Aerodrome Finance

Aerodrome did not invent its political economy from scratch. It launched in August 2023 with Velodrome V2’s split between liquid emissions and vote-locked NFTs.

The 500 million genesis distribution made that lineage institutional: 200 million veAERO went to eligible veVELO lockers, while public-goods, development and Flight School wallets began max-locked.

Aerodrome nevertheless runs on Base. Coinbase’s sequencer orders ordinary L2 transactions, while Base derives batches and deposits against Ethereum; AERO is neither Base gas nor a validator reward.

An unstaked LP position earns the pool’s swap fees. Depositing it into a gauge relinquishes those fees and receives AERO emissions instead. The same liquidity cannot collect both streams.

The choice separates exchange revenue from token inflation. A high AERO yield can attract liquidity even before a pool produces much organic fee volume, leaving LPs exposed to token prices and impermanent loss.

AERO locked for up to four years becomes a veAERO NFT. Its weight votes weekly across eligible gauges; those gauges split new AERO among their staked LPs.

Voters collect the pool fees surrendered by gauge LPs and whitelisted external incentives. A project can therefore pay voters to steer inflation toward its market—the mechanism called bribes in contracts and voting incentives in product copy.

The current product documentation says weekly emissions began at 10 million AERO before tapering off; the repository specification instead gives an initial 15 million per week. Those descriptions do not establish a single consistent launch schedule. The current documentation says the Foundation held emissions near 10.92% annualized ahead of Aero, replacing the earlier expectation that weekly voter adjustments would determine tail emissions.

Five percent of each week’s emissions goes to Dromos Labs and compounds into a max-locked position. It funds development while also enlarging a durable voting bloc.

Rebases add AERO to veAERO positions to limit dilution. They are newly minted tokens, not a dividend paid from trading revenue; fees and incentives are separate assets earned by voting.

Existing core pools are not presented as a proxy a team can simply rewrite. Yet immutability does not remove administration: fee and pause roles affect legacy pools, FactoryRegistry can admit new implementations, and the Council can kill or revive gauges.

The announced Aero merger raises the same boundary at a larger scale. The Foundation proposed 94.5% of upgraded AERO for Aerodrome holders and 5.5% for Velodrome holders, but the migration remains a plan until deployed.