Extend existing incentives program on Velodrome

Abstract

This proposal aims to extend Connext’s liquidity program on Velodrome to give delegates and the broader community time to decide on how they’d like to optimize Connext’s liquidity strategy long term as per discussion here.

Motivation

L2 adoption continues to gain significant momentum with Connext DAO taking a leadership position in supporting cross-chain activity. Sustaining NEXT liquidity on Optimism will further solidify Connext’s presence in the growing ecosystem and allow L2 users to trade and hold NEXT at a low cost.

On Velodrome’s pilot program, Connext DAO attracted about $250K @200% APR by directing 1.8X in VELO emissions on average per $1 in NEXT incentive to the NEXT/USDC pool.

Rationale

On Velodrome, $VELO emissions are directed to liquidity pools based on the number of votes by veVELO (vote-escrow VELO) holders. Protocols such as Connext can use veVELO or voter incentives (bribes) to attract votes and emissions for their liquidity pairs. DeFi protocols such as Yearn, Lido, Synthetix and Stargate leverage Velodrome’s mechanics to maintain deep liquidity on Optimism in a capital-efficient way.

Specifications

Connext will extend its initial program depositing $5K worth of NEXT tokens for a period of up to 8 weeks. These will be deposited weekly to attract votes for NEXT/USDC. During this period, Connext delegates and community can discuss and decide how to optimize its program and improve sustainability by leveraging Protocol Owned Liquidity as per discussion here.

Tour de OP Program

Velodrome is also currently offering 12K OP in additional weekly incentives to protocols participating in the flywheel. Connext’s pool would automatically qualify to receive a share of these rewards, potentially representing a 15-20% boost to Connext’s program.

Steps to Implement

Multisig managing NEXT tokens transferred by the Connext Treasury from this proposal here will continue to deposit $5K worth of NEXT tokens as voter incentives for its NEXT/USDC pool every week for a period of up to 8 weeks.

Timeline

As soon as Connext DAO formal vote is complete

Overall Cost

$5K worth of NEXT tokens x 8 weeks so $40K worth of incentives