VELO — A DeFi Experiment in Austrian Economics, Fair Farming and Elasticity

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View from the Moon (Mises, 2020)

World of DeFi! This is Ludwig von Mises,

It’s been almost 50 years since the last time you saw me.

Get your farming equipment ready, because in the honour of the 12th anniversary of the Bitcoin Whitepaper release, I am back with something new and different. Something unique!

  • In the next couple of chapters I explain how multiple economic theories are put to the test in DeFi.
  • If you want to jump straight to the pools, scroll to the bottom of the page.

The Dawn of DeFi

I have been following the DeFi space closely. While DeFi has already been recognised for its immense capabilities, it hasn’t come to its full fruition as of just yet due to the lack of incentive. The compound protocol found a solution. With their governance token they tackled the 2 biggest problems in DeFi; The lack of a proper incentive and the lack of proper decentralisation.

“The main societal problem is how to prevent a (central) power from becoming tyrannical.”

This is the meaning of all the struggles for liberty and with the invention of blockchain technology we finally have the real solution: Full decentralisation with decentralised governance.

With the invention of rebasing currencies DeFi made another leap forward. By maintaining a flexible token supply they have the potential to bring price stability to DeFi.

For the VELO experiment I combined the governance protocol from Compound, the incentive mechanism from Yam and the rebasing functionalities from Ampleforth. Moreover, I added one completely new feature to the space: Instead of rebasing the token based on price, the VELO token rebases its currency based on its own velocity. Let the free market decide on its price.

“If I use a $10 bill to tip a waiter, who pays a cab driver $10, who then orders a $10 pizza that same night, the total value of that bill for the day amounts to $30.

The velocity of that $10 bill just caused the value of the bill to triple.”

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Introducing $VLO, the VELO token

At the core of this project lies the core of economic value, the more a currency is used, the more value it produces.

Velocity in the “real economy” is measured through combining historical data and speculations about the future. This measurement can never take place in real time.

But this obstacle does not exist in DeFi.

In DeFi, one can simply observe the amount of on-chain transactions of any cryptocurrency and calculate the velocity in real time. This gave me the ability to design smart contracts that utilise this calculated velocity to make changes in the VELO token supply.

Based on this information, the following statements apply to VELO:

  • The VELO protocol is the first protocol in history that synthesises velocity into a cryptocurrency.
  • The VELO token is the first currency in the world that has a direct relationship with its own velocity.

The economic power held by VELO token holders is a direct reflection of VELO token’s velocity.

Velonomics

The VELO protocol is in constant observation of VELO tokens’ velocity. Changes in the token’s economic activity cause changes in the total token supply. Based on simple economics, changes in total currency supply directly affect market price.

The VELO protocol implements a simple rule-based inverse and elastic supply curve that expands and contracts token supply. Thorough mathematical details regarding the tokenomics are provided in the VELO Whitepaper. Access to whitepaper is exclusive to our community in Telegram and Discord.

In order to add more value to the community over time, I decided to add one extra feature… Every transaction on the VELO network will absorb a small amount of gas fees, stored in ETH. This amount will fall under full management of VELO token holders through community voting. By doing so the value of the total VELO network will increase even more as velocity increases.

The VELO smart contracts are going live on November 4th, 0:00 UTC on velotoken.fi.

Let the game begin!

VELO token specifications

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Fair token distribution

Centrally controlled currency supply is in direct conflict with the principles of a free market. Therefore, $VLO has no premine phase, no developer funds, no migrator clauses, no centralisation.

Below you find the available pools to farm VELO tokens with, as well as their respective launching dates. The percentages next to each pool indicate the total percentage of VELO tokens distributed per pool.

POOL 1: Initial distribution stage

2 weeks; from Nov 4th until Nov 18th

🧙 MAGIC MAKER
Deposit DAI, earn VLO | 10%

🔮 CRYSTAL CURVE
Deposit yCRV, earn VLO | 10%

POOL 2: Foundation stage

2 weeks; from Nov 8th until Nov 22nd

🦸‍♂‍SUPER MISES
Deposit VLO/ETH UNI-V2 LP, earn VLO | 30%

🦹‍♂‍ EVIL MISES
Deposit VLO/ETH 98/2 BPT, earn VLO | 10%

POOL 3: Double returns

2 weeks; from Nov 18th until Dec 2th

🦄 UniDAI (ETH-DAI)
Deposit UNI-V2 LP, earn VLO (6%)

🦄 UniUSDC (ETH-USDC)
Deposit UNI-V2 LP, earn VLO (6%)

🦄 UniUSDT (ETH-USDT)
Deposit UNI-V2 LP, earn VLO (6%)

🦄 UniWBTC (ETH-WBTC)
Deposit UNI-V2 LP, earn VLO (6%)

POOL 4: DeFi

1 weeks; from Nov 25th until December 2th

🍣 SUPER SUSHI
Deposit SUSHI, earn VLO | 2%

🥒 PICKLE RICK
Deposit PICKLE, earn VLO | 2%

🥧 DEFI PIE
Deposit DOUGH, earn VLO| 2%

👽ALIEN ANDRE
Deposit YFI, earn VLO | 2%

🤖 COMPOUND COMPUTER
Deposit COMP, earn VLO | 2%

👻 BRAVE AAVE
Deposit Aave, earn VLO | 2%

👺 GOBLIN LINK
Deposit LINK, earn VLO | 2%

💊 SLEEPY SYNTH
Deposit SNX, earn VLO | 2%

Total VELO Token Distribution

Distribution per pool

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Cumulative distribution through time

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Security audit

My team and I have put in a lot of effort to make certain that the smart contracts are secure. These efforts include the forking of the codebase from protocols that have undergone professional audits, informal reviews from DeFi experts and such. However, a professional audit is still pending as it hasn’t taken place as of this date. We heavily encourage everyone to be CAUTIOUS in their participation with our protocol at all times.

Go to our Github to check out our source code.

PERSONAL NOTE

It is important to note that the VELO token does not have any intrinsic value. However, ‘value’ is per definition not intrinsic, it is not in things. It is within us; it is the way in which man reacts to the conditioning of his environment.

“Neither is value in words and doctrines, it is reflected in human conduct. It is not what a man or group of men say about value that counts, but how they act, and nothing is more true for VELO token.”

As founder of VELO, I believe in the possibility of an unmanipulatable economy. DeFi is the beginning of such an economy. It might take trial and error, improving on existing projects and new experimentation, but one thing is clear to me: this economy will only arise through the community. It will only arise through you.

VELO is one of these experiments, which I am bringing to the DeFi community. This project will take a life of its own. My involvement in the project will cease after the launching date (November 4th, 00:00 UTC). It is the community then, which will govern this protocol.

Join our community through Discord and Telegram to get access to the whitepaper.

Connect your wallet on our website: velotoken.fi.

Written by

Austrian School economist, historian, logician and sociologist.

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