Aerodrome（AERO) Beginner's Guide
Aerodrome is a decentralized trading platform and liquidity infrastructure on the Base network. Key concepts include automated market makers, standard and concentrated liquidity pools, and the AERO formed after veAERO is locked, which enables a vote-escrowed governance mechanism.
Platform and Trading Mechanisms
Aerodrome operates on the Base network, allowing users to swap tokens without centralized intermediaries. Rather than relying on an order book, the platform uses smart contracts to manage liquidity pools and determines swap prices based on the ratio of assets in each pool. Liquidity providers deposit token pairs and can share trading fees in proportion to their contributions, but they also bear risks such as smart-contract risk and impermanent loss.
Two Types of Liquidity Pools
Standard pools use a constant-product formula, distributing liquidity across the full price range.Slipstream uses a concentrated-liquidity mechanism, allowing providers to select their own price ranges to improve capital efficiency within active ranges. If the market price moves outside the selected range, the position will stop earning trading fees and corresponding AERO emission rewards, requiring ongoing management.
AERO and veAERO Governance
AERO is the platform's transferable native token, primarily used as a liquidity reward, and can be locked for up to 4 years to obtain veAERO. The longer the lock-up period, the greater the voting weight.veAERO holders vote weekly to determine how many AERO emission rewards each liquidity pool receives, and share the trading fees generated by the pools they support.
Risks to Understand Before Participating
Providing liquidity does not provide fixed returns: changes in asset prices can cause impermanent loss, and smart contracts may contain vulnerabilities not detected by audits.AERO is continuously issued and has no hard supply cap, creating inflation risk; locked AERO cannot be sold or transferred before the lock-up period ends. Concentrated-liquidity positions may also stop generating returns when they move outside the active range.
Original Tutorial
https://www.binance.com/zh-CN/academy/articles/what-is-aerodrome-aero
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