TL;DR
After watching the explosion of Aerodrome Finance over the last few months, it’s time to dig into the biggest DEX on Base Network. Making up half of the Total Value Locked on Base, it is safe to say Aerodrome will continue to be a prime beneficiary of Base Networks’ increasing growth. Discussing Definitive Finance in last week’s Top 3 Low-Cap Gems on Base and its potential role in the Base ecosystem. Aerodrome Finance AMM can be seen as the Uniswap of Base. A unique market-making protocol that will continue fueling the expansion of this new and growing network.
We talk often about Automated Market Makers (AMMs) and the Decentralized Exchange (DEX) landscape. However, the two are not mutually exclusive to one another.
A DEX like Jupiter that enables anyone to easily swap between any token on Solana relies on AMMs like Orca and Raydium to provide the liquidity to fuel those swaps.
With good enough programming, some DEXs can allow users to trade faster than if they went directly to the AMM source. This symbiotic relationship has helped drive an influx of new users to networks like Solana, due to how easy they are to utilize.
As both an easy-to-use DEX and strong AMM, I believe Aerodrome allows an even easier onboarding experience for Base Network users.
What is Aerodrome Finance?
If the Aerodrome Finance protocol feels oddly familiar, you’re not alone. That’s because Aerodrome is a fork of the Velodrome FInance protocol, originally launched on Optimism.
Designed to be the central liquidity pool for the Optimism ecosystem, Velodrome achieved this objective with relative ease. It quickly become the largest liquidity pool on Optimism and currently sits as the second-largest project in the entire ecosystem.
Encompassing the best parts of Uniswap, Convex, and Curve Finance, Velodrome was designed around rewarding participants while maintaining a permissionless and stable swapping environment.
On Velodrome, and by extension Aerodrome, 100% of all fees and incentives go directly to governance participants.
With Millions in fees and incentives already being distributed by Aerodrome, this is a big part of what makes the project so appealing.
Aerodrome Finance distributes these funds through a concept called yield tokenization, where instead of being provided with simple LP tokens to designate user-provided liquidity. NFTs are used to represent their positions in the market.
This self-gratifying system has allowed Aerdrome to be the best place for farming yields on Base Network while also providing a locked liquidity market that disincentivizes yield farmers from hopping between different protocols in search of the best available farm. Allowing not only the price of the AERO token to continue appreciating but also the amount of liquidity locked on Aerodrome to grow exponentially.
While we know Aerodrome to be the largest protocol on Base at the moment. This has been true for the project since August 2023. Making it not only the largest project on Base but the holder of that title going on 8 months.
Aerodrome has risen so fast that it’s now one of the most used AMMs in crypto. Earning users more than double the incentives of Raydium on Solana. Considering how few people are using Base Network compared to Solana….
Jesse is a passionate seeker of truth who enjoys educating others about Bitcoin.
As a free thinker and 2nd amendment advocate, Jesse believes each individual has the right to monetary freedom.
“The swarm is headed towards us” -Satoshi Nakamoto
