Sonne Improvement Proposal 15 -Adding VELO on SONNE FINANCE (Optimism)

Proposal for Adding VELO on SONNE FINANCE (Optimism)

This proposal advocates for adding Velodrome Finance ($VELO) support to SONNE FINANCE. VELO is the native token of Velodrome Finance, a next-generation AMM designed to be the central liquidity hub for the Optimism network. Integrating VELO will provide several benefits to SONNE users and the overall ecosystem.

Enhanced Liquidity:

VELO's role as the core staking and emissions token of Velodrome Finance signifies its potential to attract significant liquidity. This is also evident by the trading volumes of VELO as well.

Community:

From the very beginning of Velodrome, SONNE Finance has established a strategic partnership with it. Velodrome serves as the core provider of liquidity for its token ($SONNE) on Optimism. By supporting VELO, SONNE can foster and further strengthen the connection with the active and engaged Velodrome community.

VELO Tokenomics

Circulating Supply: 641,441,385 VELO Market Cap: $84,400,589 Locked in Velodrome Voting Escrow: 889,623,303 VELO Total Supply: 1,531,064,688 VELO (Circulating + Locked in Voting Escrow) Emission Rate: 9,639,174 VELO per epoch (week), reducing by 1% weekly (more info in docs)

Information

Website: <https://velodrome.finance/ > Documentation: https://velodrome.finance/docs Developer docs: https://velodrome.finance/security#contracts CoinGecko(Ethereum Mainnet): https://www.coingecko.com/en/coins/velodrome-finance

Velodrome Finance is a next-generation AMM that combines the best of Curve, Convex, and Uniswap. Velodrome NFTs vote on token emissions and receive incentives and fees generated by the protocol.

Challenges:

Market Volatility:

VELO, being a relatively new token, experiences higher volatility compared to established assets.

Smart Contract Risk:

As with any DeFi protocol, there's an inherent risk associated with potential vulnerabilities in Velodrome's smart contracts.

Uncapped Supply:

Unlike many DeFi tokens, VELO has an uncapped total supply. While this can facilitate future growth and protocol needs, it can also lead to inflationary pressures. If the rate of new VELO entering circulation outpaces demand, it could dilute the value of existing tokens over time.

Security Considerations:

Velodrome Finance inherits the contract architecture and full security maintenance from Velodrome V2. Velodrome V2 has been audited and runs a bug-bounty program. The Velodrome smart contracts (by proxy) have undergone audits by independent firms, but vulnerabilities can still be discovered later. https://velodrome.finance/security Caveat this as well by the knowledge that SONNE houses the protocol owned liquidity for SONNE token on Velodrome currently.

Proposal:

We propose that SONNE FINANCE on Optimism integrate VELO support, allowing users to lend and borrow the token.

Technical implementation,

Collateral factor 35% Reserve factor 30% Interest Rate curve - similar to SNX.OP Incentivization YES using $SONNE

Roadmap,

After 5 days of discussion, this will be submitted with any amendments for voting as SIP 14