The MetaDEX: Aerodrome & Velodrome Explained | Ace & Alexander

Transcript

we've had a lot of success in not sort of like going to where the activity is but going to where the activity will be but our whole thesis was uh that ethereum l2s were going to grow exponentially right even in going into a bare Market that they would grow exponentially and um that thesis is very much played out and I really think we're we're still just in the very beginnings of it and so when we think about where to devote our our sort of time and attention we think focus is a Moe and you can see this in the fact that multi-chain dexes really struggle outside of One Core ecosystem pair is an Innovative pair trading exchange built

on top of Simo users can trade trending narratives with one click from do chip narratives such as long BTC short e right through the whiff versus Bonk the Hat stays on Sim's intense Centric architecture enables deep liquidity source offchain and Broad onchain and combined with pair has democratized access the complex trading strategies typically reserved for institutional Traders nothing set on zerox Research is a recommendation to buy or sell Securities or tokens this podcast is for informational purposes only and any views expressed by anyone on the show are solely our opinions not Financial advice Pacho Ryan and our guests May hold positions in the company's funds or projects discussed what's up everyone

welcome back to another episode of ZX research today I'm joined by Alex and Ace core contributors at vome and Aerodrome as well as pibbles who's one of my favorite colleagues at blockworks research um as a reminder you can use code0x research 10 for 10% off your blockworks research subscription all right let's get to it thank you for joining us Alex Den how are you guys doing doing great well been a big yeah we're in sync look at us before we get started I feel like it's important to give an over view of velodrome and Aerodrome and how they fit into the space as a decks because you guys do something pretty

novel with the ve33 Dynamics so it'd be great to get a brief introduction on that yeah yeah happy happy to to dive in so so yeah I think the best way to think about uh velodrome and Aerodrome are as uh what we call metad Dees um and fundamentally what a metad deex is is one that sort of combines all the best elements from other decks Primitives so Bel Drome and Aerodrome both combine the best of curve convex univ V2 univ V3 um and additional layers like vodi uh all into one single streamlined uh Dex

design uh so what that means practically right is that you know if you are a project seeking to build build uh liquidity on your token if you are a Trader if you are a liquidity provider you know rather than having to sort of pick and choose you know which Dex model which amm model uh is is best for you and maybe jump between four different dexes four different tokenomics designs and and all the complexity associated with that in addition of the layers built on top of each one each taking its own fee cut um we build up H into the the base layer and um what we think that provides is uh a very uh unique and

novel uh solution both for those looking to attract and build liquidity as well as Traders and swappers and of course uh that has resulted in us being uh not only the sort of leading decks of um optimism main net and uh the super chain but also on base and I I believe you know Aerodrome might be now like the fifth or sixth largest decks uh by tvl uh anywhere in D5 yeah just to add on to that I I think one of the core components of the vrum teams uh build approaches is is really emphasizing public goods and you know stepping away from rent seeking Behavior so we've

really try to provide a balanced uh system for anybody who wants to come in from any of the three major components whether you're providing liquidity trading I think trading is what we all do but we want to have efficient uh swaps protocols who really are seeking an efficient way to deepen liquidity and we have this this voting layer which is novel um and engages probably everybody in the in this in the stack do you guys want to talk a bit more about that voting layer aspect because I feel like that's um one of the parts that I think is a bit complicated uh in terms of B yeah um I think the best way to think of it is one is of course if you're

familiar at all with curves model right it it works very similar to the extent that um you can take the Vel or Arrow token um you can lock it for up to four years and what that gives you is the ability to vote each week to direct protocol emissions and Emissions are basically the incentives to liquidity providers so you are choosing you know which pools on any given week uh you know rapde pool a op token pool Etc are receiving emissions and thus um you know are are growing liquidity uh but this only really works because uh our system directs 100% of

the fees and rewards that the protocol generates back to those token lockers um um basically in exchange for their participation right it's it's basically an incentive so um in the Curve Model I think one of the issues that was uh identified and and sort of fixed in in our model is that when you vote for pools on curve um there's no incentive necessarily to vote for the most productive pool um you as a ve CRV holder are getting the same cut of fees whether your voting for a pair there that is generating a million dollars in revenue or like 100k in Revenue right

you get the same reward so uh in our system you only get the rewards for the pools that you vote for and all that essentially means is that every voter is incentivized to vote for only the most productive pools so the pools generating the most fees we'll get the most votes we'll get the most Admissions and it turns into this sort of growth flywheel and we also don't slice and dice the rewards uh along the way um you know on curve 50% of the fees are going to liquidity providers and 50% are being distributed uh kind of uh to everyone equally that locks uh uh CRV for us 100%

of those rewards are going to voters and so we do think that this is like very novel we think this is like defi as it should be you know there it shouldn't be like uh what you see with Unis swap which is um for years there's been no direct Revenue you know either flowing directly to the Unis swap foundations or or Labs let alone token holders it's always been this promise that maybe one day the token would turn on the fee switch right and there'd be some sort of cut of Revenue going to to token holders or token stakers or however they decide to sort of implement that for us from day one the the fee switch has been on

