Aerodrome Tokenomics: Distribution, Growth, and Beyond

Aerodrome tokenomics is built on a robust distribution model, with a total supply of 1 billion tokens.

The token distribution is divided into three main categories: private sale, public sale, and airdrop.

A significant portion of the tokens, 40%, is allocated for the private sale, while 30% is reserved for the public sale.

The remaining 30% is set aside for the airdrop, which aims to incentivize early adoption and community engagement.

The token's growth potential is also fueled by a strong burn mechanism, which destroys a portion of the tokens every quarter.

Distribution and Incentivization is a crucial aspect of Aerodrome's tokenomics. veAERO holders will receive 40% of the initial supply, distributed proportional to their V2 veVELO balance, with a minimum of 1000 veVELO required.

Airdrops will be granted to top communities in DeFi, including veVELO holders, who will be valuable additions to the Base ecosystem. These communities will receive their veAERO airdrops shortly before the protocol goes live.

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. Additionally, veVELO aggregator layers that accepted user deposits of VELO will also be excluded.

Aerodrome aims to serve as a growth catalyst for Base, 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.

External protocols can also incentivize specific pools by adding additional token incentives to encourage voters to vote for their pools, also known as bribing. These incentives can be paid in any of the supported tokens on Aerodrome.

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. 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.

Here's a rough breakdown of the number of wallets eligible for the veAERO airdrop: ~3500 wallets holding 500M+ veVELO, net of an estimated 20% (136M) excluded.

VeAERO Distribution is a key aspect of the Aerodrome protocol, and it's worth understanding how it works. VeVELO holders, who are among the top communities in DeFi, will receive 40% of the initial veAERO supply.

To be eligible for veAERO, you need to hold a minimum of 1000 veVELO. This is a significant barrier to entry, but it ensures that only serious and committed users participate in the distribution.

VeVELO balances granted at Velodrome's launch to the team and initial partners will be excluded from the distribution, as will veVELO aggregator layers that accepted user deposits of VELO.

Currently, around 3500 wallets hold 500M+ veVELO, but an estimated 20% of these wallets will be excluded from the distribution. This is a significant number, but it's worth noting that no snapshot has been taken yet, and it will occur shortly before the protocol goes live.

Here are the key eligibility criteria for veAERO distribution:

Aerodrome Finance allows external protocols to incentivize specific pools, known as bribing, to encourage voters to vote for their pools. This can be done by adding additional token incentives to specific pools.

These incentives can be paid in any of the supported tokens on Aerodrome, such as USDC, and are then earned by voters who voted on these incentivized pools. Through this mechanism, protocols can generate more than $1 of liquidity in their pools for every $1 spent on bribes.

A 2% of the initial AERO supply is used to seed the Genesis Liquidity Pool with USDC, supporting AERO swaps at launch. This liquidity pool is a key component of the incentivization mechanism.

Here's a breakdown of the bribing and incentivization options available:

These incentivization options aim to create a sustainable and growing liquidity pool, which is essential for the protocol's long-term health and success.

Weekly AERO token emissions start at 10 million, with a 3% increase per week for the first 14 weeks to encourage rapid protocol growth.

This emission rate helps to incentivize the growth of the protocol, making it more attractive to users and investors.

From week 15 onwards, the emission rate will decay by 1% per week to reduce overall token inflation over time.

Eventually, veAERO voters will control the monetary policy of the protocol, similar to Velodrome's veVELO voters, when emissions fall under 9 million tokens per week, expected to occur in the 67th week from launch.

Approximately 40% of AERO tokens are set to unlock after Epoch 67, which some investors might view as inflationary, but it's actually a more controlled issuance mechanism compared to venture-backed projects.

The team's AERO allocation is capped at 4 years of veAERO, creating an incentive mechanism where they must act in the long-term interest of the protocol to receive substantial compensation.

The aerodrome tokenomics model is designed to be highly liquid, with a circulating supply that's expected to increase by 10% each quarter. This will make it easy for users to buy and sell tokens as needed.

The token's market value will be influenced by the demand for its use cases, such as buying and selling aviation services. The more people who use the token, the higher its value is likely to be.

Aerodrome's token supply is capped at 100 million, with 20% allocated to the development team and 10% to the advisors. This ensures that the token's value isn't diluted by an excessive supply.

The token's use cases will create a steady stream of revenue for the aerodrome, which can be used to buy back tokens and increase their value.

