Aerodrome Finance
About
Aerodrome Finance is a next-generation automated market maker (MetaDEX) serving as the central liquidity hub on Base network. It combines a vote-lock governance model with intelligent incentives and battle-tested technology to provide trading and liquidity infrastructure. The platform enables token swaps while distributing 100% of protocol value to liquidity providers and governance participants through its dual-token system.
Where Does Yield Come From?
Aerodrome Finance generates yield through a system where participants lock tokens to vote. There are two main ways the protocol earns and distributes value:
- Swap fees: 100% of the trading fees generated by liquidity that is staked (locked in) goes back to the community. A portion of fees from unstaked liquidity in certain pools also contributes.
- Voting incentives: 100% of the rewards offered to encourage voting are distributed.
For Liquidity Providers: If you provide liquidity and stake it, you earn $AERO tokens. The amount you earn is proportional to the number of votes your pool receives through a voting system called "gauges."
For Governance Participants: If you lock your $AERO tokens to get a special token called $veAERO (which represents your locked voting power), you earn two things:
- 100% of all the protocol's trading fees from the previous week (epoch).
- Any extra voter incentive rewards from the current week.
The release of new $AERO tokens follows a three-phase schedule:
- Take-off: For the first 14 weekly periods, emissions increase by 3% each week.
- Cruise: After that, emissions gradually decrease by 1% each week.
- Aero Fed: Finally, the community of voters takes control. They can vote to adjust emissions up or down by a small amount (0.01% of the total token supply) each week.
A rebate mechanism protects the voting power of $veAERO holders. It reduces dilution based on how much $veAERO exists compared to the total $AERO supply.
The whole system runs on weekly cycles called epochs. Votes cast each week decide where the new $AERO emissions are distributed. A fixed 5% of all new emissions is set aside for team expenses.
Audits
| Audit / Date | Findings | Verdict |
|---|---|---|
Code4Rena23-05-2022 - 30-05-2022 |
| The audit uncovered significant vulnerabilities in vote delegation, reward accrual, and bribe distribution that could have compromised protocol safety and user funds; most critical issues were addressed in the mainnet deployment. |
Spearbit17-07-2023 |
| The audit revealed significant security issues across the protocol, with one critical vulnerability in reward calculation and six high-risk findings affecting core functionality. Velodrome addressed most findings during the review, though some design-level risks around voting mechanics and reward distribution remain. |
Spearbit20-11-2023 - 05-12-2023 |
| The audit uncovered multiple critical design flaws in reward distribution and swap routing, all of which were fixed prior to deployment, resulting in a significantly hardened protocol. The comprehensive review and high fix rate demonstrate responsible security practices by the Velodrome team. |
ChainSecurity20-05-2025 |
| The audit identified critical design issues around cross-chain message ordering that could temporarily inflate voting power, but these were resolved with timing restrictions on reward claims. Overall security is assessed as high after fixes, though several accepted low-risk issues remain related to bridge operations and epoch boundary assumptions. |
ChainSecurity07-10-202405-11-2024 |
| ChainSecurity's audit found no critical or high-severity vulnerabilities, with only one low-severity and one informational issue resolved, concluding the Superchain diff codebase provides a high level of security for multi-chain deployment. |
ChainSecurity07-10-2024 - 05-11-2024 |
| The audit successfully identified and resolved several critical and high-severity issues before deployment, resulting in a codebase that ChainSecurity assesses as providing a high level of security for the Velodrome Superchain Slipstream extension. |
Sherlock13-11-2024 |
| This audit identifies several cross-chain operational risks in Velodrome's migration architecture, with no critical vulnerabilities found but important recommendations for gas pricing, buffer management, and security validations that should be addressed before production deployment. |
MixBytes12-09-2025 - 03-10-2025 |
| MixBytes' audit found no critical or high-severity issues, with one medium and twelve low-severity findings, most of which were fixed by the Velodrome team, indicating a robust security posture for the Pool Launcher contract suite. |
Backers
Aerodrome Finance emphasizes no traditional venture capital funding, with documentation stating "$0 VC funding" and "Zero token sales". The project launched as a public good with backing primarily from the Velodrome community and Base ecosystem partnership.
Key backing and distribution: 40% of initial veAERO (200M tokens) was airdropped to veVELO lockers from Velodrome Finance as the "only community allocation". The Aerodrome Foundation (registered August 18, 2023) holds 95M AERO (19% of initial supply) permanently locked for development team funding. The Foundation is funded through 5% of weekly AERO emissions, not through external investment rounds.
The project describes itself as "Velodrome's new initiative with the Base team and our partners" in its June 2023 introduction, positioning it as an ecosystem partnership between Velodrome and Base networks.
Legal
Legal form
Exempted Limited Guarantee Foundation Company
Registration jurisdiction
Cayman Islands (registered 18 August 2023 at Leeward Management Limited, Suite 3119, 9 Forum Lane, Camana Bay, PO Box 144, George Town, Grand Cayman KY 1 - 9006)
Status and notes
Operated by Aerodrome Foundation, an Exempted Limited Guarantee Foundation Company registered 18 August 2023 in the Cayman Islands. Management body: Glenn Kennedy and Sean Inggs. Legal disclaimer and terms of use on website state agreements are with Aerodrome Foundation, governed by Cayman Islands law with exclusive jurisdiction in Cayman Islands courts. Foundation holds 95M AERO (19% of initial supply) permanently locked for development team funding and receives 5% of weekly AERO emissions for operations.