Key Insights

Introduction

While blockchain technology has matured, it has also faced challenges in scaling, interoperability, and integration with traditional finance systems. Various decentralized finance (DeFi) platforms have introduced innovative ways to transact, yet remain fragmented, complex, and inaccessible to the average user. Velo addresses these issues by providing a seamless solution that simplifies cross-border transactions, enables the tokenization of Real World Assets (RWAs), and enhances everyday payments through its Orbit platform and Omni Point loyalty program.

Notably, Velo has undergone significant strategic shifts since its inception in 2018. Initially, in 2020, the platform focused on its Digital Reserve System (DRS) and digital credit issuance mechanism, aiming to facilitate secure cross-border settlements. By December 2023, Velo shifted its focus toward becoming a decentralized Web3 payment network (e.g., VeloDAO), while also introducing their Identity Framework as an additional feature. In October 2024, the project expanded its focus to include the tokenization of Real World Assets (RWAs) and introduced Orbit, a consumer super app.

Background

Since its launch in 2018, Velo has evolved from building a decentralized financial payment network to advocating for broader blockchain adoption, with finance as its first targeted industry. Velo integrates traditional finance with Web3 solutions, improving transaction speeds and reducing fees without altering the user experience or replacing the system itself. End-users will not directly interact with the blockchain but will benefit from more efficient and cost-effective transactions. To do so, Velo has released a suite of products and tools, which include Universe (a hybrid DEX), Warp (bridging platform), Nova (EVM-compatible blockchain), Quantum (remittance network), PLG (tokenized gold), and Orbit (consumer payment super app).

With these tools, Velo solves fragmentation in global payment systems, especially in regions lacking banking infrastructure, by enabling seamless, cross-border transfers of fiat, digital, and real-world assets. According to a 2022 study from the IMF, remittance costs associated with sending money worldwide were as high as 16.60%. Many corridors still have fees above 5.00%, far exceeding the UN's sustainable development goal of keeping average fees below 3.00% by 2030. Led by CJ (Founder), and TA (Vice Chairman) and advised by Jed McCaleb (Founder of Stellar), Prof. David Mazières (CSO of Stellar and Stanford Professor), Prof. Robert Townsend (Economics at UC, MIT, and CMU), John Ng Pangilinan (Founder of Signum Capital) and Paul Veradittakit (Partner at Pantera) – Velo has acquired partnerships with large companies (e.g., Visa and Copper) and has recently raised $60+ million from investors DWF Labs, LDA Capital (for Lightnet, a partner company), and UOB Venture Management.

Technology

Velo is a blockchain-powered financial infrastructure that connects traditional finance with Web3 applications. Velo uses Stellar for fast, low-cost transactions and Nova for EVM-compatible smart contracts, simplifying cross-border value transfers, while also supporting multiple chains. The Warp bridge accompanies this, allowing effortless token transfers across multiple blockchains. At the same time, Orbit powers a decentralized loyalty program that integrates Web2 and Web3 rewards via the Omni Point loyalty program and a robust merchant network. This framework supports various financial activities, from tokenizing RWAs to driving DeFi mechanisms.

Base Transaction Infrastructure

Velo uses both the Stellar and Nova blockchains to facilitate seamless cross-chain interactions. Initially, Velo was built on Stellar due to its high transaction speed, efficiency, and low-cost operations. However, until February 2024, Stellar lacked smart contract functionality, limiting its ability to handle complex operations. To address the limitations of Stellar’s lack of smart contract functionality, Velo expanded to the BNB Smart Chain. While BSC offered more affordable transaction fees, the cost still posed a significant hurdle for users. To solve this, Velo introduced Nova in 2022 – an EVM-compatible blockchain specifically designed to eliminate gas fees and provide a more efficient blockchain infrastructure for the Velo ecosystem.

Cross-Chain Architecture and Warp Bridge Mechanism

The core technology that allows this interaction between Stellar and BSC, or any other smart contract-compatible blockchain (e.g., Nova, TRON, Solana, or TON) in the future, is Velo’s Warp bridging system. This system employs Stellar’s hash timelock contracts (HTLC) to enable cross-chain asset transfers.

