Aerodrome: Launch & Tokenomics

AerodromeFi
5 min readAug 4, 2023

Fueling Up: Base foundations have been laid. Atmospheric conditions are clear. Begin countdown.

When once you have tasted flight, you will forever walk the earth with your eyes turned skyward, for there you have been, and there you will always long to return. — Leonardo Da Vinci
“When once you have tasted flight, you will forever walk the earth with your eyes turned skyward, for there you have been, and there you will always long to return.” — Leonardo Da Vinci

Aerodrome Finance will soon launch on Base with ~20 partners, immediately establishing itself as the ecosystem’s premiere liquidity engine and hub. Aerodrome is built on top of the cutting edge Velodrome v2 technology stack which will soon include features such as concentrated liquidity, automated voting, and a built in veNFT Marketplace.

Aerodrome also worked closely with the Base Team to design build a public goods jet engine is built directly into Aerodrome. In this system, 25% of Aerodrome’s initial votepower is reserved for Ecosystem Goods. This will help power liquidity on assets crucial to ecosystem success, whilst fees earned from these pairs will be used for public goods funding (PGF) and public goods votepower. Making $AERO the engine of the ecosystem.

Aerodrome will also serve as a landing hub for protocols looking to deploy on Base, allowing them to build deep liquidity quickly and in a capital-efficient way. Protocols can lock veAERO and deposit incentives for veAERO voters to direct AERO emissions to their pools. In return for their votes, veAERO holders receive 100% of trading fees and incentives from the pools they choose, creating a self-balancing flywheel that rewards the most productive players in the system.

Checking Controls

Aerodrome’s launch parameters are optimized to incentivize early participants while ensuring a sustainable long-term trajectory. The initial supply will be 500M AERO, of which 450M (90%) will be locked as veAERO.

veAERO Distribution

Airdrop for veVELO Holders: veVELO holders are among the top communities in DeFi, representing sophisticated users and protocols that will be valuable additions to the Base ecosystem. They will receive 40% of the initial supply, distributed proportional to their V2 veVELO balance according to these guidelines.

  • Minimum of 1000 veVELO required
  • veVELO balances granted at Velodrome’s launch to the team and initial partners will be excluded; only new VELO locks from these veNFTs will be included
  • veVELO aggregator layers that accepted user deposits of VELO will also be excluded
  • Currently ~3500 wallets holding 500M+ veVELO would be eligible, net of an estimated 20% (136M) excluded
  • No snapshot has been taken, it will occur shortly before the protocol goes live

Ecosystem Pairs and Public Goods Funding: As outlined in our introductory post, Aerodrome aims to serve as a growth catalyst for Base. A key part of that will be dedicating veAERO voting power exclusively to critical pairs such as WETH-USDC and cbETH-WETH.

  • Fees earned from Ecosystem Pair voting will be allocated to PGF initiatives to support the foundational development of the Base network. Designing an effective program will require time and collaboration with partners. During the development phase, fees collected may be used to maintain the votepower of the veNFTs or incentivize core pairs.

Team: Aerodrome contributors will receive veAERO, vested for 2–4 years, strongly incentivizing them to seek the long-term health of the protocol and overall ecosystem.

Protocol Grants: Top protocols engaging in the Aerodrome flywheel in positive sum ways will qualify for a veAERO voting power grant for the duration of their programs. This will be a unique benefit that will give long-term value back to the partners engaged with Aerodrome and continuously attract new projects to the ecosystem.

AERO Pools: A share of veAERO will be exclusively dedicated to vote on AERO token pairs to support a healthy level of liquidity for the protocol in perpetuity.

AERO Distribution

  • Voting incentives: AERO tokens will be used strategically to match incentives from ecosystem partners or to attract additional votes to liquidity pools critical to the protocol.
  • Genesis Liquidity Pool: 2% of the initial AERO supply will be paired with USDC and deposited as liquidity to support AERO swaps at launch.

AERO Emissions

Emissions will begin at 10M AERO per epoch (week) and follow three phases:

Take-off: In the first 14 epochs, emissions will increase by 3% per epoch, topping slightly above 15M AERO. The gradual increase will support the acceleration of the flywheel while allowing time for the ecosystem to develop and protocols to onboard.

Cruise: After epoch 14, emissions will decay at 1% per epoch, ensuring supply inflation decreases as the protocol matures.

Aero FED: When emissions programmatically drop under 9M per epoch, approximately Epoch 67, veAERO voters will take control of Aerodrome’s monetary policy through the Aero Fed system. Voters will collectively make one of three choices each epoch:

  • Increase emissions by 0.01% of total supply (0.52% annualized)
  • Decrease emissions by 0.01% of total supply
  • Maintain current emission rate unchanged (as % of total supply)
  • Aero FED will have a maximum annualized emission rate of 52% of supply and a min of 0.52%.

To reduce the impact of dilution, veAERO holders will receive a weekly rebase proportional to emissions and the share of AERO supply locked, calculated with the following equation:

This adjusted rebase formula will reward veAERO holders most when locking rates decrease, incentivizing new lockers to step in.

Clear for Take-Off

Aerodrome will add a powerful economic engine to the Base network by accelerating the growth of liquidity in the ecosystem. In the coming weeks, we’ll share a full roster of partners who will take off in parallel with Aerodrome and have committed to bringing liquidity, incentives, and integrations to kick-start the Base economy.

We’d like to thank our partners at Base and Velodrome for the support leading up to launch. If you are a protocol or project looking to launch on Aerodrome, please get in touch.

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