Over half of Base Network’s $2 billion total value locked (TVL) is due to Aerodrome, with over $1 billion worth of deposits.
Coinbase layer-2 network Base is experiencing exponential growth, as evidenced by an impressive increase in its total value locked (TVL). The network’s TVL has surpassed $2 billion, more than five times its value at the beginning of 2024. Nevertheless, the growth that has been nothing short of remarkable has been attributed to the hands of Aerodrome, a decentralized exchange (DEX).
Aerodrome has emerged as a significant player in the DeFi ecosystem on Base. It is the largest DEX on the network and is responsible for nearly half of Base’s TVL. The exchange has contributed more than $1 billion in deposits, a substantial increase from the $120 million deposit base in January.
The Origin of the Aerodrome and How It Became the Motivating Force Behind the Base Network
The success of the Aerodrome can be attributed to its origins. For the most part, at least. It was introduced in September 2023 as a forked version of Velodrome, a DEX on the OP Mainnet that Velodrome Finance developed.
The ve(3,3) design by Andre Cronje is implemented in both Aerodrome and Velodrome, incentivizing users through vote-escrowed governance.
This system currently promotes the staking of Aerodrome’s AERO governance token to obtain veAERO. In the end, holders of the veAERO may receive a portion of the protocol fees.
Unsurprisingly, Aerodrome has ascended the ranks with this governance mechanism in place. The platform quickly became a favorite among DeFi users seeking to maximize their returns and attract significant liquidity.
Intriguingly, the Aerodrome’s expansion has been multifaceted rather than unilateral. The exchange has rapidly expanded to surpass other DeFi giants within the Base ecosystem, including Uniswap and Aave.
This is corroborated by DeFiLlama data, demonstrating that Aerodrome is the leader in trading volume, fees generated, and TVL.
In terms of volume, Aerodrome executed $9.02 billion in trades last month. This places the exchange on par with the top Solana-based DEXs, such as Orca and Raydium, which recorded volumes in the $9-$10 billion range.
Even though Aerodrome’s volume is still behind that of Uniswap on Ethereum and PancakeSwap on BNB Chain, its status as a significant player in the DeFi space is undeniable, particularly on the Base network.
The exchange’s significant influence on the Base network’s growth is likely to persist, as evidenced by the impressive performances that Aerodrome has shown thus far. In other words, users are increasingly seeking more scalable and efficient solutions for liquidity provision and trading.