Thanks for raising this up. We took a closer look at the Velora dashboard data to better understand what might be driving the lower revenue in Epoch 38 and wanted to share a few observations.
While acknowledging that Epoch 38 is still ongoing, the current revenue figure stands out as materially lower than prior epochs. Even accounting for the fact that the epoch is incomplete, the pacing so far appears well below historical norms, which makes it reasonable to look beyond timing effects alone.
Looking at trading activity more broadly, the most obvious driver appears to be a sharp contraction in overall volume. Monthly trading volume has declined significantly over the past several weeks, with December showing a clear step down compared to October and November.
This decline is especially pronounced on Ethereum, which continues to account for the majority of Velora’s volume. Ethereum volume dropped substantially from November to December, and given its weight in the overall mix, this alone has an outsized impact on total protocol volume and revenue, even if activity on other chains is comparatively more stable.
At the same time, user activity does not appear to have declined to the same extent as volume. Active address metrics over the last month and last three months remain relatively healthy, and daily activity by chain shows volatility but no clear collapse in participation. This divergence between relatively stable user counts and sharply lower volume suggests the decline is more likely driven by reduced trade sizes or the absence of large flows, rather than broad user churn.
One plausible explanation is that some high volume or fee sensitive orderflow, such as whale trades, market makers, or integrator driven flows, may have paused or rerouted during this period. A relatively small number of large flows can account for a disproportionate share of total volume, so changes in their behavior can have an outsized impact on volume and revenue while leaving user metrics largely intact.
In that context, it may also be useful to consider broader routing dynamics across the ecosystem. For example, large frontends such as Aave have shifted a significant portion of their orderflow to Cowswap rather than Velora. We do not have clear evidence that the current volume decline is directly related to this change, particularly given that Aave’s routing decision occurred back in June while the sharp volume contraction we are observing is much more recent. This timing mismatch suggests the current drop is unlikely to be explained by that factor alone. However, it does illustrate how sensitive large scale, fee sensitive flows can be to routing design, execution mechanics, and effective fee stacking.
Historically, when Aave used Velora as the swap router on AAVE, Velora acted as the primary execution layer for frontend swaps and earned its standard protocol-level fees from routing activity. In parallel, the Aave DAO benefited from Velora’s referral and positive slippage capture mechanism, which redirected value generated by swaps on the Aave frontend directly to the DAO treasury without introducing additional fees for users. Under this setup, users benefited from a seamless swap experience, Velora earned execution-related fees as the router, and the DAO captured referral-related revenue generated through its own frontend.
Following the transition to CoWSwap as the primary swap provider on AAVE, this structure changed. Velora is no longer part of the execution path for swaps routed through the Aave frontend and therefore no longer earns swap-related fees from Aave-originated activity.
This raises a reasonable question as to whether this structural change, combined with weaker market conditions, could be one of several contributing factors to the observed decline in volume and, by extension, protocol revenue. In particular, it may be relevant for fee-sensitive or high-volume flows, where changes in effective fees and execution paths can meaningfully influence routing decisions.
That said, we do not have enough information to draw a definitive conclusion. The timing does not line up cleanly, and it is entirely possible that the current decline is driven primarily by broader market dynamics rather than any single integration or routing decision. As such, this should be viewed as a hypothesis rather than a conclusion.
Fee data appears to track volume closely as well. Both protocol revenue and partner fees compress in November and December, which points toward a volume driven effect rather than anything obviously abnormal in the fee structure or routing based on the available data.
Putting this together, our current read is that the lower revenue in Epoch 38 is primarily driven by reduced volume, with Ethereum’s slowdown and the absence of large flows likely playing a key role. It would be helpful to hear from the team whether this pattern was expected, whether revenue is typically back loaded within an epoch, and whether any known high volume flows or integrators changed behavior during this period.
