- Aerodrome, a new platform launched in collaboration with Base developers, amasses $150 million in deposits on its first day, increasing the Base blockchain’s DeFi ecosystem’s locked value by 80%.
- Aerodrome aims to emulate Velodrome’s success by using a similar rewards and governance structure that involves AERO tokens and vested AERO (veAERO) tokens.
Elevating Governance and Liquidity in DeFi: The Aerodrome Model
In a financial landscape increasingly dominated by decentralized finance (DeFi), the newly launched Aerodrome platform has shattered expectations. Within 24 hours of its inception, Aerodrome — a product designed in collaboration with Velodrome and Base blockchain developers — has attracted a staggering $150 million in deposits. This influx has augmented the total locked value of Base’s DeFi ecosystem by a remarkable 80%.
Aerodrome is conceived as a “business development protocol” intended to fortify the Base blockchain ecosystem. It aims to streamline project launches, facilitate the onboarding of novel projects and tokens, and furnish liquidity to the greater ecosystem. It’s an ambitious endeavor that seeks to replicate the evident success of Velodrome, a mainstay on the Optimism network with over $288 million in locked value.
A quintessential feature of Aerodrome lies in its native AERO tokens. A total of 500 million AERO tokens have been minted, with 450 million set aside in a four-year lock-up period, as delineated in the project’s foundational documents. The remaining 50 million tokens are liquid, earmarked primarily for governance incentives and initial liquidity provisioning.
Addressing Liquidity Distribution Challenges in DeFi
A traditional quagmire in the realm of decentralized exchanges is the tying of rewards to overall liquidity rather than transactional volume, which essentially fuels the protocol’s fee generation. Aerodrome introduces an innovative solution through its vested AERO token, denoted as veAERO. Holders can choose to lock their AERO tokens for periods ranging from a week to four years, receiving veAERO tokens in return.
This veAERO is not merely a token but an NFT-backed asset representing governance power within the platform. The longer one locks their AERO tokens, the more veAERO tokens they receive, thereby gaining increased influence in governance decisions. These NFTs can then be traded on multiple marketplaces, offering a streamlined entry into Aerodrome’s ecosystem.
Governance participation isn’t merely ceremonial; it comes with palpable financial incentives. Participants can use their veAERO tokens to establish reward structures for trading pools. These governance actors then receive 100% of all fees and “bribes” associated with the pools they voted for, creating a self-sustaining cycle of liquidity and engagement.
As an antecedent, Velodrome has demonstrated the efficacy of this model, generating over $3 million in platform revenues in the past month alone. A sum of $1.3 million from these revenues was disbursed as fees to VELO token holders and users, underscoring the attractiveness and functional utility of this innovative governance structure.