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 Token incentives Methodology

## 1. Overview

Token incentives measures the value of native assets distributed to liquidity providers as rewards for staking liquidity pool assets in gauges. These incentives are primarily paid out in the protocol's native asset (AERO) to bootstrap liquidity across various trading pools, including Stable Pools, Volatile Pools, and Slipstream. The distribution of these assets is used to compensate supply-side participants on an ongoing basis. This metric is analogous to stock-based compensation in traditional finance, representing the cost incurred to attract and retain liquidity.

## 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
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Liquidity incentive account mapping

- **Purpose**: Map liquidity incentive gauge addresses to their corresponding trading pool addresses.
- **Logic**: `GaugeCreated` events from `Voter` contracts are parsed to extract the gauge address (`gauge`) and the pool address (`pool`). This mapping is established to associate reward distributions with specific trading pairs.
- **Key fields**: `gauge` (incentive account address), `pool` (exchange account address)

### Component B: Trading pool metadata extraction

- **Purpose**: Identify trading pairs and extract asset decimals and symbols.
- **Logic**: `PoolCreated` events from `Factory` and `CLPoolFactory` contracts are parsed to identify trading pools and their associated assets (`token0` and `token1`). These pools are classified as Stable Pools, Volatile Pools, or Slipstream based on the pool creation parameters. Asset metadata is joined to retrieve decimals and symbols for each asset in the pair.
- **Key fields**: `pool` (account address), `token0` (token 0 address), `token1` (token 1 address)

### Component C: Reward claim extraction

- **Purpose**: Capture the distribution of native AERO incentives to liquidity providers.
- **Logic**: `ClaimRewards` events from `Gauge` contracts are parsed to extract reward distributions. The native asset address for AERO (`0x940181a94a35a4569e4529a3cdfb74e38fd98631`) is assigned to these events, and the distributed amount (`amount`) is captured.
- **Key fields**: `address` (gauge account address), `amount` (incentive amount), `block_timestamp`

### Component D: USD conversion and aggregation

- **Purpose**: Normalize incentive values to USD and aggregate them daily.
- **Logic**: The reward claim events are joined with the gauge-to-pool mapping and trading pool metadata. The raw incentive amounts are normalized by the decimal precision of the AERO asset. The normalized amounts are multiplied by the end-of-day price of the AERO asset to calculate the USD value. The values are aggregated daily by UTC boundaries.
- **Key fields**: `token_incentives` (incentive amount), `price_usd` (asset price)

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

Value of native tokens distributed as incentives.

AerodromeAERO

Token incentives

Token incentives

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Chain breakdown