Aerodrome Finance is a decentralized exchange and liquidity hub on the Base blockchain. Traders swap tokens through its pools, liquidity providers supply assets to those pools, and AERO is the protocol’s token. AERO can be locked to create veAERO, a non-transferable voting position that decides where the protocol’s AERO emissions go. Understanding the difference between the token, the lock, and the pools is the key to using Aerodrome safely.
What Aerodrome Finance does
Aerodrome is a decentralized exchange (DEX). Instead of a company matching buyers and sellers, trades run against pools of token pairs that users fund. The Aerodrome Foundation’s AERO legal disclosure, published July 21, 2025, describes the protocol as “a next-generation automated market maker (AMM) designed to serve as Base blockchain’s central liquidity hub.” Aerodrome launched on August 28, 2023, according to the same disclosure.
The protocol has three groups of participants: traders who swap tokens and pay trading fees, liquidity providers (LPs) who deposit assets into pools, and AERO holders who lock tokens to vote on incentives. Each group touches a different part of the system, which is why the protocol is easy to misread if you only look at the token.
AERO and veAERO: two different things
AERO is the transferable token. Holding it does not give you the ability to direct emissions or collect voting rewards. To take part in governance, you lock AERO, and the lock produces veAERO, an ERC-721 NFT that represents your locked position. Aerodrome’s contracts specification describes voting power as depending on the remaining lock term.
| Feature | AERO (liquid token) | veAERO (locked position) |
|---|---|---|
| Form | Transferable token | ERC-721 NFT representing a locked AERO position |
| How you get it | Held in a wallet | Created by locking AERO for a chosen duration of up to four years |
| Voting on gauge emissions | Not available from holding AERO alone | Available; voting power depends on the remaining lock term |
| Voting rewards | Not available from holding AERO alone | Available to voters, as described below |
| Voting power over time | Not applicable | Decays over time for ordinary locks |
How liquidity providers earn
An LP has two routes, and the official documentation says a single deposit cannot receive both kinds of reward at once. The choice depends on whether the pool is eligible for the emissions program.
| Option | What the LP does | What the LP earns | Requirement |
|---|---|---|---|
| Gauge staking | Stakes an eligible pool position in its gauge | AERO emissions | The pool must be listed and have a gauge |
| Unstaked liquidity | Leaves the position unstaked in the pool | Swap fees paid directly | Available in pools outside the emissions program |
The practical consequence is that a pool’s advertised incentives and its fee income are not automatically additive. Before depositing, check whether the pool has a gauge, and decide which reward path you want, rather than assuming you will collect both.
How veAERO voting and revenue work
veAERO holders allocate their voting power across eligible pool gauges. Those votes shape each pool’s share of AERO emissions. In return, voters can receive fees and incentives tied to the pools they support. Two details matter here.
Revenue timing
According to the official documentation, exchange revenue is distributed weekly to veAERO voters. The timing differs by source:
- Swap fees accrued in one week are distributed during the following period.
- Third-party voting incentives are distributed in the period in which they are deposited.
Protocol fee take
The documentation, as accessed in 2026, lists a default protocol fee take of 10% in emissions-eligible Slipstream (concentrated-liquidity) pools. This is a configurable protocol parameter, not a fixed property of every pool, so read the current figure in the documentation before you calculate expected returns.
Lock mechanics you need to understand
Locking AERO commits the underlying tokens for the duration you choose, up to four years under the documented mechanics. For ordinary locks, veAERO voting weight declines as the remaining lock term runs down. This means a lock that looked strong when created will carry less voting weight later unless the position is managed or relocked, so the lock length is a decision you revisit, not a one-time setting.
Risks and control surface
AERO has no asset backing
The Aerodrome Foundation’s legal disclosure states that AERO has no intrinsic value and no asset backing. It gives holders no redemption right against the issuer for fiat or other assets. The disclosure names protocol usage, market sentiment, and broader cryptocurrency market conditions as factors that can move the token’s price.
Locked tokens are not liquid
Because a lock commits tokens for a fixed term, you cannot rely on selling locked AERO during a downturn. Keep only the portion you can hold through the lock period and through price movements.
Administrative controls
The contracts specification documents administrative and governance controls, including the ability to pause pools and to configure fees for specific pools. It also describes an emergency council with authority over managed NFTs. These mechanisms are part of the protocol’s control surface. They are not a guarantee that a pool or position is safe.
Rewards are not promised
Rewards depend on protocol activity, pool eligibility, how votes are cast, and the emissions and fee settings in force at the time. A reward source that exists today is not a promise of the same return later.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Changes to watch
Aerodrome’s documentation has referred to an intended 2026 merger with Velodrome and a planned transition for AERO, and says further details of the new emissions system are still to come. Do not assume final merger mechanics or transition terms until you have checked the current official documentation and any announcements from the Aerodrome Foundation, because these terms may have changed since the material was published.
Checklist before you participate
- Confirm whether the pool is listed and has a gauge before choosing between gauge staking and unstaked swap fees.
- Check the current protocol fee take in the documentation rather than relying on a figure from an older article.
- Decide the lock length knowing that ordinary veAERO voting power decays as the term runs down.
- Treat locked AERO as illiquid for the full lock period.
- Re-check the documentation for the status of the Velodrome merger and AERO transition.
This article does not cite third-party usage statistics such as total value locked, trading volume, or user counts, because no independently verified figures are available here. Check live dashboards and the documentation for current data, and note the date of any figure you use.
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