Aerodrome Finance is a next-generation Automated Market Maker (AMM) designed to function as the central liquidity hub on the Base network. It combines powerful liquidity incentives, a vote-lock governance model, and a user-friendly interface. Aerodrome launched on August 28, 2023, and inherits many advanced features from Velodrome V2, an AMM on the Optimism network. Aerodrome is essentially an evolution of Velodrome, designed specifically for Base, with enhancements that optimize liquidity incentives and governance for Base's unique ecosystem.
The two protocols, Aerodrome and Velodrome, are closely related, as Aerodrome takes the core design and governance principles of Velodrome and adapts them for the Base network. Both share the same incentive structures and vote-lock governance models, wherein users can lock their tokens ($AERO for Aerodrome and $VELO for Velodrome) to influence the distribution of emissions. This design encourages long-term engagement, allowing veAERO holders (those who lock their $AERO) to vote on how liquidity incentives are allocated across different pools. This vote-lock mechanism not only governs liquidity distribution but also gives participants a share of the protocol’s trading fees from the previous epoch and additional incentives.
By building on Velodrome's proven model, Aerodrome ensures deep liquidity and decentralized governance within the Base network, while offering liquidity providers and participants robust financial incentives to engage with the protocol actively. Aerodrome stands as a key player in the decentralized finance (DeFi) ecosystem on Base, further cementing the success of the Velodrome framework.