right and it's been set to 100% And we as uh you know the velodrome or or Aerodrome foundations um are just token lockers like any other right we we only earn um rewards how any other participant earns rewards and so that basically aligns incentives uh I think very very well in that uh there's no team Cuts uh there's no like Team Liquid uh token allocations to be sold on Market the whole system works like defi should which is if the protocol is creating rewards those rewards only go one place which is two participants and even the foundations

right are just participants in the system like any others uh we lock new tokens to try to you know Shore up our own voting power against inflation um and we think that's basically how things uh should be that makes sense um and under this system as far as I understand you kind of not force but you incentivize other protocols to be more active in how they deal with their liquidity um do you kind of want to talk about this and a bit about how the experience for protocols is on your decks on belr and Aerodrome versus on let's say if they wanted to launch liquidity on another Dex yeah I mean I think this is one of the

strengths that is perhaps unsung with uh our team and and the way that we interact with the various protocols that we're partnering with um as Alex has you know eloquently walked you through the voting process and the the v33 model it's not easy to Gro and say you know 30 seconds I'm unfortunately that's one of the big challenges so it does require quite a bit of education um some strategy planning with our protocol partners and every every protocol has different needs so you really have to understand um and this is kind of how we operate uh as a B2B company in some respects um different

protocols you know have like I said different liquidity needs some have their own liquidity that they're on boarding to the protocol themselves and they just want to create a an efficient treasury mechanism others have very little liquidity and they need help bootstrapping from kind of ground zero so um you know the the process is like you have to help uh those teams come up with an efficient way of of achieving their protocol liquidity goals um and this is where you know we have different ways of of achieving that for them and you know the most efficient way in the early days here on Aerodrome for example is by uh providing voting incentives so what's really interesting about

Aerodrome um is that we're we're still seeing extremely high multiples in terms of the Aero emissions relative to the amount of dollars that any protocol can deposit for an incentive to voters um at at its highest I think they were getting a a four to 5x multiple on their voting incentives which is pretty crazy like I I would challenge anybody in defi to find anything close let alone uh private Market maker deals you're paying lots of money to get liquidity required for your token um even in the most recent couple of weeks where we had uh a pretty big Market pullback the multiple only fell to two and a half times so you're you're

still getting extremely high efficiency on on voting incentives um so that's kind of the the most basic way of of achieving liquidity voters are going to like to see that they're going to direct their votes to your pool and then you get the Aro emissions that um incentivized LPS the other ways that we're helping um protocols who have their own liquidity is by encouraging them to farm Arrow just like you and I would as LPS then take that arrow and lock it up um we are actually providing V Arrow incentives as part of our flight school program so the higher number of Arrow you lock the more you'll receive in terms of bonus and direct voting for your pool is an

extremely it's essentially a fre way of getting emissions for your liquidity um so we're seeing you know zeroc cost basis type incentives programs from from teams that have their own treasury that are being deposited onto Aerodrome or valad Drome um so yeah it's it's been I would say quite a custom experience and and we do provide this sort of white glove um strategy planning with with uh with our protocol partners and um it keeps the job interesting and fun and obviously helps us kind of stay in tune with what's happening D5 I imagine it's also beneficial for you guys because you get to learn about protocols um and like potentially good partners ahead of time as they seek you

guys for um liquidity um talking so as far as I understand for protocols they get a different deal but what about liquidity providers because Alex you mentioned that on other dexes um LPS get a bit of the emissions uh a bit of the fees as well as some other rewards what how does it work I mean you already described the that it mainly goes to voters but H how does how has that affected like user behavior and yeah do you think LPS get a better deal in the end yeah I think I think there's a few Dynamics to discuss here I mean one is that the having the optionality right to to choose what kind of pools you want to

provide liquidity on is is huge here right if if you want sort of provide liquidity on a curve style Samm sort of pool um uh you know optimized for for basically stable stable you've got plenty of those as an option if you want to provide liquidity on pools that are V amm so this is your classic sort of univ V2 Style full range liquidity you can focus there or you know if you're feeling a little more adventurous and and you want to provide liquidity on a univ V3 style concentrate pool you've got those options as well so the first thing I think for liquidity providers is again in one place you've got this full

spread of options and then of course just by nature of us being the liquidity hubs of optimism and base you've got almost every major ecosystem token available so that's like a ton of optionality without you needing to jump between three different dexes and figure out uh which is best for you um but the other big benefit I think that that comes in is that uh by virtue of the rewards being a flow of VO or AO emissions it's also a very predictable stream of of rewards right you're not needing to worry about the relative

degree of like trading volume on a given day or week um you're not needing to sort of hyper optimize uh for fees this is just like each week you you know what the stream of rewards will be you'll know roughly you know at what size of that pool you are and so it makes it just kind of a a more um uh like predictable uh experience and I think this is especially important um in the context of slipstream right we have been watching volumes of course for a long time and you know most weekends you know like what what you see is on Bas and

optimism like the volumes are like going from up here just to like cratering down right and so that means if you are a liquidity provider on Unis swap uh V3 uh for instance you're going from probably printing fees to just like earning almost nothing over the weekend and that means if you're encountering any degree of impermanent loss over the weekend basically it's it's becoming a much less rewarding experience to provide liquidity there and I think part of the benefit of of the uh emissions-based model for liquidity providers is that stream's going to remain just the same over the weekend as it is over the week so you can be a bit more hands off still

