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Aerodrome is a decentralized exchange (DEX) built on Base, the Ethereum Layer-2 network created by Coinbase. It launched on August 28, 2023. The protocol is a fork of Velodrome V2, a DEX on the Optimism network, and was built by the same team.
Aerodrome was designed to provide liquidity infrastructure for the Base ecosystem. Users can swap tokens, provide liquidity, and participate in governance through a vote-lock model.
This article explains what Aerodrome is, how its governance model works, what the AERO token does, and what role the platform plays in the Base ecosystem.
What Is Aerodrome?
Aerodrome is a decentralized exchange that runs on the Base blockchain. It allows users to trade tokens without a centralized intermediary. Instead of an order book, it uses smart contracts to match trades through liquidity pools.
The platform was built to address a common challenge for new blockchains: attracting enough liquidity for efficient trading. On Base, Aerodrome accounts for a large share of DEX trading volume.
Aerodrome launched without venture capital funding or an initial token sale. It distributed tokens to users who provided liquidity and participated in governance.
How Aerodrome Works
Aerodrome operates as an automated market maker (AMM). Liquidity providers deposit pairs of tokens into liquidity pools. When traders swap one token for another, the price is set by the ratio of tokens in the pool. Liquidity providers earn a share of the trading fees.
Aerodrome offers two types of pools. Standard pools use a constant product formula where liquidity is spread across all prices. Slipstream pools, launched in March 2024, use concentrated liquidity based on Uniswap V3. In Slipstream pools, providers can choose a specific price range for their capital, which may increase capital efficiency and reduce slippage.
The platform supports volatile pools, stable pools, and concentrated liquidity pools with customizable ranges.
The ve(3,3) Governance Model
Aerodrome uses a governance model called ve(3,3), originally introduced by Velodrome. The model is designed to align incentives among three groups: traders, liquidity providers, and voters.
The system uses two tokens:
AERO is the liquid utility and reward token. It is distributed as emissions to liquidity providers.veAERO is the vote-escrowed governance token. Users acquire veAERO by locking AERO for up to four years. Longer locks give more voting power. veAERO is represented as an NFT and cannot be transferred.
Each week, veAERO holders vote on which pools receive AERO emission rewards. Pools with more votes get a larger share of newly minted AERO. Projects can offer additional token rewards, called bribes, to veAERO holders in exchange for votes.
veAERO holders receive 100% of the trading fees from the pools they voted for. This gives voters an incentive to support pools with high volume.
The AERO Token
AERO is the native governance token of Aerodrome. It rewards liquidity providers and gives holders a role in protocol governance.
The initial supply was 500 million AERO, distributed through an airdrop to veVELO holders, ecosystem pools, the team, and protocol incentive funds. The total supply is uncapped. New AERO is minted weekly as emissions. The schedule has three phases:
Take-Off phase (weeks 1 to 14): Emissions increased by 3% each week to bootstrap liquidity.Cruise phase (from week 14): Emissions decay by 1% per week, reducing inflation over time.Aero Fed phase: Once emissions drop below a threshold, veAERO voters can adjust future emission rates.
As of July 2026, the circulating supply is approximately 969 million AERO out of a total supply of roughly 1.94 billion. AERO trades at approximately $0.44. The uncapped supply means the token is inflationary. The decay mechanism and future governance controls are designed to manage the rate of new issuance.
Slipstream Concentrated Liquidity
Slipstream is Aerodrome's concentrated liquidity feature, launched in March 2024. It is based on the same concept as Uniswap V3. Liquidity providers can concentrate their capital within specific price ranges instead of distributing it across all possible prices.
In a standard AMM pool, capital is spread from zero to infinity. Much of it may sit idle if trading happens within a narrow range. Concentrated liquidity lets providers focus capital where trading actually occurs. This may improve capital efficiency compared to standard pools.
Slipstream offers preset tick spacing: 0.5% for stablecoin pairs, 2% for volatile assets like ETH, and 20% for newer tokens. AERO emissions go only to providers whose positions stay within the active trading range.
Aerodrome's Role in the Base Ecosystem
Aerodrome provides liquidity infrastructure that other projects on Base can use. When new tokens launch on Base, they need a venue where users can buy and sell them. Aerodrome serves this function. Its ve(3,3) model lets new projects attract liquidity by offering AERO emissions to voted pools.
This addresses the liquidity bootstrapping problem: new projects often struggle to attract enough liquidity for smooth trading. On Aerodrome, projects can offer bribes to veAERO holders in exchange for votes, which directs AERO emissions to their pools and supports yield farming activity.
The platform has grown since launch, driven by the expansion of Base, lower gas fees after the Ethereum Dencun upgrade in March 2024, and increased on-chain trading activity. Aerodrome accounts for a majority of DEX trading volume on Base and has generated hundreds of millions of dollars in cumulative trading fees.
How to Use Aerodrome
To use Aerodrome, you need a Web3 wallet connected to the Base network. Options include Binance Wallet, MetaMask, and Trust Wallet. Once connected, you can:
Swap tokens: Trade one token for another through the platform's swap interface.Provide liquidity: Deposit token pairs into pools to earn trading fees and AERO emissions.Lock AERO: Lock AERO for up to four years to receive veAERO, which grants voting power and fee earnings.Vote on pools: Use veAERO to vote weekly on which pools receive AERO emissions.
Risks and Considerations
As with many DeFi products, using Aerodrome involves certain risks you should be aware of:
Smart contract risk: The protocol's contracts handle large amounts of value. Audits do not eliminate the possibility of bugs or exploits.Impermanent loss: Liquidity providers may lose value if the price of their deposited tokens changes relative to each other.Token inflation: AERO has an uncapped supply with weekly emissions. This may affect token value over time.Lock-up risk: Locked AERO cannot be sold or transferred until the lock period ends.Concentrated liquidity risk: In Slipstream pools, positions outside the active range stop earning fees and emissions.Regulatory uncertainty: DeFi protocols face unclear regulations in many jurisdictions. Changes could affect the platform's availability.
FAQ
What is Aerodrome?
Aerodrome is a decentralized exchange on the Base blockchain. Users can swap tokens, provide liquidity, and earn rewards through its ve(3,3) governance model. It is one of the largest DEXs on Base by trading volume.
What is the AERO token used for?
AERO is the native token of Aerodrome. It is distributed as emissions to liquidity providers and can be locked for up to four years to receive veAERO. veAERO grants voting power and the ability to earn trading fees from voted pools. AERO was listed on Binance Spot on July 17, 2026.
What is the difference between AERO and veAERO?
AERO is the liquid, transferable token. veAERO is the non-transferable governance token received by locking AERO. Longer locks give more veAERO. veAERO holders can vote on pool emissions and earn trading fees, but cannot sell or transfer their position.
How does the ve(3,3) model work?
The ve(3,3) model aligns incentives among traders, liquidity providers, and voters. Traders get swaps from pooled liquidity. Liquidity providers earn AERO emissions and trading fees. veAERO holders vote on which pools receive emissions and earn 100% of fees from voted pools.
Is Aerodrome safe to use?
Aerodrome's smart contracts have been audited, and the protocol has operated since August 2023 without a major exploit. However, all DeFi protocols carry risks including smart contract bugs, impermanent loss, and market volatility. Users should do their own research and only deposit funds they can afford to lose.
What is Slipstream on Aerodrome?
Slipstream is Aerodrome's concentrated liquidity feature, launched in March 2024. It allows liquidity providers to concentrate capital within specific price ranges instead of spreading it across all prices. This is similar to Uniswap V3 concentrated liquidity.
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