Aerodrome, an innovative product birthed from a collaboration between Velodrome and Base developers, has managed to amass an impressive $150 million from users less than a day after it went live on Base, causing a significant boon for Base’s DeFi ecosystem. The aspiration? To emulate the success blueprint of Velodrome, one of Optimism network’s most heavily utilized platforms, boasting over $288 million in locked value, according to DefiLlama.
Much like Velodrome, Aerodrome aims to reward platform users with its dedicated AERO tokens. Those who provide liquidity, conduct token swaps, or participate in governance can earn these rewards. However, the main query lies with the number of available AERO tokens at launch. Of the total 500 million supply, a whopping 450 million are locked for a solid four years, as per developer parameters. The only liquid AERO at launch, therefore, amounts to the 50 million tokens set aside for voter incentives and providing initial liquidity.
One of the persistent issues decentralized exchanges confront is the fact that rewards emissions correlate with total liquidity rather than trading volume, which is the primary fees generator for the protocol. This is where Aerodrome enters the scene—with the capability for AERO token holders to lock their assets for a time range of one week to four years in return for veAERO, a vested AERO token. These locked veAERO are represented as NFTs, can be traded on various NFT marketplaces, and can be purchased by users to gain direct exposure to the ecosystem without having to buy tokens.
The veAERO tokens can also be used to participate in platform governance and crucially assist in defining reward levels for trading pools. Rewardingly, these voters are then given 100% of all fees and bribes grossed by the specific pools they elected.
There’s no denying that these features create a powerful cycle of liquidity. Users drawn by rewards buy more AERO, which then keeps the platform up and running as they continue to vote on which project’s tokens merit further support and rewards.
And the evidence of efficacy is compelling. Velodrome, the Optimism project, reported revenues exceeding $3 million over the past month, with $1.3 million being paid out as fees to VELO holders and users. As always, only time will validate the full effectiveness of Aerodrome within the Base ecosystem. Yet, the initial signs are nothing short of promising.
Source: Coindesk