want to make sure you're staying in range um and all that fun stuff but it's a bit more predictable bit more hands off and with our uh implementation of concentrated liquidity too we also have wider tick spacing and what that means is it allows you to set your ranges um wider uh without needing to constantly uh rebalance um depending on the kind of pair right so AES Ace uh gave me the idea maybe it's better to talk about these as like tick buckets right um but basically you can like set a three- tick range and it will represent a wider range than what a

three tick range would be on Unis Swap and that also I think just creates a better uh liquidity providing experience because you can uh not need to worry about constantly rebalancing um quite as much or setting you know insanely narrow ranges or or things like that so I think it's definitely been one of our focuses is to try to make the liquidity experience as user friendly um as as possible and I think you see the the fruits of that labor and the fact that you know on optimism and base you know vome and Aerodrome have more TV than than every other decks you know like

combined right it's it's very impressive yeah I think the the OG yield Farmers kind of migrated to these dexes because um there's a couple reasons one if you're paying attention to like voting incentives you can pick the best pool for your liquidity and they're fairly agnostic to the Token ticker it's more like hey where can I get the highest yield and um where's my liquidity going to be the most efficient uh the other thing is like these a lot of R LPS really like the token rewards and you know they've been they're they're not only LPS they're also voters so they're trying to acquire as many of tokens as possible lock them up and then every week they're you know they're generating both the emission token and

the voting r words yeah and just highlighting the uh the success of vrum and aerodrum in the L2 landscape it's it's pretty obvious that like most of the tvl has shifted on l2s to a combination of base and optimism and I think it's really important to point out that bases and optimism's success in defi is pretty much solely because of aerodrum or vrum in my opinion I mean if you look at something like Z K sync or scroll or um any of these other l2s like they they're really struggling with actually stimulating activity and I I think there's a strong Testament there for

what vrum and arrum have done so yeah yeah I I don't think I don't think we could take all the credit but what I I do think is is special about these models is that they do basically serve as secondary economic engine of these ecosystems right when you look at the like total um uh you know sort of like value that uh a velodrome has injected into the optimism ecosystem in the forms of fees generated in emissions and things like that I mean it is as large if not larger than some of the like entirity of Grant rounds on on optimism

so if like optimism is giving out op tokens is grants to try to incentivize activity the fact that there's one protocol that is injecting just as much value you know on a daily or weekly basis into the ecosystem it does have this economic multiplier effect and this is actually very important to um the launch of aerodome on base because what we knew from the very beginning and I'm sorry if anybody still holding on on to hope for the idea of there being a base token or base airdrop but I I do not think they will be one um but base was basically you know in this situation where they were going so we're going to have eth that's going to be our gas

token we're part of ethereum we're going to have uh op that's going to govern changes to the chain so that is essentially our governance token but we're missing the third role that ecosystem tokens usually play which is the incentivization token right what is the token that's going to help attract projects um liquidity providers and Traders and so there was this kind of hole to be filled and that's where aerm came in right where where the arrow token is being emitted uh every week and rewarding um ecosystem participants for for showing up and uh driving activity on chain and I think this is why you've

seen people like uh coring Bas Ventures and the base ecosystem fund you know get engaged IR ly with arrow because it it is playing a very unique but but very critical role in the ecosystem whereby the ecosystem is being incentivized there is an economic engine without the base team needing to take on you know any of the risk or complexity associated with launching a token and you know for me personally I'd much rather Jesse you know continue to focus on evangelizing and growing base than like managing a base Dow or you know something like that we we see how you know look at what's

happened to arbitrum since they launched the token it's like they've just descended into this chaos of of Dow management and grants and all that sort of stuff we're free from it on base and I don't think it's uh cost them them anything there's no like tradeoff and so yeah I think it's it's really uh amazing and you know given the size of Aerodrome and given that 100% of the those fees and Rewards are going back to the Token you know the the token is very much tied to the the success of activity on the broader ecosystem so it creates kind of a a beautiful growth flywheel for the ecosystem yeah that's particularly interesting what you say about having an

L2 Dow and how that kind of encumbers the the entire chain and divides the team's attention hey guys permissionless the event for crypto natives is heading west to Salt Lake City and we're bringing the big biggest names in crypto together for an incredible can't miss event join me in the rest of block works on October 9th to hear for more than 200 Industry Titans including Nick white from Celestia shiron from Igan and Keon from Mona the conversations that permissionless will be covering the hottest themes in crypto including modularity reaking the Bitcoin and Solon ecosystems Ai and crypto rollups l2s institutional adoption and of course the November election that will be right

around the cor we couldn't be more more excited about this event and it's happening in one of the most beautiful places in the US ticket prices will be increasing towards the end of June so get your ticket today make sure to use the code so I get some credit and bragging rights from the rest of the team uh use ZX10 for 10% off on your ticket one more thing we're also hosting the permissionless re hacka font in collaboration with blebox the theme this year is a multi-chain future to build a better cross chain experience so I don't have to have a heart attack every time I bridge to a new chain all hacka found participants will rece receive a free ticket to attend permissions so if you're a developer come join us in Salt Lake City team up with fellow devs and build the multi-chain future pair is an

