Developed by the Velodrome team and launching on Base in August 2023, Aerodrome is a decentralized exchange (DEX) and liquidity protocol designed to act as the primary trading hub in the Base ecosystem.
Like Curve, Aerodrome is designed to provide low-slippage trading for both stable and unstable coin pools; low slippage and low Base transaction fees = excellent swap prices.
Aerodrome also utilizes a "liquidity engine" system in which protocol management participants earn transaction fees by voting to direct the #issuance of $AERO tokens to the liquidity pool that generates the most trading activity.
It is notable that Aerodrome is currently the most liquid of Base's projects with a total #blockchain value (TVL) of $1.24 billion, more than five times the amount placed on L2's #Uniswap . However, thanks to its centralized liquidity system, Uniswap currently accounts for 57% of Base's total swap value, while Aerodrome only accounts for 37%.
To catch up, Aerodrome launched its own centralized liquidity protocol, Aerodrome Slipstream, in April 2024. This has also borne fruit. For example, Slipstream generated $427.5 million in volume on Base in the last 24 hours, compared to $292 million on Uniswap V2 V3 in the same period.
What is AERO and veAERO.
Aerodrome Finance uses a dual tokenization system for its ecosystem and governance structure.
AERO is a useful ERC-20 #token that serves as the lifeblood of Aerodrome. It is distributed to liquidity providers as a reward for their contribution to the platform's liquidity pool; think of it as the fuel that keeps Aerodrome's engine running smoothly.
ÂŹAERO is where things get interesting. It is a unique ERC-721 token ("NFT") that represents an AERO lock and grants control rights. Here's how it works:
AERO owners can
'cancel the vote'.
'block the token for up to four years.
a veAERO representing a blocked position
a veAERO representing a blocked position.
the longer the blocking period, the more votes the veAERO 'NFT' receives.
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