Introduction
As of early February 23, 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. In this blog post, we will examine 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.
Velodrome's Total Value Locked
Data shows 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. 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, 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 driving this growth.
Velodrome's Growing Popularity
Upon observing the graphs, it's clear that the number and volume of deposits have significantly increased since the beginning of February. Meanwhile, the number and volume of withdrawals have either remained constant or increased slightly. This increase in deposits can be seen as evidence that the recent rise in the total value locked in the Velodrome pools is directly related to the platform's growing popularity over the past month.
The data shows that the price of $VELO has increased sharply since the beginning of the year. In addition, a clear correlation exists between the price of $VELO and the total value locked in the platform.
Comparing Velodrome with Other DeFi Protocols on Optimism
To further validate this hypothesis, we compared Velodrome with other DeFi protocols on Optimism. The graphs illustrate the dynamics of user activity on the ten most popular DeFi protocols on Optimism. As the data shows, there is a sharp increase in the popularity of Uniswap and Velodrome, measured by the number of users. However, this steep trend in growing popularity is not seen in other DeFi protocols. Therefore, the sharp increase in total value locked and the popularity of Velodrome is not just an external market factor, but rather an intrinsic effect of the platform's growing user base and its expanding range of liquidity pools and yield farming options.
Conclusion
The total value locked in Velodrome's liquidity pools has been on an exponential growth trajectory since the beginning of February. The increase in deposits and popularity of the platform cannot be solely attributed to the rise in the USD value of the tokens. The rise is an intrinsic effect of the platform's growing user base and expanding range of liquidity pools and yield farming options. As of the writing of this post, it is evident that Velodrome is a promising DeFi protocol on Optimism with an increasing number of users and growing total value locked.
Check out the dashboard for a more detailed analysis. 🔍📊
Twitter: SocioCrypto