Innovative pair trading exchange built on top of Simo users can trade trending narratives with one click from Blue Chip narratives such as long BTC short e right through the whiff versus bunk the Hat stays on Sim's intense Centric architecture enables deep liquidity source offchain and Brad onchain and combined with pair has democratized access to complex trading strategy typically reserved for institutional Traders rewinding to more of that that LP experience you guys launched relay a couple months ago and I was wondering if you could touch on that and you know address what issues this solves and how the adoption experience has been since yeah yeah so um relay is is very cool um so if if you're familiar with

the curb ecosystem which I I know probably not every everybody listening to this will be but um there's this an amazing tool in the curve ecosystem um that was built called uh vodi right and and what vodi essentially accomplished was hey look you know as much as we all love onchain governance and voting and all that sort of stuff uh some of us would just like to deposit our our lock tokens our governance power right somewhere have that system work automatically and kind of like deliver back to us the the yield right so kind of an autov voting Auto compounding layer for those of us who just want to

vote optimally but we don't necessarily want to go in and click a bunch of buttons every week um maybe you want to take some of that yield go on vacation right and just come back to to the rewards that that that you've earned so we built that um directly into the base layer on uh on both velodrome and Aerodrome and that has some benefits to the extent that like vodan on on curve you know they take a they take a cut of that they they take a degree of the the fees right which is completely fair for them to do because they're not a part of the you know the broader Dow and and

they are providing the service but because we built it in the base layer you know we didn't need to add any fees to it but essentially what it does is like if you take your ve V or ve arrow and you deposit it into the Maxi relays there those relays are just going to vote for you optimally each week so make sure that you get the sort of maximum amount of rewards back um it's going to compound those rewards back into um Vell Arrow so it'll swap them you know uh right right on chain and then compound it back into more ve Arrow or ve Val so from a user standpoint it drastically simplifies things but it's also

important for protocols so for protocols uh there's a ton of administrative work of course for all protocols every week right and and we you know work with people that it's like we have to remind them to incentivize remind them to claim the rewards etc etc so for protocols they just want to be able to vote for their pairs each week and they want to take those rewards compound them into more voting power and vote more rewards to their pairs right that's that's all they want to do and so this takes all of the like Multi Management out of their hands um and it also just creates a great flywheel because that is kind of constant buy pressure on on the

underlying token as well so they're going out and buying more V locking more V voting more emissions or more arrow and uh so it's just a it's like a very uh flywheel positive sort of feature because it makes your life easier and it creates positive outcomes for for the overall system yeah I think that makes a ton of sense like it it's pretty absurd to expect an LP to log on at the end of every Epoch and manually select which pools they're going to incentivize I'm I play a pretty big role in Unis swap St with incentives for liquidity across multiple chains and uh I can tell you firsthand one of the

worst things that we've been dealing with is just managing like 10 different multi- sigs and refilling contracts with incentives and figuring out the bridges so once again absolutely killing it on the the user experience side for a protocol yeah for real um so we have relay which is amazing honestly for LPS but then going back into slipstream um so this is one that kind of goes over a lot of people's heads and I know you touched on it earlier but could you give the tldr of what slipstream is what it's enabled and um what adoption is look like for that as well yeah um I mean the the elevator

pitch right is just you know slipstream brings uh univ V3 style concentrated liquidity uh to Aerodrome and and velodrome and what we know right from watching the last few years here in in Defi and in crypto is that uh univ V3 is not right for for every token right it's not right for for every uh protocol or for every liquidity provider I think everybody including probably Unis swap themselves uh now we're seeing them redeploy uni2 right on l2s uh it sort of surprised them the degree to which other uh amm models have

very resilient or you know that use cases around them have remained even in the presence of of uni V3 uh but what uni3 does do um better than anybody else is for those extremely high volume pairs right your wde usdc pairs your um uh op WRA e pairs basically those pairs that are doing enough organic trading volume to to self- sustain that the ability to tighten the liquidity in there um makes them uh absolute volume drivers right it it just means that they can soak up the vast majority of the volume in an ecosystem that's being routed through

aggregators by by delivering Superior execution so while we've uh always remained dominant on the the tvl front and while you know you might say like 90% of the tokens in the ecosystem maintain their primary liquidity on vdrome or Aerodrome from a pure volume standpoint if 90% of the volume in the ecosystems going through like wde usdc any given day you need that ability to concentrate liquidity in order to compete for that volume and thus compete for the fees right and and the value that it creates so slipstream was our basic uh basically our answer to that um it's built from the the univ V3 uh contracts but includes a number of

changes and um say quality of life improvements I I mentioned that the tick spacing is one aspect of it um our onchain reward mechanisms too are also all built from scratch you've seen in a lot of other ecosystems um kind of maybe a shortcut taken for for how to reward the three style liquidity which is like to take it to offchain Merkel sort of stuff um and distribute rewards that way uh we are big decentralized Maxis we're very very much like it's all it all has to live onchain there can be no centralized dependencies no offchain dependencies so the rewarder also 100%

