LIP 013: $60,000 Treasury Investment into $VELO and lock the transaction proceeds as veVELO

Proposal: Liquid Driver to invest $60,000 from the Treasury into $VELO, lock the transaction proceeds as veVELO and become a significant stakeholder in Velodrome Finance.

Background: As part of its V3, LiquidDriver aims to become a cross-chain & chain agnostic protocol. These features will be enabled by the upcoming Master Gauges. This product will allow xLQDR holders—LiquidDriver’s stakeholders—to vote on a biweekly basis for $LQDR emissions. The infrastructure is intended to be rolled out on any EVM compatible chains based on the “local” demand for $LQDR emissions.

In order to soft launch its cross-chain presence, LiquidDriver seeks to achieve the two following objectives :

• Bootstrap initial $LQDR liquidity
• Become a significant stakeholder of a top-tier DEX

The Velodrome "Lock Bonus" program will be used to carry out the Treasury investment: The typical [25%-35%] $OP discount reserved for protocols that farm/buy/lock $VELO is increased by 10% for protocols that acquire and lock $VELO. The $OP discount will be used straight away by LiquidDriver to buy more $VELO and lock it as veVELO.

The Investment will be funded with a portion of the $FRAX accumulated as part of the bribing agreement LiquidDriver reached with Frax Finance to help them bootstrap their liquidity on SpiritSwap.

Investment amount:

• Initial outlay : $60,000
• $OP discount estimated : [$21,000; $27,000]
• Total estimated value of investment : [$81,000; $87,000]

Projection as of 2022-10-25:

• $VELO price: $0.022
• veVELO acquired : [3,682,000; 3,954,000]
• LiquidDriver relative stake: [0.94%; 1%] of veVELO total supply

Given the current veVELO distribution, this operation would allow LiquidDriver to quickly establish itself as one of the top 10 veVELO holders.

Furthermore, this investment will be the first milestone in the LiquidDriver entry into the Optimism ecosystem, and will be accompanied by a proposal to establish farms on Velodrome. The “Cross-Chain Expansion Fund” launched in August has been seeded with 30% of $LQDR’s daily emissions in order to prepare for the upcoming expansion. Since then, the fund has accumulated more than $150,000 worth of $LQDR that are ready to be deployed to new farms. Additionally, until the full roll out of the Master Gauges, emissions redirected to the fund will become fully dedicated to the Optimism venture. The overall strategy is to farm $VELO and lock it as veVELO in order to gradually grow LiquidDriver’s stake and eventually climb to the top 5 veVELO holders.

Benefits:

• Start accumulating a strategic governance token;
• Bootstrap $LQDR liquidity on Velodrome;
• Provide an exit option for $LQDR holders on Optimism;
• Secure long-term and sustainable $VELO emissions for $LQDR stakers;
• Favourable market conditions for a $USD cash investment given the 90-day PA of $VELO against $USD.

Risks:

• Market reversal;
• Exogenous risks related to the Velodrome team.

Risk mitigation:

• Internal due diligence carried out.

Other: Before making any final decision feel free to discuss the proposal in LiquidDriver’s discord : http://discord.gg/LiquidDriver

Please cast your votes:

• For: Approve the $60,000 investment into $VELO and lock all of the transaction proceeds as veVELO
• Against: Do Nothing