DAPG - TiD Research

1

Identifying Title of the Idea:

Listing seVLR on Pendle to promote VLR staking, improve visibility, expand VLR utility, and create more volume

DAO-Recognized Name:

TiD Research

Individual or Organization?:

TiD Research

Twitter Handle:

@tid_research

Details of the Idea:

Integrate staked VLR (seVLR) into Pendle Finance, a leading DeFi protocol that enables users to trade and manage yield.
When seVLR is deposited into Pendle, it is split into two transferable components:

  • PT (Principal Token): represents the principal value of seVLR and provides fixed-rate yield until maturity.
  • YT (Yield Token): represents the right to the future yield, which can be traded or compounded for variable returns.

By listing seVLR on Pendle, Velora can convert its staking system from a passive yield model into an active yield market, allowing participants to fix, hedge, or speculate on Velora’s revenue-based APR. This enhances visibility, trading activity, and integration opportunities across the DeFi ecosystem.

How Will This Idea Help VLR Growth:

  • Promotes staking adoption: seVLR holders gain new ways to manage yield risk and enhance returns.
  • Expands utility: turns seVLR into a composable, tradable yield asset used across protocols.
  • Improves visibility: listing on Pendle showcases VLR’s yield mechanics to a wide DeFi audience.
  • Drives liquidity and volume: Pendle markets attract traders, LPs, and aggregators, increasing on-chain activity.
  • Creates a benchmark yield curve: PT/YT pricing reveals the market’s view of Velora’s forward APR, a valuable governance signal.

Mapped KPIs or Expected Impact:

  • TVL in seVLR Pendle markets: ≥ $500k after 3 months
  • Average daily trading volume: ≥ $50k
  • Staking participation: +10–20 % increase in seVLR TVL
  • Unique wallets interacting: ≥ 100 users across Pendle × Velora
  • PT vs. realized APR gap: within ±5%, showing efficient yield discovery

Preliminary Feasibility Assessment:

  • Technical: seVLR is confirmed transferable ERC-20 — fully compatible with Pendle’s standardized yield architecture (SY).
  • Operational: Pendle listings are permissionless; no DAO-level code change needed.
  • Ecosystem fit: both Pendle and veVLR support Ethereum and Base chain, simplifying coordination of liquidity, analytics, etc.
  • Precedents: similar integrations of LPs listing have proven composable.

How Will the Idea Be Implemented?

  1. Integration Design: confirm seVLR contract interface and reward model with Velora Core.
  2. Adapter Development: build & test SY-seVLR (Pendle Standardized Yield wrapper).
  3. Market Deployment: deploy initial PT/YT-seVLR market on Ethereum/Base with one quarterly maturity.
  4. Liquidity & Awareness: seed initial TVL and run a community campaign explaining fixed/variable yield options.
  5. Monitoring: publish a simple dashboard tracking TVL, APR, volume, and wallet participation; roll over markets quarterly.

VLR and Other Token Amounts Eventually Involved:

  • Initial liquidity pool: ~500k seVLR + $50k USD (6–8 weeks bootstrap phase)
  • Audit & technical support: ~$5-10k USD
  • Total indicative commitment: ≈ 500k seVLR + $50k USD

Does It Require Any Technical Development or Additional Resources?

Yes.

  • Development of SY-seVLR adapter and deployment scripts
  • Light external security review

Are There Any Associated Costs or Budgets?

Yes.

  • Bootstrapping liquidity
  • Small engineering & audit expenses

Who Should Be Involved in the Implementation?

  • Velora Core Team: confirm seVLR specs & assist in adapter review and market creation & support liquidity coordination
  • Velora Delegates: monitor KPIs
5 Likes
Delegate Activation Program for VLR Growth (DAPG)
2

Why not directly with Spectra? They are permissionless?

3

Thank you, @TiD_Research for this strong proposal. The move to make seVLR a composable yield asset on a protocol like Pendle is an exciting prospect. Could you elaborate on the primary risks or potential integration challenges one could anticipate during the adapter development ,implementation and launch phases?

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Thanks for the support, @Eren_DAOplomats! We have categorized the primary risks into three distinct buckets, along with suggested mitigation strategies for each:

1. Technical & Integration Risks (The Adapter)

The core technical challenge is the Standardized Yield (SY) Adapter. This contract acts as the “translator” between Velora’s staking mechanism and Pendle’s yield engine.

  • If the adapter incorrectly calculates exchange rates or fails to handle a reward distribution event from Velora, it could lead to pricing discrepancies or, in a worst-case scenario, fund lock-ups.
  • We are not reinventing the wheel. The process will involve forking Pendle’s battle-tested SY templates used for similar ERC-4626 or compounding assets. Furthermore, the budget includes a provision for a lightweight external security review (audit) of the adapter code before mainnet deployment.

2. Market & Liquidity Risks (Yield Volatility)

This is particularly nuanced for a real-yield asset like seVLR.