built on chain but what this has allowed us to do is basically combine our massive tvl Advantage um with uh comparable execution to Unis Swap and this week right which has been a massive trading week for uh rapd usdc trading right is speculation around around the ETFs uh and we've been seeing the slow climb up right where we're vamping away more and more of the volume uh from Unis swap but on base uh like yesterday was the the big test right everyone's trading rapde tons of volume can we deliver more volume uh than Unis Swap

and and we did uh so we we beat them on on rapde uh yesterday and I think the thing that is so interesting about this is that uh for all the more like market share volume that slipstream claims from Unis swap um that uh creates a flywheel effect for for us right those pools continue to grow larger they earn more emissions more rewards but it creates a very negative flywheel effect for UNIS swap because if we are taking half of what they would have earned in terms of volume um like like we've done over the the past few days um then that means fees are dropping proportionally on Unis

Swap and as fees drop that's generally the only incentive mechanism for these pools then uh liquidity drops and the more liquidity drops the more volume's going to be going through uh Aerodrome or velodrome and so we're we're just in incredibly excited I mean the slipstream growth has been parabolic um and uh you know we've only just recently gotten most the uh uh aggregator integrators on board there's still a lot more integration to go we're adding automated liquidity management for those people who don't want to be micromanaging their uh LP positions every day so uh there's a lot more still to come there but we

couldn't be more excited because I think you know what there's probably been like a dozen protocols that have raised you know tens of millions of dollars saying hey we're g to flip Unis swap you know on on their core competency and then just completely fizzled uh we didn't raise any money but but that's our goal and I think we're on the path to to getting there which is super exciting yeah and like we we can Pat ourselves in the back and we've got a lot of cool dashboards we built internally to like monitor volumes and tbll and it's all looking good but I think we're still hungry I mean personally there is a huge brand advantage that Unis swapit brings to the table and LPS

just sometimes feel more comfortable because they understand the mechanism they they like collecting the swap fees and you know even even when the aprs are much higher for conc liquidity pools on slipstream because if you're actively managing your liquidity you're going to grab a huge uh stream of consistently of rewards um so we know that ux is still not the most intuitive you have to kind of know how to rebalance liquidity positions um follow price movements so we're very close to onboarding an automated liquidity partner automated liquidity management partner called Melo

protocol and they've been going through a pretty thorough audit recently but when that's done and and deployed I think it's going to be a pretty much no-brainer decision for Passive LPS to go with slipstream I mean if you've got really useful liquidity getting high high rewards um on Aerodrome or velodrome it's GNA be a it's going to be a slam DG why you shouldn't do it I don't know so um but yeah our data analytics are looking really really good and and we're doing our best to kind of amplify the success we've had so far yeah that's super exciting I um I kind of want to dive more into Partnerships than ux but before like we go to that I want ask a bit about bribes and as a

revenue Source um do you think that it could potentially be an issue eventually especially if there's a concentration of bribes for a short period like around a few bribers and then when they stop uh obviously you guys experienc like a steady stream of bribes in general but let's say a protocol had like a one week super um large like bribing um plan and then later on they just decided to stop is that something that you guys try and adjust or is there a way that you think about that yeah um I I don't think I don't think it's a it's a concern I mean I think uh generally speaking when when

Protocols are incentivizing they are subject to the the market dynamics of their situation right if you drop a an insane amount of your own token as incentives you know people are going to make rational decisions about what to do with your token now that a whole bunch of it liquid has has hit the market and you know that there will basically be tradeoffs or or costs uh to that um overall you know there are like uh guidelines and and strategies and and things like that that we try to provide um to people to basically help them

build like successful incentivization strategies because we know very well now you know what works or what what doesn't work but I think the best thing about the model is that incentives work just like fees in our system right so uh anybody who is incentivizing their token um essentially what they are doing is they are saying to uh ve Val or ve Arrow voters hey we know our our pair doesn't do enough fees to to justify the amount of emissions that we need to build liquidity so we're going to make it up to you right through

incentives and um so basically what it ends up being is uh if they are incentivizing then um it will look like a productive pool and folks will vote for it because it is essentially on a voting basis just as productive as a high fee pool but like if tomorrow on Aerodrome uh every briber were to stop um which wouldn't happen because you know we're there's no case where there's going to be less demand for liquidity on on base anytime soon I think there's going to be 4X 5x the demand for liquidity on base um but if they were to stop all the flywheel would do is shift all of its um uh incentives towards the

high fee pools and if like right now just for instance I was mentioning on rapde usdc uh we're beating Unis swap on total volume uh I I think like only five to 10% of our total emissions are even going to slipstream pools if uh this Epoch flip that was like 80% what would happen overnight is tvl on on pools competitive with with Aerodrome would go uh multiples higher and we would just be so looking up even more fees right so it would basically swap the incentives for fees and the flywheel would continue and I think I think that's a cool thing I I

think one of the be beautiful things about the model is that uh it doesn't care who is paying for liquidity Traders can pay for liquidity through their swaps and the fees they generate protocols can pay for the liquidity through through token incentives but either way it all flows to the same place which is to the token um voters and that supports the flywheel in a way that is way more resilient than models that just rely on incentives or just rely on fees um because there will be moments where fees are huge there'll be moments where incentives are huge and there'll be moments where they kind of you know fluctuate but what you need for resiliency is just enough total like

