Is Velodrome poised for a run?

Velodrome (VELO) is the older brother of the sweetheart DEX Aerodrome (AERO). But Velodrome has a fraction of the market cap as AERO, is this an undervalued opportunity? Velodrome has an impressive history of product innovation and execution. Can VELO make up ground or even surpass AERO?

What is the project?

·       DEX for the Optimism project

What is the product?

·       Token swapping and liquidity pools

Execution of Product(s)

·       Excellent, launched V2 last June, V3 launched this year

·       On the forefront of DEX innovation, consistent development of products

Market(s) & sub markets

·       Optimism network (ETH's Layer 2) - Base overtook Optimism in network activity in late March

·       Market size is smaller for Velodrome, and competition is higher when compared to Aerodrome

·         Velodrome has $140M TVL vs $750M of Aerodrome

Tokenomics

·       Extremely low supply

·       Inflationary tokenomics (3.75% initial, declines 1.5% the 1st year)

Team & Community

·       Well dox'ed and respected team

·       Active communities and platform news from team is great

Revenue potential

·       Solid revenue from DEX activities

Financial partners

·       None known, less dilution from backers

Risks & Downsides

·       Growth limited by the size of the Optimism network

·       High competition on Optimism network (a lot of DEXs)

·       High inflation, but inflation decreases over time

·       Little growth despite increased interest in altcoins

VELO is a great product with poor market fit. The technology and execution should allow Velodrome to take more DEX market share on Optimism over time, but will be capped by the adoption of Optimism. VELO will be useful to understand the future products AERO could offer.

VELO Revenue and Multiplier Projections

• VELO’s valuation could benefit from 1) growth of transaction volumes as altcoin transactions increase through alt season, and 2) increase in multiplier as alt season picks up

Base (Green) vs Optimism (Blue) Adoption

• really shows the headwinds Optimism is facing - it almost looks like Base is stealing market share from optimism

Aero vs. Velo TVL 

• note - Velo’s V3 TVL growth is stealing from V2, net no gain for Velo TVL

Scores

• Speculative potential is low due to market limitations (Optimism network growth)

• Staying power is high because of their innovation and execution

• Reputation gets a great score due to their exceptional team transparency

Market Cap Estimate

• The peak bull market place is unlikely, but could be hit if activity grows and multiplier increases. I’d be careful as use of the DEX has not been growing over the last couple months, even though we would have expected growth due to the broader growth of alt coins over the same period

This information is not financial advice to the reader.