LOCKONOMICS

Summary from the TLDR Crypto newsletter

Velodrome and Aerodrome – the leading DEXes on Optimism and Base – pioneered "lockonomics," a model where users lock tokens for up to 4 years to receive voting power, protocol fees, and project bribes, while LPs receive token emissions instead of direct fees. The system imposes a "speculation tax" on short-term holders through inflation that benefits lockers – currently 50% of supply is locked with an average duration of 3.6 years – and can be stabilized via emission control to match revenue when growth slows. Velodrome currently runs 15% annualized inflation while delivering 20%+ APY to lockers, deliberately operating at emissions exceeding revenue to drive sticky growth through accumulated protocol-owned liquidity and user lock-in before eventually reverting to a sustainable emissions-equal-revenue equilibrium.