value being created flowing flowing back into the system that makes sense um I kind of I want to understand Val dr's super chain Vision because from what I understand op stack has its own Super chain Vision um but you guys also released an article discussing your own Super chain Vision what what what does that look like yeah it's it's actually quite well aligned with the optimism Vision you know for interoperability and a unified um experience across web 3 I I see it as what uh the future of ethereum scaling really looks like uh it combines some of the components that even vitalic

has praised from like Cosmos where you have the ability to move tokens across a chain without having a wrapped version or a bridge and it's just a seamless experience like you know Alex eloquently put it as like you know as seamless as using the internet today you don't know what's going on behind the fiber and you know who's hosting the the website and who's the payments provider and it's like you're just using a website and it's it's it's like it's ubiquitous across the world um I see optimism super chain experience kind of mimicking that for web 3 um and we want to be there as the liquidity layer that supports all the different daps all the different users all the different

institutions what have you um so our strategy is to start engaging very early with all these new l2s um and mind you there are a ton of them because it's become very easy to deploy and maintain a chain through you know things like espresso and conduit um so we're seeing lots of teams um in interested in deploying in the optimism stack because they're providing such awesome infrastructure um not just the code but the resources and the people and the the users and the grants I mean part of the optimism um strategy is to reinvest all of the sequencer revenues that they're generating into the into Builder incentives I mean it's a pretty egalitarian approach and they

they're very much encouraging the success of the the l2s that they're on boarding in that fashion um rather than saying being more of a selfish um chain so um our our vision is like I said we want to deploy on as many of these l2s as needed um every L2 has a different approach and liquidity needs um so we're talking to anyone and everyone I mean whether you're a defi chain or a gaming chain or a banking chain it's like you're going to have a desire for liquidity and and people to swap assets that are used uh to to service the various applications um so we have already launched the first two instances of Elum

outside of the optimism main net uh we've got a incentives program actively ongoing with mode and uh they're very much a general purpose defi chain and they have a a really great ecosystem that's developing um Bob is our second deployment it's the the build on bitcoin kind of def5 focus chain um it's still early but we are uh deployed and and you know users are able to earn spice points um we have several others in the pipe I think you know from our first iteration here it's it's very much uh a simple liquidity provider incentives approach um but in about a month to two months away we'll be deploying kind of this

super chain uh Vel Drome 1.0 which will include voting gauges so um partner protocols and partner chains can actually incentivize votes directly from the the L2 chain that they're they be deployed on which is very cool um and users will have the ability to vote for gauges outside of the op main net um that's that's kind of what that what super chain beta 1.0 will look like for velodrome um beyond that we are very much excited about kind of the interoperable future where like I mentioned tokens can move across chain smart contracts can be interacted with from any chain um and perhaps that's

where you know we start thinking about how we've become a single liquidity layer like a V Drome chain for instance that interacts with all these various applications across the l2s yeah I think the the super chain vision is super interesting and I I think that like a lot of people are really sleeping on this like they look at something like salana and they're like this is the future there's no fragmented liquidity but it's like the the current state of l2s is not the end state of l2s you know I'm picturing a world where you go to metamask or your coinbase wallet and it doesn't matter what chain your assets are on it completely abstracts that experience away and then you go to something like Vel drum and aerod drum and swap across

any chain and deposit pulls into any chain regardless of what chain that is when you look at um some of this cross chain messaging infrastructure I I'm assuming that optimism is going to agree upon some sort of standard to facilitate the communication between all these op stack chains but we're also seeing across came out with the new token standard for interoperability and then also Catalyst amm just emerged so I was wondering if the velodrome aod Drome vision is you integrating these new token standards and collaborating with these uh these new cross chain Partners or if you're

going to build something yourself yeah yeah so we we've been working closely with uh op Labs uh from the beginning and yes uh I think what you'll see from from optimism and from op Labs is uh you know some stuff that is new and novel or or maybe very specific to implementations across uh op stock chains um and there might also be areas where they kind of put out uh you know requests for proposals or allow other people to to build um Tech on on top of this but the the beauty of of building um on the super chain specifically is

that you are able to build these um interoperable state standards uh knowing that the underlying chain technology on every Super chain is going to remain constant right because even when you have an upgrade like 4844 that comes and requires all the chains to to upgrade that upgrade goes live on each chain simultaneously right which is very different than even across other l2s where uh you know you saw optimism go live with a 4844 upgrade you saw I think blast just straight up go down for a a while before they figured out and and got the upgrade deployed

arbitrum sort of like phased it out so if you were like building interoperative between all of those that would have created a lot of issues and complications potentially for any of this like interoperability Tech um the the beauty of of what we'll be doing on the op stack chain is that will remain a constant which uh makes the implementation of some of the messaging standards and other things a bit more more simple uh to execute so yes our plan is very much to to integrate very tightly into um the tech that uh that op labs and the broader Collective is is developing around this we've been providing feedback and input into that

