Aerodrome Finance

Aerodrome Finance operates as a decentralized exchange (DEX) and automated market maker (AMM) on the Base network, an Ethereum Layer 2 solution developed by Coinbase. Launched on August 28, 2023, the platform was established to serve as the central liquidity hub for the Base ecosystem. The project was initiated by the team behind Velodrome Finance, with Alex Cutler, who has a background in politics, technology, and consulting, being a key co-founder.

The platform's business model revolves around facilitating token swaps with low slippage and minimal transaction fees, attracting liquidity providers through incentives. Revenue is generated from trading fees, and importantly, 100% of these fees are distributed to users who lock their AERO tokens. This structure is designed to create a self-optimizing liquidity flywheel. In February 2024, Aerodrome Finance secured an undisclosed investment from the Base Ecosystem Fund, led by Coinbase Ventures, to further develop the infrastructure and liquidity on the Base network.

Aerodrome Finance employs a dual-token system. The primary utility token, AERO, is an ERC-20 token used to reward liquidity providers. The second is veAERO, an ERC-721 non-fungible token (NFT), which represents a user's locked AERO tokens. By locking AERO, users receive veAERO, granting them voting rights in the platform's governance. This vote-lock governance model allows veAERO holders to influence the distribution of AERO emissions to various liquidity pools and, in turn, earn the trading fees and incentives generated by the pools they vote for. The platform combines features from established protocols like Uniswap V2, Curve, and Convex into a single, streamlined system.

The platform offers several services to its clients, who are primarily decentralized finance (DeFi) users, traders, and liquidity providers. Users can swap a wide range of tokens, provide liquidity to various pools to earn AERO rewards, and participate in yield farming. A key feature is "Slipstream," which introduces concentrated liquidity, similar to Uniswap V3, allowing for more efficient use of capital and accounting for a significant portion of the platform's trading volume. The platform has achieved significant milestones, including reaching $10 billion in total trading volume within ten months of its launch.

Keywords: Aerodrome Finance, decentralized exchange, DEX, automated market maker, AMM, Base network, liquidity hub, AERO token, veAERO, token swaps, liquidity provider, vote-lock governance, DeFi, Alex Cutler, Velodrome Finance, Coinbase Ventures, Slipstream, concentrated liquidity, cryptocurrency exchange, yield farming, ERC-20, ERC-721, governance token, utility token, blockchain finance, crypto trading