The acquisition comes at a time when decentralized exchanges are establishing a leading position on Coinbase L2 Base, while their growth is raising questions about the sustainability of token-based incentives.
AERO holders can take part in the protocol’s governance process by locking up their tokens for a period of time and voting escrow.
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Posted on October 8, 2024 at 5:27 PM ET.
Venture firms Spartan Group and Pantera Capital have added AERO, the native token of decentralized exchange Aerodrome, a dominant player within the increasingly popular Coinbase-developed L2 network Base, to their on-chain holdings .
On Monday, Spartan Group (0x770) exchanged 460 ETH for approximately 903,000 AERO in two transactions from a single address, while Pantera (0x59c) exchanged approximately 479,000 tokens from an unknown wallet, according to data from blockchain analytics firm Nansen. is shown to have been received.
Spartan Group’s acquisition of AERO was the first time an address had been published publicly on AERO, but for Pantera’s address, the company acquired its first 474,749 AERO tokens on October 4, per on-chain data. This is the second time in the last 4 days that I have received it.
If both entities decide to lock their tokens into voting escrow, they can vote on the protocol’s governance decisions. “Funds are important stakeholders in any DeFi ecosystem, and it’s very exciting to see them deepening their engagement with Aerodrome,” said Alexander Cutler, lead contributor at DEX on Unchained. is written in.
AERO’s price has experienced extraordinary growth, increasing nearly 4,410% over the past year and 26% in the past 14 days to trade at $1.20, but still, due to the low cost basis of the AERO acquisition , these two venture companies are currently in the red. About $1.24 and $1.25. Spartan Group and Pantera Capital did not immediately respond to Unchained’s requests for comment.
Read more: Coinbase Ventures and US Head Michael Collins Scoop Airfield’s AERO Token
The investment firm’s addition of Aerodrome to its holdings comes as the company sets new records for transaction volume and total value locked. Furthermore, since the beginning of the year, the decentralized exchange has ranked 7th among all protocols with $142 million in fees generated, leading to liquidity staking leader Lido Finance, synthetic dollar issuer Etena, and It outperforms other trading platforms such as Base, which is a blockchain built on Aerodrome. , per token terminal of the analysis platform.
Base has experienced significant growth, with daily active addresses and transactions and total value locked (TVL) hitting an all-time high of $2.3 billion last week, according to data from on-chain intelligence platform Artemis.
“A key driver of Base’s growth has been DEX Aerodrome, contributing more than $1 billion to TVL, up from $120 million in January,” according to a research report released by Wintermute on Monday. “There is.” “Aerodrome has established itself as the largest protocol on Base, surpassing DeFi giants like Uniswap and Aave on Base in terms of total value locked.”
Read more: What Base’s fast-growing revenue and usage mean for Coinbase stock
tread carefully
However, despite the rise of Aerodrome and its role in driving activity to Base, its explosive growth has come at a significant cost: the use of AERO token incentives to attract liquidity. Ta.
“In 2024, $355 million worth of AERO tokens were granted to liquidity providers, resulting in negative annual net income of $195 million. According to a report by Wintermute, Aerodrome earned $1 in revenue. As a result, “Base’s success, especially through Aerodrome, raises questions about the sustainability of token-based incentives and user retention.”
At press time, some liquidity providers allow you to get over 700% APR on multiple pools such as WETH/USDC, USDC/cbBTC, WETH/USDT, WETH/BRETT, WETH/DEGEN, MOG, etc. In some memecoin pools, /WETH has a 4-digit APR.
Meanwhile, the protocol is programmed to reduce the token’s inflationary emissions by 1% every epoch for a 7-day period starting every Thursday and ending every Wednesday.
Furthermore, “Once emissions programmatically drop below 9 million per epoch, or around epoch 67, veAERO voters (those who escrow voting AERO tokens) will control Aerodrome’s monetary policy through the Aero Fed system. ”, the protocol document states. At this point, voters will be able to increase, decrease, or maintain emissions each epoch.
The airfield is currently in Epoch 58, with about 11 weeks left until voters begin taking control of the Aero Fed system.
Correction (October 8, 5:51 a.m. ET): An earlier version of this article incorrectly identified Alexander Cutler as the co-founder of Aerodrome. He is a core contributor. This error has been fixed.
