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Summary:
Currently Across Protocol’s $ACX has little liquidity on Layer 2s, limiting the ability for users on L2s to acquire and hold $ACX. This proposal aims to bootstrap $ACX liquidity on Velodrome and establish a meaningful presence for Across Protocol in the Optimism ecosystem.
Motivation:
Users on Ethereum Layer 2s are currently unable to trade the $ACX with low slippage and have limited options for providing liquidity on L2s.
L2 adoption has gained significant momentum over the past 12 months and is expected to continue as more users flock to ecosystems that inherit Ethereum’s security, while offering cheaper fees and faster transaction times.
As a core cross-chain bridge, Across Protocol stands to grow alongside Layer 2s. Building a strong presence for $ACX on Optimism will give Across Protocol further exposure to the ecosystem and improve the user experience for those looking to buy or provide liquidity for $ACX.
Specification & Implementation:
On Velodrome, $VELO emissions are directed to liquidity pools based on votes by veVELO (vote-escrow VELO) holders. Protocols can use veVELO or voter incentives (bribes) to attract votes and emissions for their liquidity pairs.
Protocols bribing on Velodrome often receive $2-$3 in $VELO for every $1 they deposit. Major DeFi protocols such as Lido and Synthetix leverage Velodrome’s mechanics to maintain deep liquidity on Optimism in a capital-efficient way.
Across will implement a 10 week pilot program using 750k $ACX tokens. The protocol will bribe the ACX/WETH liquidity pool on Velodrome at a rate of 75k $ACX per week. Velodrome also offers to match at least 15% of Across Protocol’s bribes each week with $OP tokens. Once an epoch is completed on Wednesday at 23:59 UTC, VELO emissions will begin to flow to Across Protocols’ LP.
Across will also Protocol Owned Liquidity (POL) to receive $VELO rewards. Across will lock all $VELO farmed as veVELO, allowing it to build a voting position that will direct additional emissions in perpetuity, while generating fee rewards, bribe rebates, and bonuses for locking. Any rewards generated by these locks will be compounded further into veVELO.
Locking veVELO will automatically qualify Across for a Lock Bonus, typically worth 25%-40% of the $VELO locked, paid in OP.
Rationale:
Velodrome is the leading DEX on Optimism with $250M+ TVL. Incentivizing liquidity on Velodrome will naturally boost exposure for Across Protocol, as veVELO voters and Liquidity Providers will find $ACX near the top of the voting and LP pages respectively.
Velodrome will also actively support Across Protocol’s marketing initiatives during the pilot program which means the community will not only benefit from having the option to provide liquidity and trade $ACX but also generate demand towards Across Protocol’s solutions. As Velodrome has the largest active user base of any protocol on Optimism, there is no better place to be capturing attention.
Downsides:
Liquidity incentives on Optimism can represent an additional expense for Across Protocol. However, this expense can be significantly reduced through Velodrome’s bribe-emissions multiplier and any potential VELO rewards and the other incentives described above.
Voting:
Yes - move forward with pilot program
No - do not move forward with program
Abstain - no vote