Aerodrome is the top DEX on Base, Coinbase's Layer 2 network. It’s currently #1 in trading volume, active wallets (above $0.01), and total value locked.

Its native token, $AERO, currently has a market cap of $400M and a fully diluted valuation of $777M (as of March 21, 2025). There’s no maximum supply, meaning there's no fixed upper limit on how many tokens can be created.

Aerodrome’s vote-escrow model uses veAERO, where users lock $AERO tokens to receive a veAERO token. This grants voting power to direct $AERO emissions to specific liquidity pools. veAERO holders also earn 100% of the trading fees from the pools they vote for.

AERODROME THE NUMBER ONE DEX ON BASE

• Aerodrome’s WETH/USDC trading volume equals half of Uniswap V3's on Ethereum.

• Aerodrome volume also matches half of Coinbase’s centralized exchange volume.

• $AERO has a strong community backing it as many Base enthusiasts see it as the beta to the Base ecosystem, since Base doesn’t have a token.

COINBASE VENTURES MADE A STRATEGIC INVESTMENT

• Coinbase Ventures invested in Aerodrome (Feb 2024), which could lead to a future integration into Coinbase’s main platform.

• Coinbase previously followed this strategy successfully with Morpho (the lending protocol).

• Integration could expose Aerodrome and $AERO to Coinbase’s user base of 100M+.

$AERO INCLUDED IN COINBASE 50 INDEX (MARCH 2025)

• Inclusion in Coinbase 50 Index positions $AERO for passive investment inflows.

• More fund products will incorporate the index into their strategies, driving demand for $AERO.

AERODROME USES THE SAME AMM MODEL EVERYONE ELSE DOES

• Coinbase Ventures’ investment may only aim to bootstrap Base, not signal future integration of Aerodrome.

• Coinbase could easily add a DEX aggregator instead, letting users choose cheaper options elsewhere.

• Coinbase selected Uniswap V4 for Verified Pools over Aerodrome due to its customizable hooks enabling KYC compliance for regulatory requirements.

$AERO AS A BASE ECOSYSTEM BET WITH UNLIMITED SUPPLY AND WEEKLY TOKEN EMISSIONS

• Currently $AERO is seen as beta to the Base ecosystem with no $BASE token. When $COIN comes onchain (expected in 2025) will that capital move from $AERO to $COIN?

• Ongoing emissions for liquidity providers create inflationary pressure.

• 450M veAERO tokens will unlock from 2025-2027 and will cause major sell pressure.

• Despite leading in trading volume (as shown in the chart below), Aerodrome has fallen behind Uniswap on Base, generating only half the fees ($11.14M vs. $21.48M from mid-Feb to mid-March 2025). Watching the market share vs. Uniswap here is key.

• Aerodrome is attracting yield farmers with aggressive liquidity incentives, which boosts liquidity in the short term, but triggers sell pressure and brings risks of a drop in volume if rewards fade or farmers exit.

• The bull case for Aerodrome relies on very specific speculative things to fall into place, whereas the bear case is more fundamentally driven. We lean more on the bearish side.