Milk Road PRO: Token Snapshot

WHAT IS IT?

Aerodrome is the top DEX on Base, Coinbase's Layer 2 network. It’s currently #1 in trading volume, active wallets (above $0.01), and total value locked.

Its native token, $AERO, currently has a market cap of $400M and a fully diluted valuation of $777M (as of March 21, 2025). There’s no maximum supply, meaning there's no fixed upper limit on how many tokens can be created.

Aerodrome’s vote-escrow model uses veAERO, where users lock $AERO tokens to receive a veAERO token. This grants voting power to direct $AERO emissions to specific liquidity pools. veAERO holders also earn 100% of the trading fees from the pools they vote for.

BULL CASE **(OPPORTUNITIES)**

AERODROME THE NUMBER ONE DEX ON BASE

Aerodrome’s WETH/USDC trading volume equals half of Uniswap V3's on Ethereum.
Aerodrome volume also matches half of Coinbase’s centralized exchange volume.
$AERO has a strong community backing it as many Base enthusiasts see it as the beta to the Base ecosystem, since Base doesn’t have a token.

COINBASE VENTURES MADE A STRATEGIC INVESTMENT

Coinbase Ventures invested in Aerodrome (Feb 2024), which could lead to a future integration into Coinbase’s main platform.
Coinbase previously followed this strategy successfully with Morpho (the lending protocol).
Integration could expose Aerodrome and $AERO to Coinbase’s user base of 100M+.

$AERO INCLUDED IN COINBASE 50 INDEX (MARCH 2025)

Inclusion in Coinbase 50 Index positions $AERO for passive investment inflows.
More fund products will incorporate the index into their strategies, driving demand for $AERO.

BEAR CASE **(CHALLENGES)**

AERODROME USES THE SAME AMM MODEL EVERYONE ELSE DOES

Coinbase Ventures’ investment may only aim to bootstrap Base, not signal future integration of Aerodrome.
Coinbase could easily add a DEX aggregator instead, letting users choose cheaper options elsewhere.
Coinbase selected Uniswap V4 for Verified Pools over Aerodrome due to its customizable hooks enabling KYC compliance for regulatory requirements.

$AERO AS A BASE ECOSYSTEM BET WITH UNLIMITED SUPPLY AND WEEKLY TOKEN EMISSIONS

Currently $AERO is seen as beta to the Base ecosystem with no $BASE token. When $COIN comes onchain (expected in 2025) will that capital move from $AERO to $COIN?
Ongoing emissions for liquidity providers create inflationary pressure.
450M veAERO tokens will unlock from 2025-2027 and will cause major sell pressure.

WHAT TO WATCH FOR

Despite leading in trading volume (as shown in the chart below), Aerodrome has fallen behind Uniswap on Base, generating only half the fees ($11.14M vs. $21.48M from mid-Feb to mid-March 2025). Watching the market share vs. Uniswap here is key.
Aerodrome is attracting yield farmers with aggressive liquidity incentives, which boosts liquidity in the short term, but triggers sell pressure and brings risks of a drop in volume if rewards fade or farmers exit.
The bull case for Aerodrome relies on very specific speculative things to fall into place, whereas the bear case is more fundamentally driven. We lean more on the bearish side.