1. Project Introduction
Aerodrome (AERO) has been listed on HotsCoin on March 27. Aerodrome Finance is a next-generation automatic market maker (AMM) designed to serve as a central liquidity hub for Base, combining a powerful liquidity incentive engine and a voting lock governance model. and user-friendly experience. The Aerodrome inherits the latest features from the Velodrome V2. AERO is currently open for trading on HotsCoin.
2. Aerodrome mechanism
Aerodrome launches on the BASE network on August 28, 2023.
Aerodrome mechanisms include:
①Low slippage
②Handling fee
③AERO additional issuance
④Liquidity
⑤Incentive
Aerodrome’s protocol is designed to enable token swaps and generate fees from traders by attracting liquidity. Each epoch, Liquidity Providers (LPs) receive additional issuances of $AERO tokens in proportion to the votes they have accumulated. Only liquidity locked in the protocol (in the protocol's meter) will be issued.
3. Token economy
Aerodrome Finance uses two tokens to manage its utility and governance:
$AERO — The protocol’s ERC-20 utility token
$veAERO — ERC-721 governance token in the form of an NFT (non-fungible token)
$AERO is distributed to liquidity providers through additional issuance.
$veAERO is used for governance. Any $AERO holder can vote to lock their tokens and receive them in the form of $veAERO (also known as Lock or veNFT). Additional tokens can be added to the $veAERO NFT at any time.
4. Initial allocation
The initial allocation is as follows:
AERO Tokens: 500M, of which 450M are allocated as Vote Locked ($veAERO) tokens.
Weekly issuance starts from 10M $AERO (2% of initial supply). The additional issuance plan is divided into three stages:
① Take-off stage: In the first 14 cycles, the additional issuance will increase by 3% every week to promote protocol activities and the participation of partners.
② Cruise stage: After the 14th cycle, the additional issuance is reduced by 1% per cycle to ensure that as the agreement matures, the total supply expansion rate gradually decreases.
③Aero Fed stage: When the additional issuance drops below 9M per cycle (approximately the 67th cycle), veAERO voters will control Aerodrome’s monetary policy through the Aero Fed system.
5. Token reset
$veAERO holders receive resets based on the issuance of $AERO and the ratio of $veAERO to $AERO supply, reducing the dilution of $veAERO’s voting rights.
Each cycle, additional $AERO issuances are distributed in proportion to the $veAERO voting rights obtained by each liquidity pool.
Liquidity Providers (LPs) can stake their LP positions to receive $AERO allocated to each pool in proportion to the position size and lock time.
6. Team issuance
To ensure long-term sustainability, 5% of the additional issuance will be used for team operations.
Conclusion
As a key component of the Base ecosystem, Aerodrome provides powerful incentive and governance mechanisms for liquidity providers, voters and the entire community through its innovative mechanism and token economic model. Its development and growth deserve close attention.
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