Andre Cronje designed the original ve(3,3) model ('Solidly') in early 2022. The concept: voters should be rewarded by the fees generated in pools they vote for (unlike Curve, where voters receive protocol-wide fee shares). This aligns voter incentives with liquidity quality — vote for pools generating most fees, earn most fees. Velodrome iterated on this design significantly, fixing Solidly's launch problems. Aerodrome further refined it. Both have become the financial infrastructure for their respective L2 ecosystems.
How ve(3,3) Works in Velodrome/Aerodrome
veNFT system: unlike Curve's veCRV (non-transferable number), Velodrome and Aerodrome represent locked positions as NFTs (veNFTs). You lock VELO (or AERO) for up to 4 years and receive a veNFT representing your locked position. The veNFT is tradeable — your locked position has a secondary market value. This is a significant improvement over Curve's illiquid veCRV. The longer you lock and the more you lock, the more weekly voting power your veNFT has.
Weekly epochs and voting: each week, veNFT holders vote on which liquidity pools receive VELO/AERO emissions. 100% of trading fees from voted pools go to voters in that pool — not pool LPs. LPs earn only VELO/AERO token emissions, NOT trading fees. This inverts Uniswap/Curve's model: LPs earn tokens, voters earn fees. The system incentivizes voters to find pools with high genuine trading volume.
Bribe ecosystem: protocols pay bribes to veNFT holders for votes directing emissions to their pool. Unlike Curve (where bribes route VELO rewards), Velodrome's direct fee-share creates a natural bribe market: if Pool X generates $100,000/week in fees, it's rational to pay up to $100,000 in bribes to voters who will then receive those fees. This creates efficient bribe pricing where protocols compete at fair value for liquidity.
- ✓veNFT: tradeable locked position (unlike Curve's non-transferable veCRV)
- ✓Weekly votes: veNFT holders vote on VELO/AERO emission distribution
- ✓LPs earn: token emissions (not trading fees)
- ✓Voters earn: 100% of trading fees from voted pools
- ✓Bribe market: protocols pay veNFT holders for emission direction
- ✓Epoch system: weekly rebalancing of emissions based on current votes
Velodrome vs Aerodrome: Similarities and Differences
Origins: Velodrome launched June 2022 on Optimism. Aerodrome launched August 2023 on Base — built by the same team as Velodrome. Aerodrome is not a competitor but an expansion: the same product on a different chain. Both share codebase, the ve(3,3) model, and the same team.
TVL trajectory: Aerodrome grew to surpass Velodrome's TVL by late 2023 — largely because Base launched with Coinbase's backing and massive retail influx. Aerodrome became Base's dominant DEX almost immediately, while Velodrome maintained Optimism dominance. AERO token appreciated significantly with Base's growth. Both protocols feed back to Optimism ecosystem via the Optimism Collective revenue sharing.
V2 improvements: both protocols launched V2 with Concentrated Liquidity pools (similar to Uniswap V3 tick-based liquidity) alongside their classic constant-product pools. V2 enables much more capital-efficient liquidity for stable pairs and correlated assets. The combination: classic pools for stable assets with simple liquidity provision, concentrated liquidity for volatile pairs requiring tighter ranges.
- ✓Velodrome: Optimism chain — launched June 2022, still dominant on OP
- ✓Aerodrome: Base chain — launched August 2023, dominant on Base
- ✓Same team: Aerodrome = Velodrome expansion, not competition
- ✓AERO TVL surpassed VELO: Base's retail influx drove AERO growth
- ✓Optimism Collective: Velodrome/Aerodrome share revenue with Optimism DAO
- ✓V2 CL pools: concentrated liquidity alongside classic pools
Frequently Asked Questions About Velodrome and Aerodrome
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