Aerodrome is now the Largest Liquidity Hub of Base

Aerodrome is a decentralised exchange on Ethereum Layer 2 protocol, Base. It combines the best features from other DEXes into a single streamlined protocol uniquely designed to serve as the primary trading and liquidity hub of the Base ecosystem. The protocol offers users a complete platform for liquidity attraction, yield farming, and low-slippage swaps.  

Aerodrome launched in June 2023 and has since then grown to become the largest protocol on Base, capturing a TVL of $566 million, double the amount of Uniswap’s implementation on Base, at $257 million. Aerodrome alone represents 37% of the total TVL on Base, which is at $1.5 billion.  

The protocol has so far generated fees of $33 million and much of its success can be attributed to the unique incentive program enabled by its vote-lock governance model. The users lock their AERO tokens to receive fees, and locked tokens veAERO, gives users the ability to direct protocol emissions to specific pools, where they receive 100% of fees and emissions. This attacks LPs to the protocol where they offer traders low slippage on popular pairs, and the growth is reflected in consistently increasing volume numbers.  

Slipstream has further fueled Aerodrome’s growth, as it offers better execution for high-volume token pairs.  A major part of the Aerodrome’s success has been their bet to build on Base. That ecosystem has been seeing exponential growth with over 500,000 daily active addresses and over 3 million transactions every day. A part of this growth can be attributed to the implementation of EIP-4844, the Dencun upgrade of the Ethereum blockchain, which significantly reduced the transaction fees. 

The potential for growth from here onwards is also huge as the Base Layer 2 platform is built by one of the largest centralized exchanges, Coinbase. They currently have more than 100 million customers, and they can provide easy onboarding experience to their massive customer base through their smart wallet, creating a seamless user experience. With these primitives playing out in Aerodrome’s success, there is a massive potential to be unlocked in the coming days.