Aerodrome DEX on Base hosts the most active liquidity pair

Aerodrome has gained ground in its competition with other decentralized exchanges with growing liquidity and trading volumes. Aerodrome uses Wrapped Ethereum (WETH) to form pairs and lock in gains, like other DEXs. 

Aerodrome noted that its WETH/USDC pair surpassed a similar liquidity pool on Uniswap. The Slipstream pool, containing liquidity in both WETH and USDC, reached peak volumes in the past week. DEX Screener data shows the pairing on Aerodrome surpassed a similar market on Uniswap V3. 

The Aerodrome pairing also retained its activity for most of the past two weeks, reaching daily volumes of $1.5B during the seven-day period. The pair shows the potential of on-chain trading, as it rivals centralized pairs in terms of daily activity. The Aerodrome DEX regularly posts $171M in trading volumes, while the WETH/USDC pair has the largest volume at $138M in 24 hours.

The Aerodrome pairing also carries more than $16.6M liquidity, compared to $13.5M for the Uniswap V3 pair on the Base blockchain. Uniswap remains the main competitor, though Aerodrome aims to gain the status of a native DEX. 

Aerodrome aims to become the central liquidity hub on Base

Currently, most new meme tokens on Base still go through Uniswap. The DEX is active both in its V2 and V3 pools, depending on the token type. At one point, around 87% of all Base swapping activity went through Uniswap. 

As of August 2024, Aerodrome expanded its presence, taking up 56% of trading volumes. The DEX aims to become the equivalent of Solana’s Raydium while concentrating the biggest share of liquidity on Base. 

The DEX also gets a boost from the increased supply of USDC on Base. USDC became the most widely used stablecoin on the tokenless blockchain, surpassing $80B in transfers for July. The usage of USDC was a constantly expanding trend in 2024, as the stablecoin was distributed to 1M Base wallets.

Slipstream boosts volumes with concentrated liquidity

The Aerodrome Slipstream pair has surpassed Uniswap on previous high-activity days. The pair is specifically engineered to produce high volume while generating fees for AERO token holders. The Slipstream pair also aims to have minimal slippage. 

As a result of the Slipstream launch in April, Aerodrome lined up among leading DEXs on Base. The success of Slipstream follows a similar performance from the Velodrome DEX on Optimism. 

Liquidity providers receive additional incentives to supply the pair and not withdraw their WETH or USDC. In addition to liquidity fees, they receive a share of trading fees. The trading pair also has faster oracle updates, in addition to lower slippage. 

Slipstream was introduced to Aerodrome while Base was in the process of onboarding new users. The new liquidity incentives coincided with the rapid climb of the Aerodrome DEX. The exchange also carried regular pairs with riskier slippage. 

Concentrated liquidity is deployed at specific price ranges to better reflect the usual behavior of the market. This ensures safety due to a greater market depth, avoiding volatility spirals. Most of the liquidity is concentrated around the active price range of WETH, creating an easier trading experience. 

To incentivize liquidity, the DEX shares a significant APR with liquidity providers. Some of the riskier concentrated liquidity pairs have the highest APR . The inherent risk of supplying liquidity means Aerodrome will have a limited list of concentrated liquidity pairs. 

Aerodrome currently makes up around 30% of all value locked on Base, which stabilized at around $1.5B . Of that liquidity, the relatively new DEX carries around $577.92M , while Uniswap is in second place with $188.25M.

Aerodrome is not yet overwhelmed by meme tokens and instead concentrates on cultivating liquidity for DeFi and general swaps. However, the high-output pair also translated into high fees. For the past week, the DEx has kept its third place in terms of fee generation, with around $3.3M in weekly earnings. Earnings spiked higher during unusual trading days, as Aerodrome’s pairs immediately reacted to the August 5 market turbulence.

The fee growth has not been reflected in the AERO token price. AERO traded at $0.63, bound in a range after reaching a yearly peak of $1.99. The popularity of AERO increased as the Base blockchain surpassed the milestone of 1M daily active users and continued to see an inflow of active new wallets .

Cryptopolitan reporting by Hristina Vasileva