What is Aerodrome Finance (AERO)?

Aerodrome Finance (AERO) is an automated market maker decentralized exchange (AMM DEX) designed to become the main liquidity hub within the Base ecosystem. This project utilizes a two-token model to optimize performance and distribute rewards to users.

In this article, AZCoin will explore Aerodrome Finance in detail, how it works and the key features of the AERO token.

What is Aerodrome Finance (AERO)?

Aerodrome is an automated market maker (AMM DEX) modeled after Velodrome, aiming to establish a central liquidity position on the Base platform. Velodrome currently leads on the Optimism network with over $300 million in total value locked (TVL), and Aerodrome has inherited the latest improvements from Velodrome V2.

Aerodrome was officially launched on August 28, 2023, on the BASE network. Simultaneously, the $AERO token was released, and the AERO token distribution program was implemented to reward liquidity providers, a process known as emission.

Development team and project partners

Development Team

Aerodrome is developed by the team behind the DEX exchange Velodrome. However, details about the team members have not been publicly disclosed.

Project Partners

Aerodrome has established strategic partnerships with several organizations, including KyberNetwork (an AMM platform), Beefy Finance (a yield optimization tool), and Renzo (a liquid restaking service), among others.

How does Aerodrome Finance work?

Aerodrome operates similarly to Velodrome, with the following key components:

• Trader: Users who execute trades on the Aerodrome platform.
• Liquidity Providers (LP): Individuals who provide liquidity to Aerodrome’s gauges, helping to minimize slippage in traders’ transactions. In return, they receive rewards in the form of AERO tokens during each epoch.
• veAERO Voter: Users can lock AERO into pools to receive veAERO. veAERO holders have the right to vote on AERO token allocation each epoch. They receive all transaction fees based on their locked AERO amount, along with other benefits.
• Protocol: Responsible for attracting liquidity, enabling traders to swap tokens with low slippage, and collecting fees from these transactions.
• Rebase Mechanism: veAERO holders receive rewards proportional to the issuance of AERO tokens and the ratio of veAERO to the total AERO supply, minimizing voting power dilution.

Features of Aerodrome

Swap

The swapping feature of Aerodrome allows users to convert between asset pairs with low slippage and transaction fees. Users can adjust slippage settings from 0.01% to 5%. The protocol provides detailed information about the transaction route before executing the swap, helping users monitor the entire process and select the optimal route. Currently, Aerodrome supports over 160 trading pairs, offering numerous options for users.

Liquidity

Aerodrome’s liquidity provision feature encourages users to add liquidity to pools in exchange for AERO tokens. The pools on the platform are categorized into stable, volatile, concentrated, and incentivized groups, making it easier for users to choose according to their needs.

The implementation of the ve(3,3) model at Aerodrome has created incentives to increase APR for pools, improving liquidity and reducing slippage fees for users. This offers significant benefits to traders, liquidity providers (LPs), and veAERO NFT holders.

Basic Information About AERO token

Technical Specifications of AERO token

• Token Name: Aerodrome
• Ticker: AERO
• Blockchain: Base
• Token Standard: ERC-20
• Contract: 0x940181a94a35a4569e4529a3cdfb74e38fd98631
• Token Type: Utility
• Total Supply: 500,000,000 AERO
• Circulating Supply: 479,662,355 AERO

Token Allocation

Aerodrome Finance utilizes a two-token model to manage its protocol:

• AERO: ERC-20 utility token.
• veAERO: ERC-721 governance token in NFT form.

The initial total supply of AERO is 500 million tokens, with 90% distributed as veAERO. The allocation of AERO and veAERO tokens is as follows:

AERO Token Allocation

• Voter Incentives: 8%
• Genesis Liquidity Pool: 2%

veAERO Token Allocation

• Airdrop to veAERO Holders: 40%
• Ecosystem Registry and Public Fund: 21%
• Aerodrome Team (Max Auto-Locked): 14%
• Grants Protocol: 10%
• AERO Pools Votepower: 5%

What is AERO token used for?

Currently, the primary purpose of the AERO token is to reward liquidity providers (LPs) through token issuance. Users can also lock AERO tokens to receive veAERO NFTs, which grant the following benefits:

• Voting rights on protocol changes
• Project incentive rewards
• Transaction fee portion
• Token issuance amount

Where to buy and sell AERO token?

The AERO token can be traded on decentralized exchanges (DEXs) such as Uniswap and SushiSwap, as well as on centralized exchanges (CEXs) if listed. To execute trades, check the list of the best crypto exchanges that support AERO and choose the platform that best suits your needs.

Which wallets support AERO token?

AERO tokens can be stored in ERC-20 compatible wallets, including software wallets like MetaMask, Trust Wallet, and hardware wallets like Ledger and Trezor. Using secure wallets helps protect your assets safely.

Should you invest in Aerodrome Finance (AERO)?

Investing in Aerodrome Finance (AERO) depends on your investment goals and strategy. Aerodrome Finance is a new platform with high growth potential due to its unique two-token model and strong liquidity attraction capabilities.

However, as with any investment, consider factors such as risk, project reliability, and market trends. A thorough assessment of these factors will help you make an informed investment decision aligned with your financial plan.

Conclusion

In summary, Aerodrome Finance (AERO) is establishing its position with a unique two-token model and strong liquidity attraction capabilities. To stay updated on crucial security information and investment trends in the cryptocurrency sector, follow AZCoin’s articles!