U.S. Congressman Mike Collins (R-Georgia) recently disclosed a $15,000 purchase of Velodrome, a relatively small altcoin, in his filings. This investment has thrust Velodrome Finance, which has a market capitalization of around $79 million, into the spotlight. The VELO token, the native currency of the Velodrome ecosystem, saw a 9% increase in value over the past week, and is now trading at $0.1122.
Velodrome is a decentralized finance (DeFi) protocol on layer-2 networks. Launched in June 2022, Velodrome Finance evolved from the Solidly project with the aim of supporting liquidity for DeFi protocols on Layer 2 solutions. It employs a “vote escrow” mechanism inspired by Curve Finance and Olympus DAO, designed to promote long-term holding through staking, rebasing, and bonding.
The platform’s innovative approach seeks to mitigate common issues in DeFi, such as the “farm and dump” scenario, by balancing protocol emissions with fees through a rewards system. Velodrome offers various liquidity pools, with reward rates determined by user voting. The initial distribution of VELO involved 400 million tokens, allocated among community members, partner protocols, the Velodrome team, and the Optimism team. VELO holders benefit from transaction fees, bribes, and rebase rewards. When locked, VELO converts to veVELO, allowing users to vote on pools and influence protocol decisions.
Congressman Collins’ investment has brought attention to Velodrome, highlighting its unique position within the DeFi space. It also shows the increasing involvement of U.S. politicians in cryptocurrencies, most notably presidential candidate Donald Trump’s recent display of strong support towards the crypto industry, going as far as calling himself the ‘crypto President.’