Aerodrome has achieved record levels of weekly trading volume, gaining a significant foothold within Coinbase’s Layer 2 (L2) network, Base. The decentralized exchange (DEX), which began operations in August 2023, achieved a trading volume of approximately $4.7 billion for the week starting September 29, 2024. This figure exceeded the total of the previous two weeks.
Slipstream Pools Played a Role in Increasing Transaction Volume
According to DefiLlama data, the majority of Aerodrome’s transaction volume originated from Slipstream pools. Slipstreams are concentrated liquidity pools that enable token swaps to occur with low slippage. This minimizes the difference between investors’ expected price and actual price.
With the launch of Aerodrome’s Slipstream in May, it provided concentrated liquidity on the exchange and trading volume increased significantly.
Middle East Conflict Caused Liquidity Rebalancing
Over the past seven days, geopolitical tensions such as the military conflict between Iran and Israel have led to fluctuations in the cryptocurrency market. This uncertainty caused liquidity providers to rebalance their positions and focus on higher volumes in liquidity management. This happened in order to reduce risks or make the most of market fluctuations.
“While Aerodrome and Base’s increased DEX volumes are a positive sign, this does not necessarily reflect an increase in clearing activity, but rather rebalancing within liquidity ranges,” said Toe Bautista, research analyst at GSR.
Incentives Provided for High APRs
Annual percentage rates (APR) for Aerodrome’s most concentrated liquidity pools can run into four digits. For example, the USDC/cbBTC pool is achieving 1,182.2 percent APR at the time of writing with a total value lock (TVL) of $12.7 million. These high APRs encourage users to provide liquidity to the DEX.
The increase in trading volume on Aerodrome occurred in the same week as the total key value of the DEX on the Base network increased to over $1 billion. This represents an 86 percent increase since early September.
AERO, Aerodrome’s mainnet asset, has been flat over the last seven days, rising less than 2 percent, but has risen 94 percent to $1.07 in the last 30 days. AERO holders have the opportunity to earn a share of the fees generated by the protocol by staking their coins.
These developments within the Aerodrome and Base network continue to increase the importance of decentralized exchanges and Layer 2 solutions in the cryptocurrency ecosystem.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
