The Ubiquitous ve(3,3): Which Projects Are Worth Watching?
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The Ubiquitous ve(3,3): Which Projects Are Worth Watching?
This is a remarkable DEX innovation and design, offering a superior incentive system compared to original automated market makers (AMMs) like Uniswap and Sushiswap.
Navigating Web3 tides with focused insightsWritten by: ADAM
Compiled by: TechFlow
The original Solidly decentralized exchange, now commonly referred to as ve(3,3), has generated significant attention in the DeFi space. It represents a compelling DEX innovation and design, offering a superior incentive system compared to legacy automated market makers (AMMs) like Uniswap and Sushiswap. These ve(3,3) protocols require weekly or more frequent interactions among veNFT holders, partner protocols, and LPs to maximize yields, liquidity, or other objectives such as attention share.
Bear market pressures and high emissions have placed persistent downward price pressure on ve(3,3) DEXs across various ecosystems. However, in the long run, I still believe that an engaged base of holders and alignment between protocols will lead to sustainable flywheels.
Regardless of the native token's price, veNFT holders can receive over 200% in bribes weekly, while ve(3,3) teams focus on TVL, aggregator partnerships, and better order execution technology to maximize volume and fees.
Are More ve(3,3) DEXs a Bad Thing?
Every new DEX seems to be a fork or rebranding of Solidly. Guru Network has built a nice comparative dashboard to track the best Solidly Visions comparison!
According to DeFi Llama data, there are now 31 Solidly forks across multiple chains, with Velodrome accounting for over 35% of the TVL.
I don't see this as a bad thing. Clearly, competition is always beneficial for market participants. Best order execution delivers optimal prices for buyers and sellers, and DEX aggregators are making this happen (Firebird is my personal favorite—$FBA is a low-market-cap alpha). However, most forks will not succeed. Teams without unified business strategies, expansion plans, and community recognition will fail.
One of the paradigm shifts pioneered by Olympus DAO is the concept of protocol-owned liquidity (POL). This idea has now become extremely popular among new protocols because it generates revenue (capital efficiency).
ve(3,3) DEXs offer tremendous opportunities for teams managing POL. Not only do they distribute significant veNFTs that grant voting rights over fees and emissions, but they also enable customized liquidity strategies. The design space of Solidly allows modular improvements atop the base liquidity curve and staking contracts. For example, Thena uses Gamma Strategies and Algebra to implement concentrated liquidity, enabling customized liquidity ranges and curves to maximize fees for specific asset types.
Differentiation Among ve(3,3) DEXs
Building a ve(3,3) DEX requires more than secure smart contracts, effective user experience, and novel token design. Mission, vision, and values that contribute to brand identity are becoming increasingly important to attract the right partners. As the number of DeFi DApp teams grows, I predict teams will want their POL managed by a ve(3,3) DEX team with consensus, a clear track record, and the ability to consistently and thoughtfully manage relationships.
I’ve been advising Solunea, an emerging ve(3,3) DEX. They built a working protocol on zkSync, raised some ETH for POL, and launched their SLNA token before deciding to pivot to Arbitrum. Arbitrum offers more mature infrastructure, deeper liquidity, and a richer ecosystem of DApps for collaboration—making it a smart move. Solunea is a small, humble team embodying a "community-owned" ethos. Community-owned means no venture capitalists; content, partnerships, and strategies are all generated by Discord members, and 100% of swap fees go to veNFT holders. It’s a very cool, equitable project, and I recommend the team empower their community to engage with like-minded projects in the Arbitrum ecosystem.
The Future of ve(3,3) DEXs
As these protocols continue building TVL and strengthening partnerships across ecosystems, we’ll see the modular power atop ve(3,3) DEXs drive higher fees and sustainability.
Here are some ideas I’ve been thinking about for ve(3,3) builders:
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Launchpad for new project tokens—this makes perfect sense. ve(3,3) teams and NFT holders conduct due diligence and whitelisting for projects using the DEX for IDOs. Listing POL on a ve(3,3) DEX offers a seamless experience. These DEXs will build strong network effects by attracting informed and proactive voter/investor audiences. Fundraising via ve(3,3) would be a win-win.
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Treasury management. Many protocols manage diverse asset portfolios, and ve(3,3) DEXs can help improve capital efficiency. Through concentrated liquidity and perpetual contracts, delta-neutral strategies can generate yield without impermanent loss risk.
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ve(3,3) stablecoins backed by veNFTs and LP tokens. Why? Because we love capital efficiency and leverage.
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veNFT AMM for swapping locked positions and liquidations. Bug Finance is building a new mechanism allowing exits from veNFT positions.
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Self-repaying loans for veNFT holders.
In summary, ve(3,3) is here to stay, and it’s exciting to see many competitors in DeFi. My prediction is that as market makers reduce their CEX operations, we’ll see increasing migration of large-token liquidity to ve(3,3) DEXs for greater capital efficiency. There will always be speculators moving liquidity to the DEX offering the best yields, but in the long run, the most capital-efficient DEXs generating the highest volumes will benefit veNFT holders and remain sustainable.
My ve(3,3) Picks
Thena—sustainable revenue driven by Fusion (concentrated liquidity), Alpha (partnership with Deus), forks across ecosystems, advisors, strong front-end designers, and excellent BD. Add BSC’s vast ecosystem with huge potential into the mix.
Chronos—Arbitrum hosts the best DeFi ecosystem, and Chronos has a strong brand and team. As long as bribes keep flowing in, their maNFT and no-rebase model should ensure consistent TVL and lockups.
Velodrome—the largest DEX on Optimism is well-positioned. With the upcoming Optimism Bedrock upgrade and Coinbase launching Base, Velodrome has a chance to soar. Velodrome V2 is coming soon, delivering a much-needed upgrade to generate protocol fees.
Solunea—a small project just launched on Arbitrum. Dynamic emissions should keep LP APRs stable (high lockups lead to high emissions, low lockups reduce emissions). SLNA liquidity mining starts today:
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