Aerodrome is the central liquidity hub of Coinbase's Base L2 — a next-generation AMM that uses the ve(3,3) model pioneered by Andre Cronje's Solidly experiment. In this system, veAERO lockers vote to direct token emissions to specific liquidity pools and earn 100% of the trading fees generated by those pools. This aligns incentives between traders (who want deep liquidity), LPs (who want high yields), and governance participants (who want protocol fees). Aerodrome quickly became Base's largest protocol by TVL, processing the majority of on-chain swaps. Its success is partly attributable to timing — launching on Base just as Coinbase's L2 was gaining traction — and partly to its refined tokenomics. The Velodrome team (which built the equivalent protocol on Optimism) brought lessons learned from Solidly's failures to create a more sustainable model. The protocol's dominance on Base creates a flywheel: more TVL attracts more trading volume, generating more fees, which attracts more veAERO lockers, directing more emissions, deepening liquidity further. Aerodrome has become the "Curve of Base" — the foundational liquidity layer for the entire ecosystem.
Aerodrome launched on Base in August 2023, built by the Velodrome team (which operates the equivalent protocol on Optimism). It rapidly accumulated TVL as Base grew, becoming the chain's largest protocol within months. The ve(3,3) model — refined from Solidly's original (and flawed) design and Velodrome's improvements — proved effective at bootstrapping deep liquidity. By 2024, Aerodrome processed the majority of Base's on-chain trading volume.
Aerodrome uses the ve(3,3) tokenomics model: AERO emissions incentivize liquidity provision, veAERO lockers vote to direct those emissions to specific pools and earn 100% of trading fees from voted pools. LPs earn AERO rewards based on the emissions directed to their pools. The system creates a market for liquidity — protocols can bribe veAERO holders to vote for their pools, creating additional yield for lockers. Two pool types: volatile pairs (standard xy=k) and stable pairs (optimized for correlated assets).
AERO has ongoing emissions directed by veAERO voters to liquidity pools. veAERO holders receive anti-dilution rebases proportional to emissions, protecting their governance share from dilution. 100% of trading fees go to veAERO voters (not LPs — LPs receive AERO emissions instead). This separates the incentive: LPs are paid in AERO for liquidity, voters are paid in fees for governance.
The largest protocol on Coinbase's Base L2 — foundational infrastructure for the entire chain.
Improved tokenomics from Solidly's failures, creating sustainable liquidity incentives.
veAERO lockers earn all trading fees — strong, transparent value accrual.
TVL → volume → fees → locking → emissions → deeper TVL — self-reinforcing growth cycle.
Ongoing token emissions create sell pressure from farming rewards — requires continuous buying pressure.
Fully dependent on Base L2's growth — if Base fails to attract users, Aerodrome's volume suffers.
The tokenomics model is complex — many users don't understand voting, bribes, and anti-dilution mechanics.
No multi-chain presence — entirely dependent on Base's ecosystem.
ve(3,3) combines Curve's vote-escrow model (lock tokens for governance and fees) with Olympus's (3,3) game theory (incentivizing cooperative behavior). In Aerodrome: lock AERO as veAERO → vote for pools → earn 100% of trading fees from voted pools + receive anti-dilution rebases. The model creates aligned incentives between liquidity providers, traders, and governance participants.
Uniswap v3 is deployed on Base but Aerodrome dominates in TVL and volume. Aerodrome's ve(3,3) model incentivizes deep, sticky liquidity through emissions and fee-sharing — Uniswap relies on organic trading fees alone. For LPs, Aerodrome typically offers higher yields due to emission incentives. For traders, both provide competitive pricing.
AERO emissions decrease over time (following a predetermined schedule), and anti-dilution rebases protect veAERO holders from dilution. The sustainability test is whether trading fee revenue grows fast enough to offset declining emissions incentives. So far, Base's growth has supported this, but continued ecosystem expansion is necessary for long-term sustainability.
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Learn how to purchase: How to Buy Aerodrome