Aerodrome V1
Aerodrome V1 is an AMM and liquidity-incentive market on Base. DefiLlama recorded about $105.4M on 2026-08-14, so size does not decide this file. Providing liquidity means holding two assets whose ratio the market rebalances against you: when prices diverge, the pool sells the winner and accumulates the loser, and the LP realises the shortfall against simply holding. That impermanent loss cannot be explained to this client in two sentences and is indefensible when it bites. The rejection covers the AMM category, not Aerodrome’s quality. A product without IL exposure would merit its own review.
- Ships a product line without impermanent-loss exposure that merits its own review
Watched nightly: a warning on its venues or files, or a cited document that changes, reopens the memo. The first confirmation is due 2026-11-15.
The research file
Mechanism
Aerodrome offers stable pools for correlated assets and constant-product volatile pools for uncorrelated assets; its current documentation also describes concentrated ranges. An LP contributes both pool assets and receives swap fees. Gauges can add weekly AERO emissions, but incentives compensate the inventory exposure rather than remove it.
Control and operating record
veAERO voters direct emissions among gauged pools, while documented emergency authority can pause or revive gauges and manage identifiers. Aerodrome publishes contracts and security materials. No incident-free conclusion is inferred here: a pool also inherits both token contracts, Base settlement, oracles used by integrations, and the chosen pool factory.
Exit consequences
An unstaked LP can burn its receipt for its current pro-rata reserves; a gauged receipt must first be unstaked. The assets returned need not match the deposited mix because arbitrage continuously changes pool inventory. Concentrated positions can stop earning fees outside their range, and sale or rebalance realizes the changed inventory.
Why the class rule decides
The return requires continuously making a two-sided market. Stable-asset correlation may reduce divergence but does not eliminate depeg or inventory loss; emissions can disappear by vote. The AMM-LP class therefore decides independently of Aerodrome’s size or engineering quality. Only a separable product without LP inventory exposure reopens review.
Class rule
The amm lp class is outside the approved structures, so every protocol in it is not approved until the rule changes. The rule is about the structure, not an adverse finding about this protocol, and it is not a client instruction. The events that would reopen it are listed with the memo.
Sources
The claims above trace to these. Where a number could not be independently verified, the thesis says so.
- Aerodrome Docs — liquidity pool designs · primary · accessed 2026-08-14
Supports: stable and volatile pools, constant-product invariant, concentrated ranges, fee APR - Aerodrome Docs — emissions, gauges and veAERO · primary · accessed 2026-08-14
Supports: AERO emissions, gauge voting, LP incentives - DefiLlama — Aerodrome V1 survey record · secondary · accessed 2026-08-14
Supports: survey TVL, Base deployment, protocol category
Inherited controls
The research above describes the protocol layer. Every position also inherits the asset it holds and the chain it settles on. The layer with the most administrative power sets the position’s effective control; that describes control, not quality or suitability.
| Chain | Verdict | Control | Control constraint |
|---|---|---|---|
| Base | Approved with limits | Mixed control | Coinbase, one regulated US company, operates the only sequencer, and admin keys can upgrade bridge contracts within ~7 days. |