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Inaugural Day: Aerodrome Enthusiasts Infuse $150M for Base Blockchain

Aug 31, 2023 at 12:53 pm

With aspirations to replicate the visible achievements of Velodrome, one of the foremost platforms on the Optimism network with locked value surpassing $288 million, a recent addition has stirred significant attention. Barely a day after its launch, a novel platform allowing token swapping with minimal fees and incentivized rewards has attracted a staggering $150 million in investments. This swift inflow of capital has propelled the Base blockchain's DeFi ecosystem by an impressive 80% in terms of locked value.

Named Aerodrome, this creation is a collaborative effort between Velodrome and Base developers, aiming to function as a dynamic "business development protocol" within the Base ecosystem. Its role encompasses providing support to emerging projects, facilitating the introduction of new ventures and tokens, and bolstering the ecosystem's liquidity.

Aerodrome drew in over $150 million within 24 hours of going live on Base, as reported by DefiLlama.Aerodrome drew in over $150 million within 24 hours of going live on Base, as reported by DefiLlama.  

The inspiration for Aerodrome is drawn from the evident success of Velodrome, a leading platform on the Optimism network that boasts a substantial $288 million in locked value. Similar to Velodrome's model, Aerodrome rewards users with AERO tokens for activities like contributing liquidity, conducting swaps, and engaging in governance decisions.

The total supply of AERO tokens stands at 500 million, with 450 million of these being locked for a four-year period as outlined in developer documentation. The initial liquidity and voter incentives are supported by the remaining 50 million liquid AERO tokens at the time of launch.

How it works

Functionality is rooted in a strategic approach to address a challenge faced by decentralized exchanges: aligning rewards emissions with trading volume rather than mere liquidity. To tackle this, products like Aerodrome present an intriguing solution. Holders of AERO tokens can lock their holdings for varying periods, receiving veAERO tokens in return. Longer lock durations translate to more veAERO, subsequently enhancing voting power in governance decisions. This mechanism mirrors that of Velodrome.

These locked veAERO tokens are presented as NFTs, which can be traded on different NFT marketplaces. This introduces an innovative way for users to gain exposure to the ecosystem without directly purchasing tokens and managing positions.

The veAERO tokens play a pivotal role in participating in platform governance, particularly in setting reward levels for trading pools offered on the platform. Users who engage in governance not only influence decisions but also receive 100% of the fees and incentives earned by the specific pools they supported.

This comprehensive approach generates a positive feedback loop, as users are drawn by the allure of rewards, acquire more AERO tokens, and actively contribute to the platform by voting on projects, enhancing the ecosystem, and driving further rewards.

Early signs indicate the strategy's efficacy. Data reveals that Velodrome, the cornerstone of the Optimism project, amassed revenues exceeding $3 million in the past month, with $1.3 million distributed as fees to VELO holders and users.

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