uh for some time and uh we think that'll mean that the interoperability experience on the super chain and between super chains will feel you know much better than you know some of the interoperability standards that are trying to bridge together these disparate uh chains because really our goal is that uh velodrome in in the end state of the super chain feels like a single cohesive liquidity hub no matter what chain you're on right so if you're on a gaming chain you're just looking to swap out your your gaming points or whatever you've earned right for eth um you don't need a dedicated uh Vel drone deployment on your gaming chain you just need to be able to access the Vell chain

and the liquidity living on it right and that is the solution to the fragmentation issue um that allows for deep deep deeply uh accessible liquidity across all these chains um and I think is very much like the future we're we're moving towards it's an incredible problem to try to solve but uh very optimistic that you guys will a great deeply in there and uh fix some of these issues um one other question I have for you is being that you're kicking Unis swaps ass on every L2 have you considered going live on ethereum mainnet and trying to vampire attack there and seeing how that

would work out yeah we uh I mean we're we're always keeping like our eyes on the broader landscap ape and and any opportunities that that might be that might be present um but I think a few things come to our mind when we're when we're looking at at those opportunities one is that I think we've had a lot of success in not sort of like going to where the activity is but going to where the activity will be and uh like when we launched on op mainnet we had a ton of people coming to us and saying why would you deploy here it's a it's a dead chain

right you know what are you guys doing why aren't you going to Avalanche right still the alt L one moment why don't you H build it on Phantom you know why aren't you going to salana uh but our whole thesis was uh that ethereum l2s were going to grow exponentially right even in going into a bare Market that they would grow exponentially and um that thesis is very much played out and I really think we're we're still just in the very beginnings of it and so when we think about where to devote our our sort of time and attention we think focus is a Moe and you can see this in the fact that multi-chain dexes really struggle outside of One Core ecosystem um uh you know 90% of curve's

liquidity its fees or whatever probably even more than that 95% it's all still ethereum main net um it's a bit of a meme when it says there're on 14 Chains It's like they're kind of there uh but but not in like a very meaningful way that's why we've been able to like build the advantage we we have and so I think our thought process is you know the op stack is about to enter stage one decentralization um we think that's going to be a major another like another major unlock for growth as many liquidity providers uh projects look to security assumptions and need that sort of stage one stage two guarantee before they move and so while it I'm not saying what we'd

never rule out you know something on on ethereum mainnet I think what we're honestly going to see is far more of what is on ethereum mainnet now what is on polygon now what is on arbitrum now um what is on salana now moving to where we already are and we are here to basically help facilitate that growth so we we think that basically there could be more growth potential there than potentially even you know going to where to where some of the activity is right we're trying to see see ahead of the curve okay yeah that makes a lot of sense especially if you look at some of these other dexes like balancer who did go to Avalanche um and then every L2 but

kind of like I don't know like halfast their way onto the chain there's nothing going on there so they just kind of Expos themselves to more of a security risk and they're not really reaping any rewards from it that's exactly it we we want to go whole ass anywhere anywhere we we are right talking about um being let's say more active projects on chains I feel like we kind of brought this up earlier about how uh because of your unique position as like let's say being one of the or the leader um D5 project on both Optimus and Bas you get like I feel like you guys are um

more part of those development conversations how has it been building on Basin optimism and how like as you said you guys were confident that over the bear that l2s would flourish and they would do really well like how has that experience been over the past year I I'll let Alex kind of fill in the gaps here but I've been part of the team for two months and I've been Overjoyed I guess with the support that we've gotten from the Bas team specifically and I I was so wrong about how uh base would succeed I I was like these guys don't have tokens to give out how are they going to attract Builders how are they going to attract users and

it's been incredible to see their attention to the various ecosystem participants um they're very defi native so they're engaging the same way that you and I would with telegram and Twitter and um they're responding to requests for introductions and and referring projects to each other so they're like very much a network Builder um at the social layer and the dev tooling that they've provided has facilit facilitated the sort of if you build it they will Cal environment so um with their long-term strategic initiative to move their business on chain it's become you know similarly attractive to long-term oriented

building teams so you know Alex kind of talked about our our foundation model where we don't have a token allocation we are never going to be able to unlock a large amount of Supply as team members to sell and cash out it's a aligned strategy where we have to succeed in order for uh for all of us to get paid and grown it's like the the foundation must continue to make uh generate rewards um but yeah that's my my my take on from the uh base team's P point of view op optimism has a humongous amount of participants in various governance initiatives we've been at the core of the optimism governance um activities since day one we've got an incredible

evangelist and uh advocate for governance on our team Jack who's you know read every word of of anything posted in op optimism governance forums twice um he's been a large uh proponent of the success that we've received because of the various SC and it's allowed us to be pretty integral into the vision going forward for optimism's growth um in terms of how they're going to be incentivizing through Grand activities so um that's kind of my take it's it's great ecosystems to build within and the resources have been um You Know instrumental in our own growth that makes sense and whatever you guys are um paying Jack you need to pay him

way more because I've dealt with those L2 governance forms and it's just it's not it's not fun at all um so Jack you're doing the Lord's work um I guess I want to ask like a couple of final questions what would you say is like on your radar over the next six to 12 months what's like some things that you genuinely are really really excited to get out and you think that people should look forward to yeah um I think the the person is the the thing that I I just mentioned uh a bit earlier which is um op stack chains reaching stage one

