Aerodrome is a MetaDEX, merging Curve, Convex, and Uniswap into a single protocol designed to be the primary trading and liquidity hub of the Base ecosystem.
It enables users to
(1) Swap between tokens on base
(2) Provide liquidity to token pools on Aerodrome to earn yield
(3) Participate in governance to manage yield and earn rewards.
They do all of this by integrating 4 important technologies together.
AMMs: Uniswap v2 like vAMM, Curve sAMM, Uniswap V3 like clAMM
Liquid Locks: veAERO is tradable without a derivative token
Auto-Voting: Relay offers a Votium-style auto-voter and compounder.
Rewards: veAERO voters earn 100% of staked platform rewards.
It inherits most of it’s product architecture from it’s Optimism counterpart Velodrome.
In the last 10 months, Aerodrome has surpassed all competition and bolstered it’s position at the top of the Base Ecosystem with $7.8B of volume transacted & over $80M daily volume.
What attracts users to Aerodrome are the high emissions (in $AERO) which would decrease with time & ultimately mean price of $AERO would go up - hence, people are hedging their bets all on it. Also, being the top dApp on Base helps it’s case hugely.
Base has a lot of of active users. On an average about 700K active wallets daily.
This opens up opportunity for any innovative dapps to come on & get users.
one such has been - Aerodrome.
It’s a DEX where users can swap between tokens on base. it’s mainly used amongst degens to provide liquidity & earn a hefty yield.
It’s common to earn between 30% to 1500% APR on your position.
This is how Aerodrome achieves it:
each week Aerodrome distributes $AERO. It started off at 500M tokens and keeps decreasing by 1% every week. Currently at 10.3M tokens.
users can lock their $AERO to gain voting power (veAERO) & decide which token pools the $AERO gets distributed in.
once voted, based on the number of votes APR is calculated & folks like me and you can supply liquidity & earn yield.
What’s in it for veAERO holders?
they earn fees, bribes from LPers & rebase APR to compensate for locked $AERO’s change in price.
bribes exist to persuade voters to vote for a particular pool that benefits them.
Aerodrome is an interesting flywheel with sound protocol design. It’s a mash of Curve, Convex & Uniswap in one simple protocol.
Here’s what I dislike about it:
UX: Even though it tops the charts volume wise, the dapp is very tough to navigate. I’d rate it a 2/5.
Docs: For someone that loves skimming through docs, it was disappointing to see how there are no specifications about working in the docs.
LP optimised features: features like 1 token LP, auto rebalance, compound yield would increase LPers.
