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{"actor":"system:backfill","investigation_id":"59db25d0-c283-434e-b692-9b70ceca4fd0","kind":"publish","page_slug":"aerodrome","published_at":"2026-05-31T07:31:43.719Z","sequence_num":1,"snapshot":{"content_type":"investigation","entity_name":"Aerodrome Finance","sections":[{"content":"Aerodrome Finance was launched on August 28, 2023, by Dromos Labs, the team behind Velodrome Finance on Optimism. The protocol is positioned as the primary liquidity hub for Base, Coinbase's Ethereum Layer-2 network. Aerodrome combines design elements from Curve Finance, Convex Finance, and Uniswap, adapting the vote-escrow model through a ve(3,3) mechanism first popularized by Andre Cronje's Solidly Exchange. The project achieved $200 million in total value locked within 72 hours of launch. As of early 2026, Aerodrome holds approximately $1.3 billion in TVL, representing roughly 70% of all DEX liquidity on the Base network. The protocol has generated over $295 million in cumulative fees distributed to token holders since launch, with annualized swap revenue exceeding $200 million at peak volumes. Aerodrome launched without venture capital funding or private token sales; the initial token distribution excluded team allocations, though Coinbase Ventures later acquired an undisclosed AERO token position in February 2024.","heading":"Overview and Background","severity":"low","sources":[{"credibility":2,"name":"What Is Aerodrome Finance? Ultimate Guide to Base's Principal DEX — CoinGecko","type":"research","url":"https://www.coingecko.com/learn/what-is-aerodrome-finance-aero-base"},{"credibility":2,"name":"Aerodrome Finance Growth: Base's Leading DEX Explained — DWF Labs Research","type":"research","url":"https://www.dwf-labs.com/research/has-aerodrome-finance-become-the-leading-defi-protocol-on-base"},{"credibility":2,"name":"Aerodrome Finance (AERO) — Fundamental Analysis March 2026 | CoinStats AI","type":"research","url":"https://coinstats.app/ai/a/fundamental-analysis-aerodrome-finance"}]},{"content":"On November 21-22, 2025, Aerodrome Finance's centralized domains — aerodrome.finance and aerodrome.box — were hijacked via a DNS attack. Investigators determined that the root cause was an insider threat at NameSilo, the registrar managing the domains through Box Domains. Attackers modified the DNS records to redirect all users to a fraudulent copy of the Aerodrome interface. Visitors were prompted to connect their wallets and digitally sign a transaction appearing as the number '1', which was accompanied by unlimited ERC-20 approval requests for ETH, WETH, USDC, and other assets. Estimates of user losses range from $700,000 to over $1 million, drained within approximately one hour of the attack beginning. The attack did not compromise the underlying smart contracts, liquidity pools, or the protocol treasury. Aerodrome's team responded by warning users via official channels, directing them to decentralized ENS-based mirrors (aero.drome.eth.limo) and advising users to revoke any recent approvals using tools such as Revoke.cash. The sibling protocol Velodrome was simultaneously affected. Security firm Halborn published a post-mortem documenting the incident.","heading":"Frontend DNS Hijacking Attack (November 2025)","severity":"high","sources":[{"credibility":2,"name":"Explained: The Aerodrome Finance Hack (November 2025) — Halborn","type":"research","url":"https://www.halborn.com/blog/post/explained-the-aerodrome-finance-hack-november-2025"},{"credibility":1,"name":"Aerodrome Finance Hit by 'Front-End' Attack, Users Urged to Avoid Main Domain — CoinDesk","type":"news_article","url":"https://www.coindesk.com/web3/2025/11/22/aerodrome-finance-hit-by-front-end-attack-users-urged-to-avoid-main-domain"},{"credibility":2,"name":"DNS Hijacking at Aerodrome Finance Stirs Call for Stronger Security — OneSafe Blog","type":"news_article","url":"https://www.onesafe.io/blog/dns-hijacking-aerodrome-finance-security"},{"credibility":2,"name":"Aerodrome and Velodrome Published Report on NameSilo Hack — Incrypted","type":"news_article","url":"https://incrypted.com/en/aerodrome-and-velodrome-published-report-on-namesilo-hack/"}]},{"content":"Aerodrome Finance was built by Dromos Labs, a team that maintained pseudonymous identities throughout most of the protocol's history. The two co-founders are Alexander Cutler (CEO) and Tao Watts. Cutler has stated publicly that he only learned his colleagues' real names shortly before disclosing his own identity — a claim he made to emphasize the project's decentralized, anonymous-by-design origins. The team met in a Discord server in 2022, initially collaborating through veDAO before building Velodrome and subsequently Aerodrome. Cutler's background includes work in politics, technology, and consulting prior to entering DeFi. Tao Watts comes from a traditional finance background, focusing on portfolio allocation in asset management before moving into crypto via Ethereum and NFT investments. Additional team members named in coverage include Roy Degani, Ariel Alon, and Liran Kutas. The team's prior decision to operate pseudonymously was a risk factor common to DeFi-native projects; the team's subsequent public disclosure of identities is considered a positive transparency signal by many market observers.","heading":"Team and Founders: Pseudonymity to Public Identity","severity":"low","sources":[{"credibility":2,"name":"Aerodrome co-founder talks Aero, Uniswap feud, pseudonymity — DL News","type":"news_article","url":"https://www.dlnews.com/articles/defi/aerodrome-founder-talks-aero-uniswap-feud-pseudonymity/"},{"credibility":2,"name":"Alexander Cutler — IQ.wiki","type":"other","url":"https://iq.wiki/wiki/alexander-cutler"},{"credibility":2,"name":"Tao Watts Introduction and Work History — RootData","type":"other","url":"https://www.rootdata.com/member/Tao%20Watts?k=MjIxMDA%3D"},{"credibility":2,"name":"Alex Cutler Speaker Profile — Blockworks","type":"other","url":"https://blockworks.co/speaker/alex-cutler"}]},{"content":"AERO is the native governance and incentive token of Aerodrome Finance. The protocol applies a vote-escrow (ve) model: users lock AERO for up to four years to receive veAERO, a non-transferable voting NFT that grants governance rights, a pro-rata share of 100% of all protocol trading fees, and the ability to direct weekly AERO emissions to specific liquidity pools. The initial supply at launch was 500 million AERO. The supply is uncapped, with inflationary weekly emissions that began at 10 million AERO per epoch (2% of initial supply) and follow a decay schedule. The token distribution at launch allocated 40 million AERO (8%) for voter incentives, 10 million (2%) for genesis liquidity, 200 million (40%) as a veAERO airdrop to veVELO lockers, 105 million (21%) for public goods, 95 million (19%) for the foundation, and 50 million (10%) for Flight School — all non-foundation allocations auto-max locked. A criticism raised by Uniswap founder Hayden Adams is that Aerodrome's revenue claims are inflated because the protocol charges 100% of LP fees and cycles them back through token emissions, characterizing this as circular rather than sustainable revenue. Aerodrome disputes this framing, arguing that fee flows to veAERO holders represent genuine capital returns. The inflation mechanism and potential for governance apathy among veAERO lockers are recognized structural risks of the ve(3,3) design. From epoch 67, when weekly emissions fall below 9 million AERO, veAERO holders collectively vote on future emission levels.","heading":"Tokenomics: ve(3,3) Model and Inflation Risks","severity":"medium","sources":[{"credibility":2,"name":"Aerodrome Tokenomics: How AERO Accrues 100% of Protocol Fees — Tokenomics.com","type":"research","url":"https://tokenomics.com/articles/aerodrome-tokenomics-how-aero-captures-100-of-protocol-fees"},{"credibility":2,"name":"A closer look at the ve(3,3) tokenomics model in DeFi — OAK Research","type":"research","url":"https://oakresearch.io/en/analyses/fundamentals/a-closer-look-at-ve33-tokenomics-defi"},{"credibility":2,"name":"Aerodrome vs. Uniswap - Getting Toxic — Messari","type":"research","url":"https://messari.io/report/aerodrome-vs-uniswap-getting-toxic"},{"credibility":2,"name":"Uniswap