Aerodrome has reached record levels of weekly trading volume on Base, Coinbase’s Layer 2 (L2) network. The decentralized exchange (DEX), which launched in August 2023, has clocked approximately $4.7 billion in trading volume as of September 29, 2024. That’s more than the previous two weeks combined.
According to DefiLlama data, most of Aerodrome’s trading volume came from Slipstream pools. Slipstreams are concentrated liquidity pools that allow token swaps to be executed with low slippage. This allows investors to minimize the difference between the expected price and the realized price. Since Slipstream’s launch in May, liquidity on the exchange has increased significantly.
Middle East Conflict Causes Liquidity Rebalancing
Geopolitical tensions, such as the military conflict between Iran and Israel over the past seven days, have caused volatility in the cryptocurrency market. This uncertainty has caused liquidity providers to rebalance their positions and shift to higher volumes in liquidity management. Investors have taken these steps to reduce risks or take advantage of market volatility.
“While the increasing DEX volumes from Aerodrome and Base are a positive indicator, this does not solely reflect an increase in swap activity; rather, it is a rebalancing within liquidity ranges,” said Toe Bautista, research analyst at GSR.
Incentives for High APRs
Aerodrome’s concentrated liquidity pools can see annualized percentage rates (APRs) well into the four-digit range. For example, the USDC/cbBTC pool is generating 1,182.2% APR at time of writing with $12.7 million in total value locked (TVL). These high APR rates incentivize users to provide liquidity to the DEX.
The surge in trading volume on Aerodrome comes as the total locked value of DEX on the Base network has risen above $1 billion, representing an 86% increase since early September.
AERO Asset and Investor Opportunities
Aerodrome’s mainnet, AERO, has been flat over the past seven days, up less than 2 percent. But over the past 30 days, it has risen 94 percent to $1.07. AERO holders have the opportunity to stake their coins and earn a share of the fees generated by the protocol.
These developments within the Aerodrome and Base network continue to increase the importance of decentralized exchanges and Layer 2 solutions in the cryptocurrency ecosystem.