert most of them in $ETH, holding only $OP and $VELO! I am going long on $OP, and adding the $VELO in the locks to improve the voting rewards. It's a perpetual gain on Velodrome.

Getting all sort of tokens from voting, as the bribe can be different than the LP pair and the rewards from fees. Some of them will be swapped on the DEX, while the pennies will stay with me forever!

I tend to add $VELO on both locks, some small amounts on the 4 years one and big chunks on the short one. The 136.67 VELO initially locked increased slightly, and now is rounded up at 656 $VELO tokens. This lock is much smaller than the other one, but the max lock boosted the voting power and the rewards obtained from voting.

The other lock will expire in 7 months and I will probably not renew this one! There's a time to hold and a time when we should cash out ... and that time may be March 2025! Happy farming frens' and degens!

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