Founder Criticizes Aerodrome's Revenue Model — Phemex News","type":"news_article","url":"https://phemex.com/news/article/uniswap-founder-criticizes-aerodromes-revenue-model-as-misleading-51044"}]},{"content":"Aerodrome's core smart contracts are forked from Velodrome V2, which underwent a comprehensive security review by Spearbit in February-March 2023. That audit identified 1 critical-risk issue (fixed), 8 high-risk issues (all fixed), 19 medium-risk issues (16 fixed, 3 acknowledged), and 30 low-risk issues prior to deployment. Post-engagement verification reviews were conducted in May and June 2023. Aerodrome's contracts were additionally audited by ChainSecurity. The protocol maintains a bug bounty program. No exploits of the underlying smart contracts have been publicly reported. The November 2025 DNS hijacking attack was a Web2 infrastructure attack and did not involve any vulnerability in the on-chain protocol code. Dromos Labs maintains a public GitHub organization (github.com/aerodrome-finance) that includes the contracts, Slipstream, relay, and documentation repositories.","heading":"Smart Contract Security and Audits","severity":"low","sources":[{"credibility":1,"name":"Aerodrome Finance Security Page — aerodrome.finance","type":"official","url":"https://aerodrome.finance/security"},{"credibility":1,"name":"Aerodrome Finance Smart Contracts — GitHub","type":"official","url":"https://github.com/aerodrome-finance/contracts"},{"credibility":2,"name":"Explained: The Aerodrome Finance Hack (November 2025) — Halborn","type":"research","url":"https://www.halborn.com/blog/post/explained-the-aerodrome-finance-hack-november-2025"}]},{"content":"On February 27, 2024, Coinbase Ventures (through the Base Ecosystem Fund) announced an acquisition of an undisclosed AERO token position. The announcement triggered a price surge of over 140%, with AERO rising from approximately $0.097 to $0.25 and trading volume spiking over 4,000%. Coinbase Ventures holds its AERO position as veAERO, participating in protocol governance. This relationship is notable: Aerodrome was launched explicitly as the designated liquidity hub for Base, a network operated by Coinbase. While not technically an official Coinbase product, Aerodrome is integrated into the Coinbase retail app's swap interface, giving it access to Coinbase's retail user base. The intertwined relationship between a Coinbase subsidiary holding governance power in Aerodrome while Aerodrome serves as the primary DEX on a Coinbase-operated chain represents a centralization consideration that users should weigh.","heading":"Coinbase Ventures Investment and Institutional Relationship","severity":"medium","sources":[{"credibility":1,"name":"Liquidity Protocol Aerodrome Finance Receives Investment from Coinbase Ventures, AERO Rallies Over 140% — Yahoo Finance","type":"news_article","url":"https://finance.yahoo.com/news/liquidity-protocol-aerodrome-finance-receives-035644475.html"},{"credibility":2,"name":"AERO Price Soars 35% with Coinbase DEX Integration — BeInCrypto","type":"news_article","url":"https://beincrypto.com/aerodrome-finance-aero-coinbase-integration/"}]},{"content":"On November 13, 2025, Dromos Labs announced the merger of Aerodrome (Base) and Velodrome (Optimism) into a new unified DEX called Aero, targeting a Q2 2026 launch. The merger introduces METADEX03, a dual-engine AMM architecture designed to reduce value leakage through MEV auctions embedded directly into the AMM's Slipstream V3 pools. AERO will remain the unified token; existing VELO holders will receive 5.5% of new AERO supply and AERO holders 94.5%. The new Aero platform is planned to expand to Ethereum mainnet and Circle's Arc blockchain. Alexander Cutler stated the goal is for Aero to become the largest exchange globally. The Aero token migration and new pool migrations are an active operational risk period, as liquidity providers are required to migrate funds to new MEV-resistant pools ahead of the July 2026 deployment target.","heading":"Dromos Labs Merger: Aerodrome + Velodrome Into Aero (2025–2026)","severity":"medium","sources":[{"credibility":1,"name":"Leading Base DEX Aerodrome Merges Into Aero in Major Overhaul — CoinDesk","type":"news_article","url":"https://www.coindesk.com/tech/2025/11/13/leading-base-dex-aerodrome-merges-into-aero-in-major-overhaul"},{"credibility":2,"name":"Dromos Labs Merges Aerodrome and Velodrome into New DEX Aero — The Defiant","type":"news_article","url":"https://thedefiant.io/news/defi/dromos-labs-merges-aerodrome-and-velodrome-into-new-dex-aero"},{"credibility":2,"name":"Aerodrome devs unveil new protocol, token in bid to dethrone Uniswap — DL News","type":"news_article","url":"https://www.dlnews.com/articles/defi/aerodrome-devs-target-uniswap-with-new-ethereum-protocol/"},{"credibility":1,"name":"Aero DEX aims to fix liquidity fragmentation and dethrone the incumbents — CoinDesk","type":"news_article","url":"https://www.coindesk.com/business/2026/01/29/aero-dex-aims-to-fix-liquidity-fragmentation-and-dethrone-the-incumbents"}]},{"content":"No formal enforcement actions by the SEC, CFTC, DOJ, or any other regulatory body against Aerodrome Finance or Dromos Labs have been identified in available public records as of May 2026. The AERO governance token occupies an ambiguous regulatory status common to DeFi governance tokens, which some regulatory frameworks may classify as unregistered securities. Aerodrome's legal disclosures document is publicly available. The protocol's close operational relationship with Base (a Coinbase product) may subject it to indirect regulatory scrutiny directed at Coinbase, though no such action has been reported. The project's shift from pseudonymous to publicly identified founders reduces one regulatory risk vector.","heading":"Regulatory Status","severity":"low","sources":[{"credibility":1,"name":"Aerodrome Finance Legal Disclosures — aerodrome.finance","type":"official","url":"https://aerodrome.finance/documents/AERO/legal-disclosures.pdf"}]}],"sources_used":[{"credibility":2,"name":"What Is Aerodrome Finance? Ultimate Guide to Base's Principal DEX — CoinGecko","type":"research","url":"https://www.coingecko.com/learn/what-is-aerodrome-finance-aero-base"},{"credibility":2,"name":"Aerodrome Finance Growth: Base's Leading DEX Explained — DWF Labs Research","type":"research","url":"https://www.dwf-labs.com/research/has-aerodrome-finance-become-the-leading-defi-protocol-on-base"},{"credibility":2,"name":"Aerodrome co-founder talks Aero, Uniswap feud, pseudonymity — DL News","type":"news_article","url":"https://www.dlnews.com/articles/defi/aerodrome-founder-talks-aero-uniswap-feud-pseudonymity/"},{"credibility":2,"name":"Explained: The Aerodrome Finance Hack (November 2025) — Halborn","type":"research","url":"https://www.halborn.com/blog/post/explained-the-aerodrome-finance-hack-november-2025"},{"credibility":1,"name":"Aerodrome Finance Hit by 'Front-End' Attack, Users Urged to Avoid Main Domain — CoinDesk","type":"news_article","url":"https://www.coindesk.com/web3/2025/11/22/aerodrome-finance-hit-by-front-end-attack-users-urged-to-avoid-main-domain"},{"credibility":2,"name":"Aerodrome and Velodrome Published Report on NameSilo Hack — Incrypted","type":"news_article","url":"https://incrypted.com/en/aerodrome-and-velodrome-published-report-on-namesilo-hack/"},{"credibility":1,"name":"Leading Base DEX Aerodrome Merges Into Aero in Major Overhaul — CoinDesk","type":"news_article","url":"https://www.coindesk.com/tech/2025/11/13/leading-base-dex-aerodrome-merges-into-aero-in-major-overhaul"},{"credibility":1,"name":"Aero DEX aims to fix liquidity fragmentation and dethrone the incumbents — CoinDesk","type":"news_article","url":"https://www.coindesk.com/business/2026/01/29/aero-dex-aims-to-fix-liquidity-fragmentation-and-dethrone-the-incumbents"},{"credibility":2,"name":"Dromos Labs Merges Aerodrome and Velodrome into New DEX Aero — The Defiant","type":"news_article","url":"https://thedefiant.io/news/defi/dromos-labs-merges-aerodrome-and-velodrome-into-new-dex-aero"},{"credibility":1,"name":"Liquidity Protocol Aerodrome Finance Receives Investment from Coinbase Ventures, AERO Rallies Over 140% — Yahoo