decentralization um uh when you talk to some of the largest like institutions liquidity providers um some major projects and protocols uh who are very security-minded right one of the major reasons that they will site for for not yet having moved to to Layer Two where we know everything is better right uh everything's faster everything's cheaper um the yields are are better right there's just like literally everything's better on an L2 to the point where if I have to go to L1 for anything these days I like have a deep deep sigh and and like reluctantly pull out my ledger and

like go to work right so we know that there that there's nothing from a ux experience or from from a rewards perspective that is like better on layer one right now it is is it is security it is the liquidity depth it is those types of things and so for every op stack chain that includes base and that includes op main then and that includes uh mode and and everyone else to reach stage one I think it's going to be a major uh growth uh unlock for them in that it's going to remove a degree of the friction that's there right now for for migration and we also know that their plan is very much to shift immediately to their number one Focus

being to FasTrack to stage two decentralization um which will increase you know the the security uh even farther and so I think we're super excited uh for that and I think if you combine that with this year seeing the beginnings of the interoperability between these super chains as well as like the announcement and deployment of of a lot more Super chains I think we've just started to scratch the surface I I think it's maybe like uh a bit underappreciated that like every major dii team uh has chosen to build on the op stack whether they're forking it and

not participating in the the super chain or they are choosing to participate in it it's just become the de facto technology on which to build l twos there's a lot more uh coming and so I think the combination of of the increasing security of of um the beginnings of interoperability of the growing of the network Effects by virtue of more protocols deploying is just going to be a crazy growth Catalyst for not only ethereum L2 but everything ethereum L2 that's being built on uh on the super chain and for us personally in that right there there's two things you know we're obviously excited about seeing

vrum um deploy across all of these chains right tap into that in operability we don't see any other deck player focused on this right now and so you know we are very happy to front run them like we front ran them uh on l2s generally and and sort of build a very unique uh uh experience but to do that while also you know having things like slipstream eating away at the the last baset of of of like Unis swaps footprint on these al2s I think it just paints like a very very exciting picture um we're going to be we're going to be the hubs on what we think will be the uh largest ethereum l2s some of the largest

you know crypto networks uh in Defi and um and you know it's just going to be fun to watch this whole whole thing play out this journey that we started two years ago I'm waiting for uh you know the next coinbase earnings call and and when Jesse poock gets called up by Brian and talks about how awesome Bas is and you know that Aerodrome is at the liquidity Hub of the chain so that's what's getting me excited I think I think uh coinbase's wallet is is their smart wallet is phenomenal um I've gotten a demo and it's like incredible how easy to theyve abstracted the experience for their existing coinbase users and onchain summer 2 starting in a week so

we'll see how this goes but um should be a tremendous amount of new users coming into the ecosystem Ace I was a bit surprised that you mentioned that the base um teams were very very native I um I guess just because of The Branding or maybe it's just like some initial assumptions I would have assumed that they were a bit more um suited up as opposed to they're very like native and yeah it's surprising because yeah that's the approach that I or the I guess the the thesis I kind of had initially um but Jesse is very much he's like a native himself he's built crypto companies before coinbase and he's

setting the tone internally like he wants to build a very open Financial open building Community um you know across base like there's no walled Gardens on this L2 like everyone was like oh it's going to be the the corporate chain and the the kyc AML chain and so far it's been um come one come all do you know experiment the same way that ethereum always has been and I think he's creating and and and uh cultivating a team with similar approach and they they've had a lot of people come through that team some have moved on to bigger and better roles but they're always putting you know new Talent into the team and I think they're all they all come from a similar cloth

like that the four of us do on this college like they're all dents at heart and um you know I Bas is very much a unique team relative to the rest of the broader coinbase organization which might be a lot more suited up yeah I I I think about the the base team as like a very much a founder-led startup right in in Jesse being being the the founder um of him being totally crypto ethereum aligned and when Jason or when when uh when Jesse talks about bringing a billion users on chain you know he's willing to do his part uh in like onboarding his his grandmother his friends his cousins like like he will

literally onboard you to wallets to all this sort of stuff so he'll do that work so it has the power of like a founder-led startup and it just happens to be a founder-led startup with the resources of a multi-billion dollar publicly traded company that's delivered some of the best uh consumer level crypto products that that exist and that sort of combination is what I think makes uh base uh so uniquely compelling and I do think it it has been a surprise uh to some um but like you know I think there are things that uh if if uh coinbase would ever want to go a

different direction you know a non-open direction a non- ethereum align Direction you'd know because it would be over Jesse's dead body you know he'd be he'd be walking out the front door I mean that that is just how much of an advocate he is for for the the the broader vision and um I think you feel it in the experience you have on chain and it's why we've bet you know uh in a very large way on uh base being one of if not the leading chains uh in in all of crypto um uh like sooner than many you expect yeah I'm still very surprised about this I guess I have to have Jesse

on the podcast and ask him about it you should Alex Ace thank you guys so much for coming on evangelizing AER and base um it was a pleasure to speak to you guys thanks for having us guys fun [Music]