Velodrome is a decentralized exchange focused on low slippage trading for highly correlated assets on the Optimism network.
Velodrome leverages Curve's stableswap DEX design with its native VELO token emitted on a weekly basis and used to reward Velodrome LPs. Like CRV, VELO holders can lock their tokens (up to maximum of 4 years) on the platform to receive veVELO and participate in governance, which includes voting on which liquidity pools should receive VELO emissions. Velodrome offers two kinds of pools: variable pools for uncorrelated assets and stable pools for pegged assets. Stable pools leverage the same Automated Market Maker (AMM) design as Curve's stableswap invariant and variable pools use the standard constant product AMM formula (like Uniswap V2).
Velodrome makes money through protocol fees that are currently set at 0.02% for each swap within both variable and stable pools. These pools can be assigned different trading fees by veVELO holders. veVELO holders vote on which liquidity pools receive VELO rewards, and pools earn proportionally to the voting power they accrue per week. veVELO holders earn trading fees generated by the pools they voted for proportionally to their voting power.
You earn VELO emissions for providing liquidity on Velodrome. You can also stake VELO (veVELO) to earn trading fees. veVELO holders also earn bribe fees paid to the pools they voted for, as well as non-dilutive rebase emissions.