Aerodrome, a decentralized exchange (DEX) operating on Coinbase’s Layer 2 (L2) network Base, has reached record-high weekly trading volumes despite ongoing market volatility. Launched in August 2023, Aerodrome achieved a trading volume of around $4.7 billion for the week starting September 29, 2024. This figure surpasses the combined total of the previous two weeks.
Slipstream Pools Boost Trading Volume
According to DefiLlama data, much of Aerodrome’s volume came from Slipstream pools, which are concentrated liquidity pools that allow token swaps with minimal slippage. This feature minimizes the difference between the expected price and the executed price, offering a more efficient trading experience for investors.
Since Slipstream’s launch in May, the exchange has seen a noticeable boost in concentrated liquidity, directly impacting Aerodrome’s trading volume growth.
Middle East Conflict Triggers Liquidity Rebalancing
Geopolitical tensions, such as the military conflict between Iran and Israel, have led to significant market fluctuations over the past week. These uncertainties prompted liquidity providers to rebalance their positions, leading to higher trading volumes as they managed risks or capitalized on the volatility.
Toe Bautista, a research analyst at GSR, commented, “While the rising DEX volumes on Aerodrome and Base are positive indicators, this doesn’t necessarily reflect an increase in trading activity. Instead, much of it is liquidity rebalancing within set ranges.”
High APR Incentives Attract Liquidity Providers
One of the key drivers of Aerodrome’s success is the high annual percentage rates (APR) offered by its most concentrated liquidity pools, reaching as high as four figures. For instance, the USDC/cbBTC pool currently has a total value locked (TVL) of $12.7 million, offering an APR of 1,182.2%. These high returns incentivize users to provide liquidity to the DEX.
The surge in trading volume also coincided with Aerodrome’s total value locked on the Base network surpassing $1 billion, marking an 86% increase since early September.
Meanwhile, AERO, the main token of the Aerodrome platform, showed a modest gain of less than 2% in the past week, but over the last 30 days, it surged 94% to reach $1.07. AERO holders can stake their tokens to earn a share of the protocol’s fees.
The developments within Aerodrome and the Base network highlight the growing importance of decentralized exchanges and Layer 2 solutions in the cryptocurrency ecosystem.
Aerodrome, trading volume, Slipstream pools, Base network, decentralized exchange
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