Aerodrome Finance (AERO)

Tokenomics & Utility

AERO and veAERO

AERO is a transferable ERC-20 token on Base. Locking AERO creates veAERO, an ERC-721 token represented by a non-fungible token, or NFT. That NFT records a locked position and carries voting power. A lock can last from one week to four years. Voting power depends on both the amount locked and the time remaining; a longer lock gives more power for the same amount of AERO. As time passes, voting power falls unless the holder extends the lock or uses the auto-max-lock feature. (aerodrome.finance)

veAERO holders can direct emissions toward pools and receive voting rewards tied to the pools they support. Those rewards include eligible swap-fee revenue and incentives supplied by others. The protocol also provides a rebase mechanism that gives locked positions additional tokens to reduce the effect of new AERO issuance on their voting power. Relay, an optional tool in Aerodrome’s interface, can vote and compound rewards for a locked position automatically. (aerodrome.finance)

Initial distribution and ongoing issuance

Aerodrome began with 500 million AERO. Of that initial amount, 450 million was distributed in locked veAERO positions: 200 million for veVELO lockers, 105 million for a public-goods fund, 95 million for development-team funding, and 50 million for Flight School. The remaining 50 million was allocated as liquid AERO for voter and initial-liquidity incentives. Flight School later concluded, and its voting power was integrated into the public-goods fund. (aerodrome.finance)

New AERO is issued to support liquidity rewards, so the initial supply was not a fixed lifetime limit. Aerodrome’s documentation describes weekly emissions and a development allocation equal to 5% of those emissions. The important distinction for readers is between issuance, which creates rewards for eligible pools, and voting, which helps determine where those rewards go. (aerodrome.finance)