Aerodrome Finance

Aerodrome Finance is the main decentralized exchange on Base, Coinbase's Ethereum Layer 2 network. It functions as the network's central liquidity hub, combining an automated market maker with a system for directing liquidity incentives to the pools that need them.

Aerodrome inherits its design from Velodrome, which pioneered the model on Optimism. The core mechanism is vote-escrowed governance: users lock AERO tokens for a period and receive veAERO, which grants voting power over how the protocol's weekly token emissions are distributed across liquidity pools. Longer locks give more voting power.

The incentive flywheel

Projects that want deep liquidity for their token can either lock AERO themselves to vote for their pool, or pay bribes to existing lock holders to vote that way. Lock holders receive both those bribes and a share of the trading fees generated by the pools they vote for. This creates a market for liquidity incentives: emissions flow toward the pools where someone is willing to pay for them, which is usually where they generate the most fee revenue.

The design's aim is to align emissions with actual demand rather than distributing them evenly, which is a common failure mode in liquidity mining.

Supply

AERO has no fixed maximum supply. Total supply currently sits at roughly 1.96 billion with about 977 million circulating. The token is emitted weekly on a schedule that adjusts based on how much of the supply is locked, so a higher lock rate reduces effective inflation for those holding rather than locking.

Aerodrome has consistently been among the largest sources of liquidity on Base and is closely tied to that network's growth.