Aerodrome Finance and Velodrome merge to launch Aero

Aerodrome Finance and Velodrome are combining their decentralized exchange operations under a new platform called Aero, which is set to operate across seven networks and consolidate the projects’ liquidity, governance, and token systems.

Aero will support Ethereum mainnet, Base, Robinhood Chain, Ink, OP Mainnet, Arc, and Arbitrum, according to a Wednesday statement from Dromos Labs, the development company behind both exchanges. The rollout would place Aerodrome’s Base-focused exchange and Velodrome’s OP Mainnet operation within a single onchain spot-trading product.

The merger also requires a token transition. Existing AERO and VELO tokens will migrate to a newly issued AERO token, while veAERO and veVELO — tokens used for governance and reward participation — will convert into sAERO. Holders using private wallets will need to complete the migration through the project’s designated upgrade sites rather than receiving the new assets automatically.

Dromos Labs, founded and led by chief executive Alex Cutler, is positioning Aero as a unified liquidity venue for a group of networks that it says process roughly $120 billion in decentralized exchange trading each month.

Base and OP Mainnet liquidity move under one platform

The launch brings together two exchanges that have become central liquidity venues on their respective networks. Aerodrome accounted for 58% of decentralized exchange trading volume on Base during the third quarter, while Velodrome represented 60% of DEX volume on OP Mainnet over the same period, according to the project’s statement.

Aerodrome also led decentralized exchanges in Bitcoin-dollar trading volume during the quarter, the statement said. That activity gives the merged platform an established base of traders, liquidity providers, and governance participants rather than requiring Aero to build market depth from scratch.

The seven-network model places the project in direct competition with multichain decentralized exchanges that have generally expanded through separate deployments on different chains. Aero’s approach is to merge the operations and economic systems of two existing brands into one platform, potentially making it easier for liquidity providers to manage incentives across connected networks.

The project reported roughly $422 million in combined value locked immediately before the transition. Value locked measures crypto assets deposited into a protocol’s smart contracts, though it can rise or fall with token prices and user withdrawals.

New AERO token sets the post-merger ownership split

The token migration gives Aerodrome holders the overwhelming share of the new AERO supply. Users from Aerodrome’s network will receive 94.5% of the new token allocation, while Velodrome users will receive 5.5%, reflecting the relative scale of the two ecosystems at the time of the merger.

AERO and VELO holders must first claim any outstanding rewards and remove existing governance votes before exchanging their tokens. The projects said the migration will not occur automatically for tokens held in self-custody wallets, making the upgrade process particularly relevant for users who have supplied liquidity, locked tokens, or participated in voting.

The new system will use sAERO as its staked governance asset. Staking AERO is designed to give participants influence over how liquidity rewards are distributed, continuing a model familiar to users of both Aerodrome and Velodrome.

The protocol’s planned annual token emissions are set at 8%, according to the project’s migration terms. Emissions can supply rewards for liquidity providers and governance participants, but they also expand token supply over time. The effect on individual holders will depend on how much of the new issuance is absorbed by demand for staking, trading, and liquidity provision.

Predictive allocation targets reward spending

Aero’s main economic addition is a system called Predictive Allocation. Participants who stake AERO will be able to direct a liquidity-reward budget toward markets they expect to generate the most revenue.

The mechanism effectively turns reward distribution into a recurring market decision. Instead of a protocol team setting all incentives directly, staked-token holders can allocate emissions toward pools they believe will attract sustainable trading volume and fees.

That structure gives governance participants a reason to focus on fee generation rather than simply chasing temporary deposits. A pool with large token incentives can attract liquidity quickly, but it may lose that capital once rewards decline. Aero’s model is intended to reward participants who can identify markets capable of producing recurring trading income.

The project has also set a 47-hour waiting period between reward-allocation changes. The delay limits rapid repositioning around each voting or reward cycle and gives liquidity providers more visibility into how incentives may change. It also means participants seeking to adjust allocations will need to plan around the protocol’s schedule rather than reacting immediately to short-term market moves.

Cross-network trading and dynamic fees

Aero is launching Metaswaps, a feature designed to connect trading between supported chains through onchain liquidity. Cross-network swaps are often fragmented, requiring users to bridge assets separately before trading on another network. Metaswaps aims to use liquidity across Aero’s deployments to make that process more integrated.

The effectiveness of the feature will depend on the depth of liquidity available on each network and the costs of moving value between chains. A cross-network trading tool can reduce operational steps for users, though it also introduces additional routing and smart-contract complexity compared with a swap confined to one blockchain.

A second upgrade, Slipstream V3, introduces dynamic trading fees that rise when markets become more volatile. The design is intended to compensate liquidity providers when rapid price movements increase the risk of holding assets that may be arbitraged against external markets.

Slipstream V3 also includes maximal extractable value, or MEV, capture on supported Layer 2 networks. MEV refers to value that can be extracted by changing the order of transactions in a block, often through arbitrage or liquidation strategies. By directing some of that activity back into the protocol, Aero aims to retain revenue that might otherwise flow to transaction-ordering bots or outside searchers.

The merger therefore combines more than two exchange brands. It shifts Aerodrome and Velodrome into a shared token, shared governance structure, and multichain liquidity strategy, with the success of Aero likely to rest on whether its reward system can keep capital productive across seven networks rather than merely distributing emissions across them.