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What Is Aerodrome AMM and How to Buy AERO Tokens?

2024-03-21 13:05:33

In our commitment to broaden our offerings continually, we are introducing a new project addition - Aerodrome Finance. Aerodrome Finance is a next-generation automated market maker (AMM) designed to serve as Base's primary liquidity hub

This article explores Crypto Automated Market Makers (AMMs) and introduces Aerodrome, an AMM serving as the liquidity hub for the Base blockchain. We'll cover how Aerodrome Finance works, its unique features, and its native token AERO. We'll delve into AERO tokenomics, token statistics, and the key features of Aerodrome Finance. Finally, we'll provide steps to buy and trade the AERO token.

What Is AMM and How Does a Crypto AMM Work?

An automated market maker (AMM) is a type of decentralized exchange that uses pooled liquidity and pricing algorithms to facilitate automated crypto trading without order books. Traders swap between assets in liquidity pools, with prices adjusting based on supply and demand. Aerodrome is an example of an AMM. Aerodrome Finance is a next-generation automated market maker designed to serve as the central liquidity hub and trading platform on the Base blockchain.

What Is Aerodrome Finance?

Aerodrome Finance is the central trading and liquidity marketplace on the Base blockchain. It is a next-generation automated market maker (AMM) designed to serve as Base's primary liquidity hub, combining a powerful liquidity incentive engine, a vote-lock governance model, and a user-friendly experience. Aerodrome inherits the latest features from Velodrome V2, a previous AMM protocol.

What makes Aerodrome Finance unique is its innovative incentive structure and governance model. It rewards participants who contribute to the protocol's sustainable growth, with 100% of the protocol's incentives and fees going to veAERO voters. These voters lock their AERO tokens to convert them into veAERO, a non-fungible token (NFT) that represents their voting power. The longer the lock period, the higher the voting weight. Voters can then vote on which liquidity pools will receive AERO emissions, allowing them to build liquidity at a low cost.

Aerodrome Finance works by attracting liquidity from traders and liquidity providers. Traders can swap tokens with minimal slippage and pay low fees to AERO lockers. Liquidity providers deposit trading tokens and receive AERO emissions as rewards. The protocol offers incentives to veAERO voters to attract votes and AERO emissions to their pools. Voters receive 100% of the incentives and fees for the pools they vote for. This self-optimizing liquidity flywheel and anti-dilution rebases for voters help sustain the protocol's growth.

What Is the AERO Token?

AERO is the native ERC-20 utility token of the Aerodrome protocol. It is distributed as emissions to liquidity providers who supply liquidity to Aerodrome's trading pools, rewarding them for their contributions. AERO holders can lock their tokens to receive veAERO NFTs, granting them voting rights to determine how future AERO emissions are distributed across the various liquidity pools. These veAERO voters receive 100% of the trading fees generated by the protocol, proportional to their locked AERO amounts, incentivizing them to allocate emissions intelligently. 

AERO Tokenomics

The Aerodrome protocol utilizes two distinct tokens to facilitate its utility and governance mechanisms. The AERO token, an ERC-20 standard token, serves as the utility token for the protocol. It is distributed as emissions to liquidity providers who contribute to the platform's liquidity pools. On the other hand, the veAERO token, structured as an ERC-721 non-fungible token (NFT), is employed for governance purposes. 

Any AERO token holder can participate in the governance process by vote-escrowing their tokens, which involves locking them for a specified period, ranging up to four years. In exchange, they receive a veAERO NFT, also known as a Lock or veNFT. The longer the lock duration, the higher the voting power or weight assigned to the underlying locked balance, following a linear relationship. For instance, locking 100 AERO for 4 years would yield 100 veAERO, while locking the same amount for 1 year would result in 25 veAERO.

The protocol also offers an Auto-Max Lock feature, which treats the Aerodrome Locks (veNFTs) as being locked for the maximum duration of 4 years, preventing any decay in their voting power. This feature can be toggled on or off for each individual Lock (veNFT).

AERO Token Distribution

AERO Token Statistics

Token Symbol: AERO

Total Token Supply: 812.05M  AERO

Market Capitalization: $129 Million

Trading Price: $0.8

Cryptocurrency Rank: #2435

*Data source: The table above is real-time data from Coinmarketcap as of March 21, 2024

Features of Aerodrome Finance

Some of the features of Aerodrome Finance include:

  1. Stable & Volatile Trading for Low Fees: Aerodrome enables trading of both stable and volatile cryptocurrency assets with low trading fees for users.
  2. 100% of Protocol Incentives and Fees Go to Voters: All incentives from the protocol emissions as well as trading fees generated are distributed to veAERO holders who have voting rights based on their locked AERO tokens. 
  3. Liquid Locked Positions in the Form of NFTs: AERO holders can lock their tokens to receive veAERO NFTs, representing their locked and vote-escrowed position, which remain liquid and transferable.
  4. Permissionless Pools, Gauges, and Incentives: Aerodrome allows anyone to create new liquidity pools, gauges for staking liquidity, and configure incentives in a permissionless manner.
  5. Self-Optimizing Liquidity Flywheel: The ability to create pools/incentives in a permissionless way enables a self-sustaining liquidity flywheel on the protocol.
  6. Anti-dilution Rebases for Voters: The voting power of veAERO holders increases over time relative to the AERO token supply growth, protecting their governance rights from dilution.

How to Buy and Trade AERO Tokens?

CoinEx is a global cryptocurrency exchange, trusted by 5+ millions of users worldwide with 100% reserve. With 900+ tokens supported, including AERO, users can now trade easily and seamlessly. To purchase AERO tokens on CoinEx, follow the steps below.

  1. Create an Account: Start by signing up for a CoinEx account. 
  2. Deposit Funds: After logging in, deposit funds into your CoinEx account using any supported cryptocurrencies or deposit methods available on the exchange. Having funds in your account enables you to execute trades seamlessly.
  3. Navigate to AERO Trading Page: Once your account is funded, go to the dedicated AERO trading page on CoinEx. You can find a search box and enter the term AERO to swiftly locate the trading pair associated with AERO tokens.
  4. Choose a Trading Pair: Select the trading pair AERO/USDT if you'd like to trade AERO against USDT (Tether).
  5. Specify the Purchase Amount: Determine the quantity of AERO tokens you want to purchase. Input the amount in the trading interface, which will calculate the corresponding cost based on the current market price.
  6. Execute the Trade: With the specified amount, proceed to execute the trade. Confirm the details, and if you are satisfied, submit the order. 

By following these comprehensive steps, you can easily trade AERO tokens on CoinEx, taking advantage of the available trading pairs.

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