Aerodrome's tokenomics mechanics are designed to incentivize liquidity and community engagement. The total supply of AERO tokens is allocated among various groups, including team members, liquidity pools, and veAERO holders.

A total of 14% of the total supply is allocated to the team, which is locked for between two to four years. This ensures that the team's interests are aligned with the long-term success of the project.

Aerodrome has allocated 5% of the total supply to incentivize AERO liquidity pools. This means that liquidity providers can earn AERO tokens by depositing crypto assets into Aerodrome's pools.

The veAERO governance system allows users to lock their AERO tokens for various durations, ranging from 1 week to 4 years. The locking period determines the voting power of the veAERO holder.

Here's a breakdown of the key tokenomics mechanics:

The veAERO holder's voting power is directly proportional to the duration they lock their AERO tokens. This means that users who lock their tokens for a longer period will have more voting power in the future AERO emissions distribution.

The project was launched in 2023 with a limited track record compared to established DEXs. This means that the tokenomics mechanics are still evolving and adapting to the needs of the community.

Aerodrome is currently in a growth phase, which means its token emissions are relatively high, providing the necessary fuel for rapid expansion and rewarding early participants.

This growth phase is expected to transition in about seven weeks, when Aerodrome reaches Epoch 67, allowing the community of veAERO holders to vote on reducing emissions.

By reducing the supply of newly issued tokens, veAERO holders can help drive up the value of the remaining tokens, creating scarcity and potentially leading to price appreciation.

Aerodrome's tokenomics shift is a crucial development for the long-term value of the AERO token, signaling a transition from rapid growth to sustainable long-term value creation.

The MetaDEX Revolution is in full swing, and it's having a profound impact on the way we think about tokenomics. Aerodrome is leading the charge, combining the best features of previous DEXs to create a more efficient and user-friendly experience.

Aerodrome's tokenomics are inspired by Curve and Convex, which has improved governance and emissions. This is a game-changer for veAERO holders, who can now earn 100% of the fees and bribes from the pools they vote on.

The protocol's centralized automated market makers (clAMM) are inspired by Uni v3, allowing for capital-efficient exchanges. This is a huge advantage for LPs, who receive 100% of AERO emission incentives and can fund the pools with the highest yields.

Traders are also benefiting from Aerodrome's high liquidity, which allows for better execution compared to other exchanges. In fact, Aerodrome's market share in the Base DEX market has surged to 63% since the launch of Aerodrome Slipstream in April.

The Coinbase Effect is a significant driver of growth and adoption in the crypto space. Base, a key player in this ecosystem, has seen its TVL reach approximately $2.7 billion.

Coinbase's integration of Base into its smart wallet has been a major catalyst for this growth. The partnership with Stripe for fiat-to-crypto conversions on Base has also contributed to its expansion.

As a result, Aerodrome, the largest dApp on Base, has benefited from Base's rapid expansion. Its DAU and daily trading volume have steadily increased over the year.

This growth has led to a significant increase in the usage of Aerodrome. Protocols on Base hold nearly 10% of veAERO, aiming to enhance the liquidity of their governance tokens by locking AERO and voting to direct issued tokens to their own pools.

Coinbase's decision to launch cbBTC has further increased economic activity on Base. cbBTC's TVL has grown to $839 million since its launch on September 12.

Aerodrome is the biggest beneficiary of this initiative, accounting for about 80% of the trading volume for cbBTC trading pairs.

Aerodrome is currently in a growth phase, which means its token emissions are relatively high, providing the necessary fuel for rapid expansion.

The tokenomics are set to shift in the coming weeks, with a crucial development happening in Epoch 67, where the community of veAERO holders will have the power to vote on reducing emissions.

Aerodrome measures time in "epochs" that last a week, and it's currently in Epoch 60, but will transition to Epoch 67 in about seven weeks.

Reducing the supply of newly issued tokens can drive up the value of the remaining tokens, creating scarcity and potentially leading to price appreciation.

The reduction in token emissions, combined with Aerodrome's leading position in the Base ecosystem, sets up the AERO token for potential long-term appreciation.

Aerodrome's tokenomics offer a range of benefits that make it an attractive choice for traders and liquidity providers alike.

Low trading fees are a major advantage, allowing users to save money on each transaction compared to other decentralized exchanges.

High APYs for liquidity providers mean they can earn significant yields on their deposited assets through AERO emissions.

The AERO token is community-governed, giving veAERO holders a say in the protocol's evolution through voting on key decisions.