Finance","type":"news_article","url":"https://finance.yahoo.com/news/liquidity-protocol-aerodrome-finance-receives-035644475.html"},{"credibility":2,"name":"Aerodrome vs. Uniswap - Getting Toxic — Messari","type":"research","url":"https://messari.io/report/aerodrome-vs-uniswap-getting-toxic"},{"credibility":2,"name":"Aerodrome Tokenomics: How AERO Accrues 100% of Protocol Fees — Tokenomics.com","type":"research","url":"https://tokenomics.com/articles/aerodrome-tokenomics-how-aero-captures-100-of-protocol-fees"},{"credibility":2,"name":"A closer look at the ve(3,3) tokenomics model in DeFi — OAK Research","type":"research","url":"https://oakresearch.io/en/analyses/fundamentals/a-closer-look-at-ve33-tokenomics-defi"},{"credibility":2,"name":"Alexander Cutler — IQ.wiki","type":"other","url":"https://iq.wiki/wiki/alexander-cutler"},{"credibility":1,"name":"Aerodrome Finance Smart Contracts — GitHub","type":"official","url":"https://github.com/aerodrome-finance/contracts"},{"credibility":1,"name":"Aerodrome Finance — aerodrome.finance (official site)","type":"official","url":"https://aerodrome.finance/"},{"credibility":1,"name":"Dromos Labs official site","type":"official","url":"https://dromos.xyz/"},{"credibility":1,"name":"Aerodrome Finance Legal Disclosures — aerodrome.finance","type":"official","url":"https://aerodrome.finance/documents/AERO/legal-disclosures.pdf"}],"summary":"Aerodrome Finance is a decentralized exchange (DEX) and automated market maker (AMM) launched on August 28, 2023 on Coinbase's Base Layer-2 network. It operates a ve(3,3) tokenomics model inherited from Velodrome Finance and has grown to become the dominant DEX on Base by total value locked and trading volume. The protocol has no history of smart contract exploits but suffered a significant DNS hijacking attack in November 2025 that resulted in approximately $700,000 to $1 million in user losses.","timeline":[{"date":"2022-06-02","event":"Velodrome Finance, the predecessor protocol by the same team, launched on Optimism.","source":"From Launch to Leadership: The Story of Velodrome Finance — Descrii","source_url":"https://www.descrii.tech/from-launch-to-leadership-the-story-of-velodrome-finance/"},{"date":"2023-08-28","event":"Aerodrome Finance launched on the Base network with an initial supply of 500 million AERO and no venture capital or private sale funding.","source":"What Is Aerodrome Finance? Ultimate Guide — CoinGecko","source_url":"https://www.coingecko.com/learn/what-is-aerodrome-finance-aero-base"},{"date":"2024-02-27","event":"Coinbase Ventures (Base Ecosystem Fund) announced an undisclosed AERO token acquisition; AERO price surged over 140%.","source":"Liquidity Protocol Aerodrome Finance Receives Investment from Coinbase Ventures — Yahoo Finance","source_url":"https://finance.yahoo.com/news/liquidity-protocol-aerodrome-finance-receives-035644475.html"},{"date":"2025-11-13","event":"Dromos Labs announced the merger of Aerodrome and Velodrome into a new unified DEX named Aero, targeting a Q2 2026 launch on Base, Optimism, Ethereum mainnet, and Circle's Arc.","source":"Leading Base DEX Aerodrome Merges Into Aero in Major Overhaul — CoinDesk","source_url":"https://www.coindesk.com/tech/2025/11/13/leading-base-dex-aerodrome-merges-into-aero-in-major-overhaul"},{"date":"2025-11-21","event":"DNS hijacking attack via insider threat at NameSilo redirected aerodrome.finance and aerodrome.box to phishing sites; approximately $700,000-$1 million drained from user wallets. Smart contracts were not compromised.","source":"Aerodrome Finance Hit by 'Front-End' Attack — CoinDesk","source_url":"https://www.coindesk.com/web3/2025/11/22/aerodrome-finance-hit-by-front-end-attack-users-urged-to-avoid-main-domain"},{"date":"2026-01-29","event":"CoinDesk published an in-depth profile on the Aero cross-chain DEX expansion plans targeting Uniswap and Curve on Ethereum mainnet.","source":"Aero DEX aims to fix liquidity fragmentation and dethrone the incumbents — CoinDesk","source_url":"https://www.coindesk.com/business/2026/01/29/aero-dex-aims-to-fix-liquidity-fragmentation-and-dethrone-the-incumbents"}]},"v":1}