stargatefi

Background Currently Stargate has protocol owned liquidity across each of the original seven chains it deployed on. These are Ethereum, Avalanche, Polygon, Fantom, BNB Chain, Optimism and Arbitrum. Each liquidity pair sits in a DEX, providing liquidity to trade STG and earning fees from trades.

Proposal Velodrome is the leading DEX on Optimism and the top Ethereum Layer 2 DEX with over $300M TVL. It serves as the the primary liquidity hub for the quickly growing Optimism ecosystem, serving 2x - 3x as many protocols of comparable DEXs.

Velodrome works by directing VELO emissions to liquidity pools based on votes by veVELO (vote-escrow VELO) holders. Protocols can use veVELO or voter incentives (bribes) to attract votes and emissions for their liquidity pairs. In the last voting round, bribers received $3.5 in VELO for every $1 in bribes on average.

On top of the bribe multiplier, Velodrome incentives will match at least 25% of Stargate’s bribes per the “Tour de OP” incentive program, if Stargate moves $1.5M of POL (protocol owned liquidity) to Velodrome and bribes STG-USDC pool. Combined, the bribe multiplier and bribe match can yield a 4X+ impact on liquidity incentives for STG-USDC.

The LP will still be used and routed through all aggregators, resulting in the same execution, but an APR higher than what Stargate is getting on the current Uniswap pools will be paid.

If this pair performs well, Stargate will additionally have the option to migrate additional POL to Optimism to add to Velodrome and receive additional VELO emissions. The Velodrome team will also work to promote Stargate through their ecosystem, onboarding new users to Stargate. This aligns Stargate with a large and engaged community of DeFi users.

Stargate will also lock farmed $VELO rewards as veVELO to significantly reduce the need for STG emissions in the future while maintaining a robust liquidity layer on Optimism. Additionally, locking veVELO will automatically qualify Stargate for a Lock Bonus, typically worth 30%-40% of the VELO locked, paid in OP.

Execution $1.5m of POL will be moved from the Uniswap LP pool to Velodrome on Optimism. Simultaneously, Stargate will begin test run worth $500k in STG to bribe the STG-USDC pool at a rate of $100K per week. Velodrome incentives will match at least 25% of Stargate’s bribes each week. Once a voting epoch is completed on Wednesday at 23:59 UTC, VELO emissions will flow to Stargate’s LP. If successful, this proposal will result in a higher APR to Stargate’s LP and a significant reduction of STG emissions over time.

For the purposes of the pilot, Startgate will focus on locking all VELO farmed as veVELO to build a veVELO voting position and maximize the ROI provided by "Tour de OP Incentives. This will also earn Stargate additional bribe boosts and lock bonuses which will be compounded into more $veVELO, creating an exponential effect to early $veVELO accumulation. As that position grows, it will direct additional emissions to STG pools, generate fee rewards and bribe revenue that can also be compounded into additional $veVELO.

While the focus during the course of this pilot will be to maximally compound rewards, once the veNFT position reaches DAO targets, the DAO can begin to repurpose fees, bribes, and emissions for other purposes. The goal being to reach a state where the DAO can bribe and sustain liquidity without needing additional $STG emissions.