  • Impermanent Loss & Pricing Unlike fixed-inflation tokens, seVLR’s yield is derived directly from Velora’s protocol revenue. Therefore, the pricing of the future yield (YT) relies heavily on the market’s forward-looking projection of that revenue.
    • If the market anticipates a high revenue month (pumping the YT price) but the actual realized staking yield comes in lower, the rapid re-pricing of yield expectations will cause divergence.
    • This volatility between projected revenue and realized revenue is the primary driver of Impermanent Loss (IL) for liquidity providers in yield markets.
  • We suggest implement conservative initial parameters for the AMM curve to concentrate liquidity where yield is most likely to trade based on historical revenue data. Additionally, we also suggest start with a “Guardrail Phase” (cap on deposits) to allow the market to find equilibrium on pricing Velora’s revenue volatility before we encourage deeper liquidity.

3. Operational & Maturity Risks (The “Rollover”)

Unlike a standard Uniswap pool, Pendle markets have an expiry date (Maturity).

  • There might be “Zombie Markets.” If a pool matures and there is no active coordination to “roll over” liquidity to a new maturity date, the integration becomes stagnant, and users are left holding expired PT tokens.
  • We suggest building a Quarterly Rollover Framework into the proposal. This ensures that 2 weeks prior to maturity, a governance signal or operational check is triggered to prepare the next pool, ensuring continuous, unbroken liquidity for seVLR holders.

We view the Smart Contract Risk as the highest priority (solved via audit/testing) and the Yield Pricing Risk as the most unique to this specific asset type. By adhering to Pendle’s existing standards and managing initial liquidity parameters carefully, we believe these risks should be handled and monitored properly within manageable bounds for the DAO.

1 Like
5

Thanks for your feedback, @Julio!

Spectra is indeed permissionless and technically capable. However, the goal of this proposal is Growth and Visibility, not just utility. When we look at the data, the difference is clear:

  • TVL: Pendle holds ~$3.5B in TVL, whereas Spectra is in the ~$40M range.
  • Volume: Pendle sees tens of millions in daily volume; Spectra sees significantly less.
  • The Verdict: Listing on Spectra would be “easier” but would likely result in a ghost town. Listing on Pendle exposing Velora to the largest yield-trading user base in DeFi. We believe the extra coordination effort is worth the difference in potential exposure.
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1 Like
6

Hey, @todayindefi! Thanks for dropping this proposal. It really hit the right notes for us, so the initiative is more than welcome. We look forward to keeping it rolling.

We agree with the fact that such a proposal can bring more stakers to Velora while it expands VLR use cases and improves Velora’s and VLR’s visibility. However, the liquidity and volume improvements would depend on how many users we are able to attract with this new use case.

That being said, we have a few questions regarding your initiative:

When it comes to the expected impact, we wonder where those numbers came from. Are they estimations from previous implementations of similar tokens within Pendle or estimations from analysing Pendle’s stats? We aren’t aiming to discredit or disregard these numbers, but we are of the idea of being careful with the KPIs and expected impact that we set, so they are realistic and achievable.

Regarding the initial liquidity pool, do these numbers come from previous implementations in Pendle? If the answer is yes, what would the expected revenue be for the DAO if it deploys that liquidity, from trading fees within this pool? Also, are the numbers presented in the KPI and expected impact achievable with this capital deployment? Have you considered extra liquidity deployments, beyond the initial one, to keep the pool in Pendle attractive to potential users? Have you considered incentivising the Pendle pool or getting involved in ‘Pendle Wars’?

When it comes to the audit and technical support costs, are you in contact with a team able to carry out this implementation? If there’s a need for that, during the Governance Day, we came in contact with a team that carried out such implementations. Please let us know, and we can coordinate a meeting with them if needed.

Lastly, about maturity dates, is there any extra cost for rolling over the Pendle implementation? Also, would the DAO on its own be able to manage the rollover process, or do we require third-party assistance?

All in all, we really appreciate this proposal and would be happy to push it forward. We look forward to your replies, and we are open to having a call if needed.

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Hi @SEEDGov,

Thank you for the rigorous due diligence. These questions are vital to ensure we aren’t just “listing for the sake of listing,” but creating a sustainable market structure for Velora.

Below is the breakdown regarding the data sources, the economic case for POL, and the specific Incentive Costs.

1. KPI Methodology & Benchmarking

Our targets were modeled by comparing the launch performance of other Staked Governance Tokens listed on Pendle, specifically xSILO, sKAITO, sENA, and vePENDLE.

