Aerodrome, a decentralized exchange on the Base platform, captures a significant share of trading turnover in the CL segment. From a recent announcement, company officials noted that its Slipstream pools capture 90% of the total volume of concentrated liquidity on Base despite competition from other players such as Uniswap V3.
Aerodrome Dominates Concentrated Liquidity on @base ✈️
Aerodrome’s Slipstream pools consistently capture the majority of CL. Last week, 90% of the volume flowed through Aerodrome compared to just 10% for Uniswap V3.
100% of swap fees are distributed to veAERO voters. pic.twitter.com/hQcshElf9m
— Aerodrome (@AerodromeFi) October 14, 2024
Aerodrome’s Slipstream Pools Lead the Charge
Concentrated liquidity has configured the DeFi space as a liquidity provider that can direct capital more effectively in a given price band, enhancing market depth and reducing trader’s slippage costs. Slipstream pools of Aerodrome have become the obvious solution for traders and liquidity providers in the Base network. These pools are efficient in capital utilization and provide attractive remuneration for participants, assisting Aerodrome in achieving its market leadership.
By comparison, Uniswap V3, one of the leading decentralized exchanges in DeFi projects, is far behind, taking only 10% of Base’s total trade volume. The daily volume chart that Aerodrome has provided shows this clear lead, with Aerodrome ahead of Uniswap V3 in recent months as more capital has flooded into Slipstream pools.
100% Fee Distribution to veAERO Voters
One of the factors that helped Aerodrome succeed was the correct reward system. Aerodrome returns 100% of swap fees to veAERO community members who use their AERO tokens to participate in protocol decisions and fee distribution. This provides a good reason for participants to bring liquidity and use the platform.
By incentivizing liquidity providers, traders, and governance participants, the model aims to keep all these participants actively involved in the protocol.
The Battle for Liquidity: Aerodrome vs. Uniswap V3
Aerodrome took little time to become the go-to platform for concentrating liquidity, particularly on Base, where Uniswap V3 had already established its CL model. Still, the fact that Aerodrome has managed to secure such a large portion of Base’s volume within a relatively brief period suggests that the Uniswap V3 is at a disadvantage regarding liquidity and user experience.
The gap between the Aerodrome and Uniswap V3 constantly increases, as seen in the daily volume chart. Since early May 2024, the market share of Aerodrome has increased notably.
Future Outlook for Aerodrome
To sustain this lead in the future, Aerodrome must still innovate and provide value to its users since competitors such as Uniswap V3 are currently trying to regain a market share. But, the current status of the platform and its scale in the context of concentrated liquidity indicate it can do well in Base.