Liquidity providers deposit funds into Aerodrome and stake their LP tokens to receive AERO tokens in proportion to their share of the votes (token incentives).

Aerodrome is a non-custodial exchange protocol built on Base. Aerodrome was launched by the Velodrome team in 2023.

AERO tokenholders own and govern the protocol. They vote which pools they wish to earn trading fees from (revenue), while the pools' unstaked liquidity providers earn the remainder of the trading fees (supply-side fees).

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Aerodrome

# Aerodrome Expenses Methodology

## 1. Overview

Expenses measures the total cost incurred by Aerodrome to facilitate its decentralized exchange operations on the Base network. For Aerodrome, this metric specifically accounts for token incentives distributed to liquidity providers to encourage deep liquidity across its trading pairs. These incentives are paid in the protocol's native asset, AERO, and represent the primary operating cost of the protocol's emissions-based flywheel model.

## 2. Data sources

- **Blockchain events**: `ClaimRewards` events from `Gauge` contracts, `GaugeCreated` events from `Voter` contracts, and `PoolCreated` events from `Factory` and `CLPoolFactory` contracts, covering Base and Arc
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Liquidity incentive extraction

- **Purpose**: Capture the raw quantity of native assets distributed as incentives to liquidity providers.
- **Logic**: `ClaimRewards` events are parsed from `Gauge` contracts to identify the distribution of the AERO asset. The value is extracted from the `amount` field of each event. These events represent the point at which liquidity providers realize their earned emissions from participating in the protocol's incentivized pools.
- **Key fields**: `block_timestamp`, `amount`, `address` (contract address).

### Component B: Incentive account and pair mapping

- **Purpose**: Map incentive distributions to their respective trading pairs and business lines.
- **Logic**: `GaugeCreated` events are parsed from `Voter` contracts to establish the relationship between gauge addresses and exchange pool addresses. Furthermore, `PoolCreated` events are parsed from `Factory` (V1) and `CLPoolFactory` (V3) contracts to identify the underlying tokens for each pair. This mapping ensures that all incentive distributions are correctly attributed to the Aerodrome liquidity environment and categorized under the automated market maker business line.
- **Key fields**: `in_gauge` (gauge address), `in_pool` (pool address), `in_token0`, `in_token1`.

### Component C: USD conversion and normalization

- **Purpose**: Transform raw on-chain incentive amounts into a standardized USD value.
- **Logic**: All extracted incentive amounts are normalized by their respective decimal precision based on asset metadata. The resulting quantities are multiplied by the end-of-day price feeds for the AERO asset on the day the claim event occurred. Values are aggregated to a daily frequency using UTC day boundaries to represent the total protocol expenses for that period.

*This methodology was automatically generated by Token Terminal's methodology analyzer.*

Total project operating and incentive expenses.

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Expenses

Expenses

Competitive landscape

Chain breakdown