Aerodrome Finance isn’t just another decentralized exchange—it’s the central liquidity hub of Base, designed to power the onchain economy with sustainable incentives, transparent governance, and zero reliance on venture funding. Built on the back of Velodrome V2’s proven architecture, Aerodrome delivers an ecosystem where liquidity flows efficiently, incentives are intelligently aligned, and every participant has a stake in the future.

What is Aerodrome?

Launched on August 28, 2023, Aerodrome is a next-generation Automated Market Maker (AMM) optimized for the Base blockchain. It supports low-fee swaps, high-liquidity trading, and long-term value creation through its innovative vote-lock governance model and emissions-based incentive system. By combining elegant design, permissionless operations, and a user-first approach, Aerodrome acts as the beating heart of Base’s DeFi infrastructure.

Why Aerodrome Stands Out

Aerodrome is engineered with a set of principles that make it unique in the DEX space:

• All value goes to users: 100% of trading fees and rewards are distributed to LPs and veAERO holders.

• No VCs, no pre-sale: Launched clean, Aerodrome had zero token sales and no venture capital backing.

• Truly decentralized: Governance is onchain, contracts are immutable, and operations require no centralized APIs.

• Smart incentives: Liquidity providers and voters are rewarded in ways that maximize participation and long-term sustainability.

How It Works: Incentives & Governance

At the heart of Aerodrome is a cyclical, weekly incentive model based on 7-day epochs. Here’s how the flywheel operates:

1. Liquidity providers (LPs) stake token pairs in Aerodrome’s pools.

2. veAERO voters (users who lock their AERO tokens) vote on which pools should receive emissions.

3. Based on these votes, LPs receive AERO token rewards proportional to their stake and pool popularity.

4. In return, veAERO voters receive all of the trading fees from the previous epoch, plus any added incentives.

This structure tightly aligns rewards with actual usage and encourages active governance participation, not passive holding.

Tokenomics

Aerodrome uses a dual-token model:

• $AERO: The utility and emissions token, distributed to liquidity providers.

• $veAERO: A governance NFT (ERC-721) received by locking AERO. Longer locks mean more voting power—up to 4 years for full voting weight. Auto-Max Lock ensures a fixed 4-year lock with no decay.

Initial token distribution was deeply community-focused. 40% of veAERO was airdropped to veVELO lockers, with an additional 50% locked for public goods, the foundation, and education efforts like “Flight School.”

Emissions follow a three-phase approach:

• Take-off: 14 weeks of emissions growing 3% weekly.

• Cruise: Post-epoch-14 decay of 1% per week.

• Aero Fed: After emissions drop below 9M/week, veAERO holders vote on emissions policy—adjusting, maintaining, or reducing rates.

Liquidity Pools & Trade Execution

Aerodrome’s architecture supports multiple pool types to match the needs of different tokens:

• Stable Pools: Designed for correlated assets like USDC and DAI; minimize slippage with a unique AMM formula.

• Volatile Pools: For uncorrelated tokens like AERO or ETH, using the classic x*y=k formula.

• Concentrated Liquidity Pools: LPs can provide liquidity within specific price ranges for optimized capital efficiency. Pools use tick spacing to define precision, from as fine as 0.01% for stables to 20% for emerging tokens.

To reduce slippage and protect against flash loan exploits, Aerodrome uses a 30-minute TWAP (Time-Weighted Average Price) system when routing trades.

For Traders, LPs, and Voters

Aerodrome is designed to serve different participant types effectively:

• Traders: Enjoy low-fee, high-efficiency swaps with deep liquidity and tight spreads.

• Liquidity Providers: Stake assets to earn AERO emissions, based on veAERO votes.

• veAERO Voters: Lock AERO to vote for pool incentives and earn trading fees, aligning governance power with protocol performance.

APR for pools is calculated based on active liquidity, especially in concentrated pools, ensuring more accurate and fair yield reflection.

Security and Reliability

Security is foundational. Aerodrome inherits its smart contract framework from Velodrome V2—an audited, battle-tested protocol with an active bug bounty program. All operations are immutable and onchain. No centralized servers or API dependencies exist, reducing attack surfaces and censorship risk.

Final Thoughts

Aerodrome Finance is more than a DEX—it’s the launchpad for the next era of decentralized liquidity on Base. With its emissions-driven incentive model, robust vote-escrowed governance, and deep liquidity design, Aerodrome offers a model for sustainable, user-first DeFi. No VCs. No central levers. Just community-powered finance.