  • Valuation & Seed Sizing:
    • When determining the seed liquidity size, we looked for the most comparable asset in terms of market structure and valuation. VLR’s Fully Diluted Valuation (FDV) is currently tracking closely to SILO.
    • Among the comps, xSILO launched with the leanest seed liquidity (~$100k–$150k), whereas larger caps like sENA or sKAITO launched with >$1M in seed.
    • Given the valuation alignment with SILO, we believe matching the xSILO seed depth is the prudent approach. This is why we set the DAO allocation at ~500k seVLR + $50k USD, which brings the total initial pool value to ~$100k.
  • Bridging the Gap (Seed vs. Target):
    • You are correct to question the leap from ~$100k Seed to a $500k TVL target. While the initial liquidity ensures the pool is functional (handling trades without slippage), achieving the 5x growth to reach $500k TVL requires the active incentive strategy detailed below.
  • Growth Justification (+10-20% Staking Participation):
    • Historical data from Pendle (e.g., Arbitrum STIP) shows that listing assets often drives 57%–234% growth in underlying liquidity.
    • Pendle unlocks two user personas native staking cannot capture: Conservative Hedgers (seeking Fixed Yield) and Yield Speculators (seeking leveraged yield exposure). We believe a 10-20% lift is a conservative baseline given these new inflows.
  • Market Efficiency (±5% APR Gap):
    • This KPI measures whether the pool is “liquid enough” for price discovery. A tight gap between Implied Yield (PT price) and Realized Yield proves that arbitrageurs are active, which is a key signal for institutional confidence.

2. The Economic Case: Renting vs. Owning Liquidity

You asked about the expected revenue and whether the numbers are achievable with this capital. We view the initial deployment as a “Balance Sheet Transfer” (POL) rather than an expense (Liquidity Mining) for three reasons:

  • A. Cost Efficiency: To attract $100k of liquidity via incentives alone is a “sunk cost.” By deploying our own treasury, the “cost” is effectively lower despite the impermanent loss (we retain the principal).

  • B. Revenue Capture: As the owner of the LP position, the DAO captures two revenue streams:

    1. Swap Fees: We earn trading fees (typically 0.1% - 1%) from every user interaction.
    2. Yield-on-Yield: Since the underlying asset (seVLR) is yield-bearing, the DAO continues to earn the native staking rewards while providing liquidity.

  • C. The “Rug Protection” Floor: By holding a permanent POL floor, the DAO guarantees that slippage will never exceed acceptable limits for standard trade sizes, preventing the “Ghost Town” scenario.

  • Volume & Turnover Ratio (10%):

    • Historical data from Token Terminal shows that active Pendle pools typically see a daily turnover ratio (Volume / TVL) between 5% and 15%.
    • Our target of $50k Daily Volume on a projected $500k TVL represents a 10% Turnover Ratio. This sits in the middle of the historical band, validating that the target is realistic for an active yield market.

3. Bridging the Gap: Incentives & “Pendle Wars”

You correctly pointed out the gap between the $100k Seed and the $500k TVL Target. While the seed ensures the pool works, achieving 5x growth requires active participation in the “Pendle Wars.”

  • Target APR (~50%): To compete with other volatile altcoin pools on Pendle, we need to target an APR of ~50%, similar to the APRs of ENA, PENDLE, KAITO pools.
  • The Math:
    • Native Yield (~25%): With seVLR staking APR in the last epoch at ~45%, and the pool being 50/50 (seVLR/USD), the pool generates a baseline ~22.5% APY naturally.
    • Boosted Yield (~25%): The remaining gap must be filled by PENDLE rewards.
  • We estimate we need to direct ~0.25% of total vePENDLE voting power to our gauge to hit this target. Using bribe markets like Equilibria (which controls ~17.2% of vePENDLE), the estimated cost is roughly ~$500 per week. This is a way to “rent” the remaining $400k of liquidity.

4. Technical Implementation & Rollover

  • We would absolutely like to take you up on the offer to meet the implementation team you mentioned from Governance Day. Partnering with a team that has already successfully deployed on Pendle significantly de-risks this for Velora. Please do facilitate that introduction.
  • Rollovers: To answer your specific question—rollover is not automatic. It requires deploying a new maturity contract and migrating liquidity.
    • Cost/Process: The gas costs are negligible, but there is an operational requirement. If we work with the technical partner you suggested, we can establish a process for the DAO to execute this migration on a regular basis.
1 Like
8

Thanks for sharing this research! We think the idea of introducing seVLR into Pendle’s yield market is interesting and we appreciate the work put into outlining the potential structure.

We have several open questions here for us to support:

  • First, how were the projected KPIs around TVL, daily volume, and staking participation derived, and what comparable Pendle deployments were used as benchmarks? At present, these assumptions appear optimistic relative to ecosystems of similar size, and it’s unclear whether demand would materialize without sustained incentive support.
  • Second, how should the DAO evaluate the opportunity cost of deploying ~500k seVLR plus $50k in USD liquidity for this initiative versus alternative uses of treasury capital? Is there a clear framework for determining whether this deployment is expected to be net accretive to the DAO once incentive dilution, liquidity fragmentation, and ongoing maintenance are considered?
  • Third, can we better understand the operational and technical risk involved in adapter development, yield pricing, and maturity rollovers? While feasibility is discussed at a high level, it’s not clear how much ongoing engineering and operational overhead this would impose, or how those risks are monitored and priced into the proposal.

Overall, we see potential here, but would be more comfortable revisiting this idea with stronger empirical grounding, clearer economic modeling, and a more conservative phased approach that limits downside risk to the treasury.

1 Like