Velix Litepaper

Velix Protocol

Velix is a Liquid Staking as a Service (LaaS) platform designed to revolutionize liquidity management for stakers across multiple blockchain networks. It addresses the challenges of traditional staking by allowing users to earn native network rewards on their staked assets while retaining liquidity for other DeFi activities. Built with a strong emphasis on multi-chain interoperability, Velix simplifies the staking process through an intuitive DApp, reduces liquidity fragmentation, and enhances overall financial flexibility.

Goal

The development of Velix required overcoming significant technical complexities, particularly in creating a protocol that operates seamlessly across different blockchains. This development phase involved deep research and the implementation of innovative solutions to ensure both efficiency and security. Educating users on the benefits of liquid staking and driving adoption has been central to Velix’s mission, aiming to make advanced DeFi tools more accessible and user-friendly.

Liquidity Management

Liquidity management is a crucial aspect of Velix. The platform ensures liquidity is maintained across all chains it deploys on, preventing fragmentation and enhancing user experience. Velix also actively manages market volatility, focusing on protecting assets during downturns while targeting active blockchains that present growth opportunities.

Innovative Features

Velix integrates cutting-edge features like Miner Extractable Value (MEV) capture and auto-compounding to maximize returns for its users while also strengthening the security and decentralization of the networks it supports. As a pioneering protocol, Velix is poised to transform DeFi engagements across various blockchains, offering a secure, efficient, and flexible staking solution for the modern decentralized finance landscape.

Problems and How Velix is Solving Them

The decentralized finance landscape is fraught with challenges that can deter users from fully engaging with staking opportunities. These include:

• Complex Processes: Traditional staking often involves complicated procedures that are not user-friendly.
• Illiquidity: Users typically face lock-up periods that restrict access to their funds.
• Platform-Specific Risks: Users are exposed to the risks associated with individual platforms, especially during market downturns.
• Liquidity Fragmentation: Staking on multiple blockchains can lead to fragmented liquidity, reducing overall efficiency.

Velix’s Solutions:

• Simplified Staking: Velix eliminates these complexities by providing users with an intuitive DApp that streamlines staking, earning, and liquidity management across multiple blockchains.
• Enhanced Liquidity: Velix maintains liquidity across various chains, ensuring users have continuous access to their funds without the typical lock-up periods.
• Market Volatility Management: Velix actively monitors market trends, adapting to protect assets during downturns while focusing on chains with the most promising growth opportunities.
• Multi-Chain Interoperability: Velix’s support for multiple blockchains reduces liquidity fragmentation and allows users to diversify their staking portfolios, minimizing risks associated with any single platform.

Why Velix ?

• No Internal Protocol Lock-Up: Users can unstake their assets without the typical lock-up periods enforced by other protocols, providing easy access to their funds when needed.
• Multi-Chain Support: Velix supports multiple blockchain networks, enabling users to stake and earn rewards across various chains, thus diversifying their portfolio and reducing platform-specific risks.
• Accrual of Rewards: Staked tokens remain constant in quantity, but users earn additional rewards over time, increasing the overall value of their assets.
• MEV Capture: Velix’s MEV validator client captures additional profits from Miner Extractable Value activities, redistributing these to stakers, which enhances their overall yield.

Protocol Architecture

User Journey:

Deposit and Delegation:

• Users begin by depositing METIS tokens, which are then delegated to high-performance sequencers for network validation and consensus.

LSD Issuance (veMETIS)

• Users mint veMetis with their METIS tokens, which they can then stake for sveMetis, a liquid staked token that accrues rewards while ensuring users maintain liquidity.

Reward Distribution

• Rewards are distributed in veMetis to sveMetis holders, offering a proportional return based on the amount of sveMetis held. This process includes a 10% allocation to the Protocol Treasury to support Velix’s growth, with the remainder distributed to stakers.

Node Locking and Bridging:

• Node Locking Pool on Layer 1: Users submit their METIS tokens to the Sequencer Node Locking Pool on Ethereum (Layer 1), which ensures the security and proper sequencing of transactions.
• METIS Bridging: Velix uses the Metis Bridge to safely transfer tokens between Metis Andromeda (Layer 2) and Layer 1, ensuring secure movement of METIS tokens across layers.

Contracts and Vault:

• veMetis Contract and Minter: This component converts deposited METIS into veMETIS, allowing participation in the reward system on Layer 2.
• Reward Distributor Contract and Protocol Treasury: Manages the flow of rewards, channeling funds into the Protocol Treasury and distributing them to stakers.
• sveMetis Vault: Secures 90% of the veMETIS rewards accumulated from staked tokens, incentivizing further participation.

User Actions on Layer 2:

• Users can stake their veMETIS to receive sveMETIS or revert their sveMETIS to veMETIS after a 7-day bridging challenge period, a security measure to verify the correctness of Layer 2 transactions before finalization.

Note
The protocol architecture described here is specific to the Metis ecosystem. Velix is designed with flexibility in mind, allowing the architecture to adapt and optimize based on the unique features and requirements of different blockchain networks. This ensures that Velix delivers optimal performance and user experience across various ecosystems.

Security

At Velix, the security of our users’ assets and the integrity of our protocol are of paramount importance. We have implemented comprehensive security measures to ensure that our platform remains robust and reliable across all supported blockchain networks. Below are the key security protocols and initiatives we’ve undertaken:

Smart Contract Audits

To guarantee the security of our protocol, we engaged with PeckShield, a leading blockchain security firm, to conduct a thorough audit of Velix’s smart contracts. The audit focused on identifying potential vulnerabilities, verifying the correctness of our contract logic, and ensuring compliance with industry best practices.

Audit Summary

• Scope: The audit covered all core smart contracts involved in the Velix protocol, including those related to staking, reward distribution, and token minting.
• Findings: No critical vulnerabilities were found, and all identified issues were addressed promptly to fortify the protocol’s security.
• Recommendations: Recommendations provided by PeckShield were integrated into the protocol, further enhancing its resilience against potential threats.

You can access the full audit report here

Conclusion

As the blockchain landscape evolves, the demand for flexible and efficient staking solutions grows. Velix meets this need by offering a Liquid Staking as a Service (LaaS) platform that ensures users can earn rewards while retaining liquidity across multiple networks. This approach not only enhances financial flexibility but also addresses the challenges of traditional staking, such as liquidity lock-ups and market volatility.

Velix’s multi-chain support and advanced features like MEV capture position it as a crucial tool for optimizing staking strategies in the decentralized finance ecosystem. By bridging the gap between user needs and the technical complexities of multi-chain staking, Velix is set to lead in providing secure, efficient, and user-friendly staking solutions.