Earned On Velodrome - Until I Lost It All!
Velodrome innovated the space, and this draft article was ready since December. I didn't had time to push the "publish" button as other topics were time sensitive and had priority. Got hacked and drained of my crypto but feels like a waste to not publish it, as the assets are still there ... locked!
Earned some $VELO in 2024, locked all for at least one year... and then the story finished without a happy ending. Lost $35,000 worth of crypto and I now have to work hard to build it back!
Velodrome added Across LPs in the summer, and this was the first $ACX liquidity available on Optimism. Because Velodrome uses locked $VELO NFTs to vote on token emissions, the user can earn incentives from the fees generated by the protocol.
Being early as a liquidity provider is one of the main advantages, as the APY is always bigger with less players in the pool. I paired 11,500 ACX with 0.35 ETH to create my liquidity, and got ready for top yield rewards.
I earned over 1700 $VELO in the early days, claimed and locked, then let the rewards accumulate. Claimed again after few months, and decided to add the bounty to one of the locks. I claimed 4,034 $VELO in December, as the emissions APR dropped to 50%.
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. Was time to claim 136.67 $VELO and convert them into veVELO and 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. 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 decided to play the long term game and locked all the $VELO for four years, receiving the maximum amount of voting power.
I have locked a small amount of $VELO for four years, and a bigger chunk for 365 days. Each has a different voting power, and constantly adds $VELO through the rebase system. The one year lock was increased with 4000 $VELO I claimed in December, for more voting power and bigger rebase.
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.
The veVELO NFT is used to vote for bigger emissions and the rewards are multiple. I earned wETH and $ACX as voting fees, plus $ACX and $OP as incentives for governance participation. One day I will claim them all!
You will get bored of this story! As you know... 2024 didn't started good for PVM, who's wallet got hacked twice and lost his crypto. Yes crypto bro.... PVM got "hacked" not once but twice!
All those earnings were quite cool but now I will just leave them there, as the wallet is now dormant! Will leave it like that until the dust settles on the hack, and the wounds will start to heal. The $VELO is locked of one year, and is no point to keep checking it!