Warp securely and efficiently moves VELO tokens between Stellar and a smart contract chain (e.g., BSC) as follows:

To move the tokens back to Stellar, the trusted partner can initiate the "redeem" method function. This locks the VELO on the smart contract chain, while Warp facilitates the unlocking of the corresponding VELO on Stellar.

Orbit’s Omni Point Loyalty Program

In Velo’s RWA-focused litepaper, they discuss a loyalty program that combines traditional Web2 and Web3 systems, creating an ecosystem for earning and redeeming rewards (i.e., Omni Points and OM tokens) through various Web2 and Web3 activities.

Here’s how the system works to facilitate the flow of Omni Points and OM tokens:

Throughout this process, users interact with Orbit’s easy-to-use app interface without being exposed to the complex underlying technology.

Identity Framework

In the most recent litepaper, Velo outlines its identity framework – a solution that combines the advantages of KYC and KYB verification with blockchain's inherent anonymity. This framework is designed to find a balance between regulatory compliance and users’ private identity through a two-tiered system:

Additionally, the framework supports different types of interactions based on varying levels of privacy:

Staking and Rewards

Network Rewards

Velo offers different ways in which users can earn rewards.

Based on a commercially reasonable search, further details regarding the mechanisms behind each method are not publicly available.

Putting It All Together

To understand Velo's broader impact beyond RWAs, it’s important to see how its infrastructure optimizes cross-border payments. The diagram below displays the difference between traditional systems and Velo, highlighting how the ecosystem reduces intermediaries, fees, and speeds up the process.

While the above has covered the network's unique functions, Velo is also actively creating a suite of products to enhance the ecosystem's utility, as mentioned in this report's "Background" section. Some notable products are:

VELO Token

Token Functions

VELO is the native token of the Velo ecosystem and was originally issued on Stellar, making it compatible with Stellar native wallets. VELO also exists as a BEP-20 token on BNB Smart Chain through a wrapped version. This wrapped VELO is compatible with EVM-native wallets such as MetaMask and can be acquired through CEXs and DEXs. It serves multiple purposes within the ecosystem, including:

Tokenomics

VELO originally had a maximum token supply of 30 billion, but it was reduced to 24 billion after a 6 billion token burn in 2022 spread across six months. A commercially reasonable search found no disclosure(s) of other planned token burns. The circulating token supply as of September 20, 2024, is ~7.39 billion, reduced from a projected ~10.78 billion due to:

To support ecosystem expansion, the circulating token supply is forecasted to reach ~11.04 billion by 2025/2026, as depicted in the chart below.

VELO Token Allocations

Notably, the above pie chart depicts the initial token allocations. However, after the token burn, percentages of the new 24 billion VELO maximum token supply have changed as follows (valued at approximately $328.08 million USD, as of October 18, 2024, with VELO priced at $0.014):

Vesting

As mentioned above, vesting schedules for founders, select investors, and advisors were extended by up to two years. Furthermore, reserve tokens are perpetually locked.

Roadmap

The 2024 roadmap for Velo has been updated as of September 2024 to reflect the latest developments and future plans. Below are the key milestones:

Additionally, here are a few recent announcements from Velo:

Closing Summary

Since its launch in 2018, Velo has pivoted its strategy toward tokenizing real-world assets (RWAs), including U.S. Treasury Bills, accounts receivable, and gold. Innovations like (i) Universe, a hybrid DEX, (ii) Warp, a cross-chain bridge solution, and (iii) Nova, an EVM-compatible blockchain, are central to its mission of improving global financial transactions. Recent partnerships with the Solana Foundation and the Laos government highlight Velo’s growing influence in digital and traditional finance sectors. With plans to expand its ecosystem through projects like Orbit and its Omni Point loyalty program, Velo is ready to continue enhancing cross-border payment efficiency and accessibility.