Introduction to Velodrome Finance

Velodrome Finance is an advanced automated market maker (AMM) designed to optimize liquidity management by attracting liquidity providers and facilitating token swaps. It combines the strengths of platforms like Curve, Convex, and Uniswap. Launched in June 2022, Velodrome aims to become the liquidity hub for the Superchain ecosystem, particularly on the Optimism network.

The protocol is powered by two core tokens:

• $VELO: A utility token used to reward liquidity providers and incentivize ecosystem participation.

• $veVELO: A governance token represented as an ERC-721 NFT, used for voting and determining reward distributions.

Velodrome operates through weekly token votes to allocate rewards to liquidity pools. These tokens feature unique governance mechanisms that encourage user participation in decision-making.

Image:https://velodrome.finance/docs

Tokenomics and Distribution System

The distribution of $VELO and $veVELO tokens is as follows:

1. Community: 240M $VELO (60%) - allocated to users who play important roles in the successful and long-term development of Velodrome, including:

   • $WEVE Holders (27%, 108M $VELO)
   • $OP network users (18%, 72M $VELO)
   • Repeat Optimism Users: 3,755 $VELO per wallet
   • Cross-chain DeFi users (15%, 60M $VELO), including:
   • Curve protocol wallets with $veCRV locked for 1,450+ days
   • Convex protocol lockers of $vlCVX
   • Treasury DAO Genesis Mine $MAGIC holders with 1-3 month locks
   • Platypus protocol holders, lock $vePTP
   • Redacted Cartel Dutch Auction Participant
   • Eminence Finance affected wallets
2. Partnerships: 96M $VELO (24%)
3. Velodrome Foundation: 40M $VELO (10%)
4. Optimism: 20M $VELO (5%)
5. Genesis Liquidity Pools: 4M $VELO (1%)

These allocations aim to establish Velodrome as the foundational liquidity layer for the Optimism ecosystem.

Image:https://velodrome.finance/docs

Factors Affecting $VELO and $veVELO

The prices of Velodrome Finance tokens are influenced by several key factors:

1. Growth of Liquidity Pools:
   Velodrome’s primary goal is to attract liquidity providers. As more liquidity flows into the platform, demand for VELO tokens increases,potentially driving prices higher.Increased Liquidity Also Boosts trading volume, positively impactingVELO’s value.

2. $veVELO Governance Participation:
   Governance Participation with veVELO:DemandforveVELO is tied to governance engagement. As more users lock VELOtoobtainveVELO, the reduced circulating supply may push prices upward. Longer lock periods enhance voting power and rewards, making $veVELO attractive for long-term investors.

3. Token Emission and Burn Mechanisms:
   Weekly token emissions and gradually declining rewards play a crucial role in long-term price trends. Reduced new token supply could increase scarcity, potentially raising prices.

4. Integration with the Optimism Ecosystem:
   Velodrome’s close ties to Optimism are key to its success. As Optimism expands and attracts more users, demand for Velodrome’s liquidity could rise, boosting the value of $VELO and $veVELO.

5. External Market Conditions:
   Like all cryptocurrencies, $VELO and $veVELO prices are affected by broader market trends, investor sentiment, regulatory changes, macroeconomic factors, and competition from other DeFi projects.

Price Prediction for $VELO Token

Since early 2025, VELODROME has shown a general downtrend, with its price around $0.06 as of March 26, 2025. Trade cautiously and be mindful of risks.

Image:https://www.gate.io/trade/VELODROME_USDT

Based on the Prophet model’s backtesting of the last 100 days, VELODROME’s price is predicted to hover around $0.05 in the next month. This prediction is not financial advice.

Conclusion

Velodrome Finance represents a promising development in DeFi, with its $VELO and $veVELO tokens offering innovative liquidity management and governance mechanisms. While price predictions are subject to market volatility and ecosystem growth, the protocol’s fundamentals support long-term value. For investors and traders, monitoring adoption rates, token emission plans, and governance participation will be key to understanding these tokens’ future performance.