Introduced in Velodrome V2 is a new type of veNFT called a "managed NFT" (also known as "(m)veNFT"). A (m)veNFT aggregates veNFT voting power into a single NFT, with rewards accrued by the NFT going to the owner of the (m)veNFT. The (m)veNFT votes for pools in the same way a normal veNFT votes, with the exception that its' voting power is this aggregated voting power.
The challenge arises when a (m)veNFT has earned rewards from a voting period. Does the (m)veNFT owner keep the rewards for themselves, distribute the rewards back to the veNFT depositors (either as the reward token or as VELO), or do something else with these rewards? The Velodrome team provides a working MVP to solve this.
Provide a trusted and automated solution to distribute rewards earned by a (m)veNFT back to its' depositors.
An automated contract to convert rewards earned by a (m)veNFT back into the intended token. Autocompounder will convert it to VELO and then deposit into the (m)veNFT. Autoconverter will only convert it to the Autoconverter token. The autocompounder's (m)veNFT voting power increases from these VELO deposits, further increasing the rewards earned. When a normal veNFT holder who previously deposited into this (m)veNFT withdraws their veNFT from the (m)veNFT back to their wallet, they receive their initial deposit back, as well as their proportional share of all compounded rewards.
There are two types of Relays with similar functionalities:
| Autocompounder | Autoconverter | |
|---|---|---|
| Claim Rewards | Yes | Yes |
| Swap | Yes (only to VELO) | Yes (only to the Autoconverter token) |
| Compound | Yes | No |
| Reward paid to caller1 | Yes | No |
| Sweep tokens | Yes (if not a high liquidity token) | Yes (any token) |
| Vote | Yes | Yes |
| Increase rewards | Yes | No |
| Set caller reward amount | Yes | No |
| Add high liquidity tokens | Yes | Yes |
| Add/remove Keepers | Yes | Yes |
There are several key components of the Relay:
- Access control / trust levels
- Time windows of access
- (m)veNFT design considerations
There are degrees of trust and access given to various groups. The groups are:
- Public
- Keepers
- Allowed callers
- Relay Admins
- Velodrome team
Can be any EOA or contract. Are allowed to claim rewards, swap (and compound - for autocompounders) within the last 24 hours of an epoch. Swap routes are determined using a fixed optimizer contract, although callers can provide their own custom route provided there is a better return. The optional swap route provided must only route through high liquidity tokens, as added by team. In the autocompounder, Public callers are rewarded based on the amount compounded - they receive a minimum of either (a) 1% of the VELO converted from swaps (rounded down) or (b) the constant VELO reward set by the team.
Addresses authorized by Velodrome team to claim rewards (and compound - for autocompounders) starting one hour after epoch flips. Keepers are trusted to swap rewarded tokens using the routes they determine (as long as they are better than the routes provided by the optimizer) which is then deposited into the (m)veNFT.
Addresses authorized by the Relay admin to vote for gauges and send additional VELO rewards to the (m)veNFT to be distributed among veNFTs who have locked into the (m)veNFT.
An initial admin is set on Relay creation who can then add/remove other admins, as well as revoke their own admin role. Admins can also add/remove Allowed Callers. Within the first 24 hours after an epoch flip, an admin can claim and sweep reward tokens to any recipients.
The team can set the VELO reward amount for public callers, add high liquidity tokens, and add/remove keepers.
| Public | Keeper | Allowed Caller | Admin | Velodrome Team | |
|---|---|---|---|---|---|
| Claim Rewards | Yes | Yes | Yes | ||
| Swap and Compound | Yes | Yes | Yes | ||
| Reward paid to caller1 | Yes | ||||
| Sweep tokens | Yes (if not a high liquidity token) | ||||
| Vote & increase rewards | Yes | ||||
| Set caller reward amount | Yes | ||||
| Add high liquidity tokens | Yes | ||||
| Add/remove Keepers | Yes |
| Who | First hour | Middle2 | Last 24 Hours |
|---|---|---|---|
| Public | X | ||
| Keeper | X | X | |
| Allowed Callers | X | X | X |
| Admin | X | X | X |
| Team | X | X | X |
Anyone who owns a (m)veNFT can create a Relay. Only the allowedManager role within VotingEscrow
and the governor role within Voter have permission to create a (m)veNFT. The (m)veNFT is sent to
the Relay in creation where it will permanently reside.
Anyone with a normal veNFT can deposit into a (m)veNFT. Therefore, we expect to see (m)veNFTs controlled with the aggregate voting power of hundreds normal veNFTs or more. The motivation in depositing a normal veNFT is to earn passive rewards, not to delegate voting power for governance. However, the cumulative voting power of the (m)veNFT could be significant enough to influence Velodrome governance proposals. Therefore, the Relay is designed:
- Without governance voting functionality
- No ability to withdraw the (m)veNFT
So, once a (m)veNFT is deposited into a Relay, it will stay there permanently.
What happens if a (m)veNFT is deactivated by the team? What happens if the controllers for the (m)veNFT can no longer be trusted to act in the best interest of the veNFT depositors? What happens if a veNFT depositor finds a different (m)veNFT to deposit into, or if they decide to vote from their own veNFT again? The answer to these questions is the same:
At any time, a normal veNFT can be withdrawn from its' deposited (m)veNFT, as long as it has not been deposited within the same epoch.
The routes provided by the keepers are only used if they're better than the routes provided by the Optimizer.
The intention of sweep is solely to allow pulling of low liquidity tokens earned by the (m)veNFT, to prevent compounding the tokens with high slippage. The admin can revoke their own access if desired. High liquidity tokens are initially set when a relay is deployed by the factory. Key aspects about these tokens include:
- They are established during the relay's deployment.
- Once added to the list, these tokens cannot be removed, not even by the admin/owner.
- Only the owner of the relay factory has the permission to add more high liquidity tokens to the list.
Since the autoconverter isn't intended for public use, the admin has the authority to sweep any token, even if it is not a high liquidity token. It's important to understand sweeping is designed to work as a last-resort. If the need arises, the admin can sweep tokens and deposit the high liquidity tokens back manually. They also can try to swap these tokens by identifying the appropriate routes which aren't unavailable in the optimizer.
The first hour after an epoch flip are given solely to the Admin in the case a token sweep is needed. After this privileged access, the Keeper can claim and compound tokens as desired. This prevents a race to sweep if the keepers are automated or compound as soon as they are able to. The following five days are given solely to keepers to compound rewards. Then, within the last 24 hours, everyone is incentivized to claim and compound any remaining rewards, including keepers. This guarantees that rewards of high liquidity tokens will always be claimed and compounded, even without active keepers.
These tokens exist within Velodrome with at least $1M+ liquidity or $250k+ VELO liquidity in two or more pools:
See script/README.md for more detail.
Footnotes
-
Caller is referring to anyone who calls the autocompounder's function
rewardAndCompound. Even if the caller is a keeper/admin/allowed caller, they are treated the same in the reward amount calculation. ↩ ↩2 -
Middle is the timeframe between the end of the 1st hour after an epoch flip and the start of the last day of epoch. ↩