Decentralized finance (DeFi) is changing how we interact with financial systems, and Aerodrome Finance is an inaugural MetaDEX on the Layer 2 Base ecosystem. Aerodrome has become the largest decentralized exchange (DEX) on Base since its inception in August 2023, with billions of total value locked (TVL) and an active user base. What does Aerodrome Finance do differently? This article delves into the features, mechanics, and vision of this leading DEX, uncovering why it’s the DeFi backbone of Base.
What is Aerodrome Finance?
Aerodrome Finance is a cutting-edge MetaDEX launching onto Base, a Layer-2 blockchain built by Coinbase. As it launched in August of 2023, it was Base’s leading liquidity hub, complete with cross-token trade and liquidity provision with minimal slippage. With its superior lineage tracing back to DeFi heavy-hitters like Velodrome, Curve, Convex, and Uniswap, Aerodrome offers its users both an effortless and profitable experience.
With an approximate TVL of about $830 million, Aerodrome leads Base’s ecosystem, onboarding several hundred thousand users and fueling innovation among DeFi protocols. Aerodrome’s website boasts an interface convenient for trading, supplying liquidity, and voting, featuring both simplicity and accessibility to newer as well as advanced DeFi users.
Why Aerodrome Stands Out
Aerodrome Finance stands out due to its advanced features and sound operational framework. The primary reasons it is the best DEX on Base are as follows:
1. Dominant Liquidity Hub
The top MetaDEX on Base is Aerodrome with about $830 million worth of TVL, and it processes about 56% of Base’s network trade volume, according to DefiLlama. leadership is proof of its strong position in providing liquidity and supporting forthcoming projects in Base.
2. Fusion of DeFi Excellence
Aerodrome blends the strengths of Velodrome (efficient liquidity optimization), Curve (efficient stablecoin trading), Convex (reward optimization) and Uniswap (user-friendly) to produce yield farming with reward optimization and low slippage trading and token swapping efficiency to appeal to different classes of users.
3. Dual-Token System
Aerodrome has both an AERO utility token and veAERO governance token. The holders of veAERO can vote to decide how to allocate AERO emissions by epoch (on a periodic schedule) and earn trading commission and rewards. The mechanism rewards long-term engagement and aligns users’ incentives with sustainability of protocols.
4. Unique Rebase Mechanism
Aerodrome’s rebase mechanism incentivizes veAERO holders proportionally to both AERO emissions and veAERO to AERO supply ratio. The mechanism reduces dilution of votes and preserves governance control and long-term veAERO value.
5. Aero Fed: Community Governance
Aero Fed gives veAERO holders control to lower, increase, or keep the same rate of AERO emissions per epoch. This confers monetary policy authority to the network and gives flexibility and transparency.
How Aerodrome Operates
Aerodrome’s business model, influenced by Velodrome, has four main components:
- Traders: Users who swap tokens on Aerodrome, leveraging low slippage and robust liquidity.
- Liquidity Providers (LPs): Contributors who add tokens to liquidity pools (gauges) to reduce slippage for traders, earning AERO emissions per epoch in return.
- veAERO Voters: Users who lock AERO to obtain veAERO, enabling them to vote on AERO emission allocations. They receive 100% of trading fees proportional to their locked AERO, plus extra incentives.
- Protocol: The Aerodrome protocol attracts liquidity, supports low-cost swaps, and collects fees to redistribute to the community.
This cohesive ecosystem ensures mutual benefits for traders, LPs, and voters, sustaining a vibrant platform.
AERO Token: Key Information
Basic Specifications
- Token Name: Aerodrome Finance
- Ticker: AERO
- Blockchain: Base
- Token Type: ERC-20
- Contract Address: 0x940181a94A35A4569E4529A3CDfB74e38FD98631
- Total Supply: 1,370,000,000 AERO
Token Allocation
The initial AERO supply was 500 million tokens, with 90% allocated as veAERO. The distribution breakdown is:
- AERO:
- Voters Incentives: 8%
- Genesis Liquidity Pool: 2%
- veAERO:
- Airdrop: 40%
- Ecosystem & Funding: 21%
- Development Team: 14%
- Protocol Grants: 10%
- AERO Pools Votepower: 5%
Token Utility
- AERO: Released at periodic intervals across periods, AERO is distributed to liquidity pools proportionally to veAERO votes. Pools can be staked and then receive rewards in AERO proportionally to the size and duration of the stakes. The rewards are indefinite and can be withdrawn at any time.
- veAERO: Acquired through locking up AERO, veAERO grants voting rights on direct AERO emissions and protocol governance. On top of this, holders receive trading fees and other perks, with the aim of incentivizing continued participation.
Team and Investors
The same team behind Velodrome, a top DEX currently operating on Optimism, established Aerodrome Finance. The team members’ details aren’t provided, reflecting the team’s emphasis on product excellence rather than individual popularity.
In February 2024, Aerodrome secured funding from the Base Ecosystem Fund, with the amount undisclosed. This investment has fueled its growth, enabling expanded features and influence within the Base ecosystem.
Aerodrome’s Role in the Base Ecosystem
Base, being a Layer 2 blockchain, provides low-cost, high-speed transactions and is therefore an ideal platform for DeFi innovation. Aerodrome Finance is taking good advantage of this, as it is currently Base’s largest DEX and supports well over 50% of network trade. Social media posts refer to Aerodrome as Base’s “liquidity engine,” and its high of original value locked (TVL) is at $790 million, and its market capitalization is around $400 million (April 2025).
Aerodrome has additional cutting-edge tokens like uSOL and uSUI to fuel an effective on-chain economy. Aerodrome allocates 31% of genesis supply of AERO to new protocols and that contributes markedly to Base growth.
Vision and Potential
Aerodrome Finance is the future of the standard DEX model as a MetaDEX integrating DeFi protocols to achieve maximum yield and liquidity. Its openness, incentivization model, and Base Ecosystem Fund make it poised to be DeFi leader both at Base and in the broader blockchain space.
DeFi investment exposes risk via potential price volatility of tokens and risks to security. Investors have to do extensive research and store assets in cold storage.
Conclusion
Aerodrome Finance leads DeFi innovation with its MetaDEX of high-quality liquidity, low-cost fees, and community governance. The largest DEX on Base, it enables trading and drives Layer 2 growth. From traders to liquidity providers to fellow DeFi enthusiasts, Aerodrome has an interactive platform to enjoy. Find out how at Aerodrome Finance and make informed investment decisions. Here’s to thriving in DeFi’s bright future!
