Try Quests to earn cryptoVelodrome: New ATH for Total Value Locked
On February 4, 2023, the total value locked on Velodrome surpassed its all-time high recorded in the beginning of August 2022. This dashboard examines the cause of this growth.
Velodrome is an Automatic Market Maker designed to provide deep liquidity, low swapping fees, and low slippage, enabling users to swap their tokens, supply liquidity into pools, and lock their Velo, the native token of Velodrome, to earn yield.
As of early February 2023, the net value locked on Velodrome has surpassed its all-time high recorded in the beginning of August 2022, and has continued to grow exponentially. This dashboard examines whether this growth is intrinsic to Velodrome, or if it is a natural response to the recent growth of the crypto market, similar to other DeFi protocols on Optimism.
To accomplish this, we first explore the relevant metrics of Velodrome to see how they have changed recently, with a focus on the popularity and performance of the pools. Secondly, we examine whether the same growth can be seen in Optimism, as the host platform, and specifically in Perpetual Defi, one of Velodrome's competitors on Optimism.
The graph below illustrates that the net value of tokens deposited into the Velodrome pools (in USD) reached its all-time high on February 4th, exceeding 100 million USD in less than two weeks. This rapid growth of deposits into the Velodrome pools began two weeks prior to this peak.
There are several factors that could explain the rise in total value locked in the Velodrome pools. One possible explanation is the overall growth in the value of all tokens. It's worth noting that the most popular tokens that can be deposited into the Velodrome pools are WETH and OP, as shown in the next tab (Pools). Despite the fact that the price of OP and ETH has not significantly changed since the beginning of February, the total value locked in the pools continued to rise.
Therefore as the data shows the increase in the total value locked in the pools cannot be solely attributed to the rise in the USD value of the tokens. There may be other factors that are driving this growth.
In the next tab, we will delve into the liquidity pool activities on the Velodrome platform to gain a better understanding of this phenomenon.
