What Is Aerodrome Finance?

1. What Is Aerodrome Finance?

Aerodrome Finance is a decentralized exchange (DEX) and liquidity hub built on the Base blockchain, Coinbase’s Layer 2 solution. Designed to be the primary liquidity engine of the Base ecosystem, Aerodrome combines liquidity provisioning, yield farming, and vote-escrow tokenomics (veTokens) into a unified, community-governed platform. At its core, Aerodrome enables users to trade tokens, earn rewards, and direct emissions through a sophisticated governance mechanism. It leverages the proven infrastructure of Velodrome on Optimism but tailors its architecture to suit the emerging Base network.

2. Why Aerodrome Finance Was Created

Aerodrome was launched to solve the problem of fragmented liquidity and inefficient incentives in new Layer 2 ecosystems like Base. When new L2 chains emerge, they often struggle to attract deep, sticky liquidity that sustains decentralized finance (DeFi) protocols. Traditional AMMs do not always incentivize long-term liquidity and governance participation. Aerodrome introduces a vote-escrow model that rewards users not just for providing liquidity, but for locking tokens and guiding the direction of the platform's emissions. It aims to be self-sustaining, capital-efficient, and governed by the users who contribute the most value.

3. How Aerodrome Finance Works

1. Users swap Base-native tokens on Aerodrome through a decentralized interface with efficient routing.
2. Liquidity providers deposit token pairs into pools and receive LP tokens in return.
3. AERO tokens are locked to receive veAERO, which grants voting rights and emission influence.
4. veAERO holders vote on which liquidity pools should receive AERO emissions.
5. Protocols or users offer bribes to veAERO voters to direct emissions to their desired pools.
6. Liquidity providers earn yield from swap fees, AERO emissions, and bribes based on gauge votes.

4. Key Features of Aerodrome Finance

• Low-slippage token swaps on the Base network
• Efficient liquidity provisioning with veToken-based incentives
• Vote-escrow (veAERO) governance model for decentralized control
• Bribe marketplace to incentivize gauge voting
• Locking mechanism to align long-term participation
• Composable DeFi infrastructure tailored for the Base ecosystem

5. Who Can Use Aerodrome Finance?

• Retail DeFi users for token swaps, rewards, and governance
• Liquidity providers seeking multi-layered yield opportunities
• DAOs and protocols looking to grow liquidity via emission influence
• Traders needing low-fee, fast execution on Layer 2
• Governance participants locking tokens to shape protocol direction

6. What Is the $AERO Token?

$AERO is the native token of Aerodrome Finance and serves as the backbone of the platform's incentive and governance systems. Users can lock AERO to receive veAERO, which provides:

• Voting power over which liquidity pools receive emissions
• Eligibility to earn bribes from protocols aiming to attract emissions
• A share of protocol revenue distributed based on governance structure
• Incentives for long-term alignment through token locking