ve-Tokenomics: Curve, Aerodrome, Velodrome

Vote-escrowed (ve) tokenomics started with Curve Finance in 2020. Lock CRV for up to 4 years, receive veCRV. veCRV holders vote on which pools get CRV emissions and earn a share of protocol fees. This design created the Curve Wars.

The Curve mechanism

1. You hold CRV. Lock it for 1-4 years to receive veCRV.
2. Lock length determines voting power (4 years = 1:1, 1 year = 0.25 veCRV per CRV).
3. veCRV votes on gauge weights: which pools get CRV emissions each week.
4. Higher emissions = higher LP APR = deeper liquidity for that pool.
5. veCRV also earns 50% of Curve's trading fees.

The Curve Wars

Stablecoin issuers (Frax, Alchemix, MIM, later Convex) realized: if they controlled enough veCRV, they could direct emissions to their own pools, deepening liquidity for their stables at Curve's cost. Convex emerged as an aggregator: users deposit CRV, get cvxCRV, and Convex uses aggregated voting power to direct emissions to paying bribers.

ve(3,3): Solidly and Aerodrome

Andre Cronje's 2022 innovation. veCRV holders were diluted by every new emission. In ve(3,3), veholders get a share of new emissions proportional to their voting power. This eliminates the dilution issue.

• Solidly / Solidly Labs. Original launch on Fantom.
• Velodrome. Optimism port; became flagship DEX.
• Aerodrome. Base port; became flagship DEX on Base with hundreds of millions in TVL.

Why it works

• Aligns long-term holders with protocol growth.
• Attracts liquidity to specific pools via emissions.
• Creates a market for bribes (paying veholders to vote for your pool).

Where it fails

• Long lockups reduce liquidity of the underlying token.
• Bribe economies can become extractive (protocol pays more in bribes than it earns).
• Governance concentration risk (a few whales control votes).