Guide

What is Aerodrome Finance?

By Surfista Crypto · Reviewed by Evan Luthra · Updated

Aerodrome Finance is a decentralized exchange (DEX) and the main liquidity hub on Base. It works as an automated market maker (AMM). It has nothing to do with aerodromes or aviation.

One note before anything else: despite the name, Aerodrome here is not an airfield. It is a decentralized finance (DeFi) protocol on the Base chain.

How Aerodrome works

Like any automated market maker, Aerodrome replaces the order book with liquidity pools. Providers deposit a token pair, traders swap against the pool and pay a fee, and that fee is distributed to providers. Aerodrome offers stable pools (for correlated pairs such as two stablecoins) and volatile pools, plus concentrated liquidity through Slipstream.

AERO and the ve(3,3) model

AERO is the protocol token. Locking it returns veAERO (vote-escrowed), which carries the right to vote on which pools receive more AERO emissions and to share in rewards. This design, called ve(3,3) and inherited from Velodrome, tries to align the incentives of traders, liquidity providers and voters in a single loop.

Lineage: a Velodrome fork

Aerodrome is a fork of Velodrome Finance, the equivalent protocol on Optimism. It adapts a tested model to Base. Velodrome is mentioned here only as lineage: they are separate protocols on separate chains.

Where Pool Party fits

Managing concentrated-liquidity positions on Aerodrome by hand is work, and getting the range wrong increases impermanent loss. Pool Party automates that management on Base, self-custodially, so you do not have to adjust price ranges yourself. Launch the app.

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Frequently asked questions

What is Aerodrome Finance?
Aerodrome Finance is a decentralized exchange (DEX) and the main liquidity hub on the Base chain. It works as an automated market maker (AMM), where liquidity providers deposit token pairs into pools and earn a share of the swap fees traders pay. It is unrelated to aviation.
Is Aerodrome on Base?
Yes. Aerodrome was built for Base and is where much of the chain ecosystem liquidity concentrates. It is a fork of Velodrome Finance, which follows the same model on Optimism.
What are AERO and veAERO?
AERO is the protocol token. Locking AERO gives you veAERO (vote-escrowed), which lets you vote on which pools receive more emissions and share in rewards. This is the ve(3,3) design, intended to align traders, liquidity providers and voters.
What is Slipstream on Aerodrome?
Slipstream is the concentrated-liquidity product on Aerodrome. It lets a provider concentrate capital in a price range to earn more fees, at the cost of higher impermanent loss and the need to rebalance the position as the price moves.