The realm of Decentralized finance (DeFi) is once again set to get a promising major player, as Velodrome launched Aerodrome, a novel decentralized exchange (DEX), specifically constructed for Coinbase layer 2 blockchain, Base. Emphasizing low fees and “minimal slippage” as its unique selling point, the exchange also lays stress on rewarding its user base.
Upon visiting its website, Aerodrome is characterized as a transformative automated market maker (AMM) designed to act as Base’s principal liquidity center. Its attributes include a potent liquidity incentive engine, a vote-lock governance model, and an easy-to-navigate user experience.
This development signifies the kickoff of the DeFi era on Base, as suggested by the team’s post on an unnamed social platform, X. The exact working attributes of Aerodrome, along with the role of its governance token, AERO, were also shared on the platform to foster transparency.
To sweeten the deal, Aerodrome has an airdrop planned, intending to distribute its AERO token to existing users possessing veVELO tokens or locked Velodrome (VELO) tokens. As stated by the project, an impressive 40% of the AERO supply will be part of this airdrop, presenting an enticing offer to early adopters.
The strategy in play here is evidently the liquidity flywheel model, a fundamental concept in DeFi. It’s a feedback loop where an increase in users leads to deeper liquidity, resulting in lower slippage, which in turn lures even more users. This repetitive cycle indicates a potential for exponential growth that’s hard to resist.
It’s worth noting, however, that according to figures from DeFi tracking website DefiLlama, Velodrome has over $193 million (or 118 ETH) of total value locked (TVL), whilst the newly launched Aerodrome currently has just under $1 million (562 ETH) in TVL.
This massive differential signifies the challenges Aerodrome may face as it enters an already bustling market. The certainty of its potential to secure a significant user base and whether its planned incentives could drive up liquidity in the long run, is left to be seen. However, it does highlight the ongoing nature of innovation within the DeFi sector, offering a glimmer of hope for enthusiasts, as they watch the circumstance unfold.