Aerodrome (AERO)

Aerodrome (AERO) is the token of Aerodrome Finance, which became the largest decentralized exchange on Base, the layer-2 network incubated by Coinbase. AERO is paid out as rewards to liquidity providers, and holders who lock it gain votes that decide where those rewards go, in return for the trading fees and incentives earned by the pools they back. The model, known as ve(3,3), combines the vote-escrow design of Curve with ideas taken from earlier DeFi experiments that rewarded long-term holders.

Aerodrome began in 2023 as a copy of Velodrome, a similar exchange on Optimism, built by the same team, now called Dromos Labs. Following a plan announced by the developer Dromos Labs in November 2025, the two exchanges were merged in October 2026 into a single protocol named Aero, which operates on seven networks; AERO kept its ticker and Velodrome's VELO was converted into it.

Imagine a market town where traders pay a small fee each time they swap goods at a stall, and the town council hands out new coins each week to whoever stocks the stalls. Townspeople who lock their coins away for years get votes on which stalls receive those new coins. In return, they collect all the fees from the stalls they voted for, plus any gifts the stallholders offer to win their votes.

That is Aerodrome. Projects that want their token to be easy to trade can either pay voters directly or buy and lock AERO themselves to steer rewards to their own stall. The more trading a stall attracts, the more fees its voters earn, so in theory rewards drift towards the markets people actually use.

Base opened to the public in August 2023, and Aerodrome launched at the end of that month as a fork of Velodrome's second version, with part of its first supply given as locked AERO to people who had locked VELO. Its launch was coordinated with Base contributors, and Coinbase's venture arm became a holder of locked AERO. In 2024 it added Slipstream, a set of concentrated-liquidity pools similar to those of Uniswap, and it went on to handle most trading volume on Base.

On 12 November 2025 Dromos Labs announced that Aerodrome and Velodrome would be combined. The new exchange, Aero, launched in October 2026 on Base, Ethereum mainnet, OP Mainnet, Arbitrum, Ink, Arc and Robinhood Chain. Old AERO converts one for one into new AERO, each VELO into about 0.044 AERO, giving Aerodrome holders 94.5 percent of the merged supply and Velodrome holders 5.5 percent. Locked veAERO and veVELO positions became staked AERO, called sAERO, and emissions to the old pools stopped.

Holders could lock AERO for up to four years to receive veAERO, a position recorded as a non-fungible token whose voting weight depends on the amount and length of the lock. Each weekly epoch, voters spread their weight across liquidity pools. New AERO is then shared among pools in proportion to the votes they received and paid to the liquidity providers in them, while voters collect the pool's fees and any bribes. A voter's share of a pool's rewards is:

• $R_{i}$ is the reward paid to voter $i$ for the week.
• $v_{i}$ is the voting weight that voter placed on the pool.
• $V$ is the total voting weight placed on the pool by everyone.
• $F$ is the trading fees the pool earned and $B$ the incentives, or bribes, deposited for its voters.

If a voter places 50,000 votes on a pool that received 1,000,000 votes in total, and the pool earned $40,000 in fees plus $10,000 in incentives, the voter receives $0.05 \times 50{,}000 = 2{,}500$ dollars' worth of tokens. Lockers also received weekly top-ups of new tokens to offset the dilution caused by emissions.

• Liquidity rewards. AERO emissions attract deposits to pools for pairs such as ether and USDC.
• Voting and fees. Locked or staked AERO directs emissions and earns the fees of the pools it supports.
• Vote markets. Token issuers pay incentives to voters, making AERO a tool for buying liquidity.
• Trading. AERO is listed on major cryptocurrency exchanges, including Coinbase.

The ve(3,3) design depends on a steady flow of new tokens, so holders who do not lock are diluted and rewards can attract short-term "mercenary" liquidity that leaves when emissions fall; see tokenomics. Liquidity providers face impermanent loss and smart contract risk, and a protocol so closely tied to one network depends on that network's growth. The 2026 merger added migration risk: upgrades are irreversible and self-custody holders must convert their tokens manually. Aero targets annual inflation of about 12 percent, with a launch ceiling of 20 percent.

• Aero
• Aerodrome Finance