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Aerodrome has secured a significant position within Coinbase‘s Layer 2 (L2) network, Base, achieving record weekly trading volumes. Since its launch in August 2023, the decentralized exchange (DEX) reached approximately $4.7 billion in trading volume for the week starting September 29, 2024. This figure surpasses the total of the previous two weeks combined.
Slipstream Pools Contribute to Increased Trading Volume
According to DefiLlama data, a substantial portion of Aerodrome’s trading volume originated from Slipstream pools. Slipstream refers to concentrated liquidity pools that enable token swaps to occur with minimal slippage. This setup minimizes the disparity between expected prices and actual transaction prices for traders.
Since the launch of Slipstream in May, concentrated liquidity has been provided to the exchange, leading to a notable increase in trading volume.
Middle East Conflict Causes Liquidity Rebalancing
Geopolitical tensions, such as military clashes between Iran and Israel in the past week, have triggered fluctuations in the cryptocurrency market. This uncertainty has prompted liquidity providers to rebalance their positions and seek higher volumes for effective liquidity management. Such actions aim to mitigate risks or optimally leverage market volatility.
GSR research analyst Toe Bautista stated, “While the increasing DEX volumes of Aerodrome and Base are positive signs, it does not necessarily reflect an increase in swap activities; rather, it indicates rebalancing within liquidity ranges.”
The annual percentage rates (APR) for Aerodrome’s most concentrated liquidity pools can soar into four-digit figures. For instance, the USDC/cbBTC pool achieves an APR of 1,182.2% with a total value locked (TVL) of $12.7 million at the time of writing. These high APRs incentivize users to provide liquidity to the DEX.
The rise in trading volume on Aerodrome coincided with a significant increase in the total locked value of the DEX on the Base network, surpassing $1 billion. This represents an 86% increase since the beginning of September.
AERO, the native asset of Aerodrome, has shown steady performance over the past week with less than a 2% increase, while it rose by 94% to $1.07 over the last 30 days. AERO holders can stake their tokens to partake in the fees generated by the protocol.
These developments within Aerodrome and the Base network continue to enhance the significance of decentralized exchanges and Layer 2 solutions in the cryptocurrency ecosystem.
