Home / Analysis / Crypto / Technical Analysis / Base Aerodrome Finance Launches Slipstream as Base TVL Edges Closer to $2 Billion

Base Aerodrome Finance Launches Slipstream as Base TVL Edges Closer to $2 Billion

Last Updated April 22, 2024 8:54 AM
Valdrin Tahiri
Last Updated April 22, 2024 8:54 AM
By Valdrin Tahiri
Verified by Peter Henn

Key Takeaways

  • Aerodrome Finance accounts for nearly 50% of the Total Value Locked (TVL) in Base.
  • In the past three weeks, Base has had more users than any other Ethereum Layer-2.
  • Will the increase in activity combined with a new upgrade lead to an AERO all-time high?

Aerodrome Finance is an automated market maker  (AMM) that provides liquidity for Base, Coinbase’s Layer-2 solution. Its TVL has grown immensely in 2024 and is approaching $800 million.

Aerodrome’s native token is AERO. Despite increasing over 2,000% since March, it is still ranked outside of the biggest 100 cryptocurrencies based on their market capitalization. Can the surge in Base activity trickle down to AERO and lead to another similar increase?

How Does Slipstream Work?

Aerodrome Finance is a fork of Velodrome, one of the main decentralized exchanges (DEX) on Optimism. It incentivizes liquidity provision and governance participation by distributing AERO emissions  to Liquidity Providers (LP).

It also allows token holders to lock AERO to vote on emission distribution via veAERO tokens. Finally, it rewards voters with trading fees and incentives. Slipstream, which is already used in Velodrome,  will go live on Aerodrome Finance on April 22.

Slipstream enhances trading efficiency for high-volume pairs. It does this by incentivizing LPs to provide liquidity on the pairs that are being traded the most. This is done by allowing LPs to earn both emissions and a portion of the trading fees. The latter becomes more important in high volume trading pairs.

Slipstream’s use of concentrated liquidity is focused on stable, low-volatility pools. Conversely, more volatile pools without notable volume will likely continue operating with the existing variable AMM pools  provided by Aerodrome.

Finally, Slipstream will offer other improvements such as faster oracle updates, a custom fee algorithm depending on volatility and swaps for different pool types.

Base Activity Keeps Growing

The activity in Base has risen noticeably during the past three weeks. The rise coincided with Ethereum’s Dencun upgrade, which reduced transaction fees on Layer-2 solutions.

Last week, Base had over 600,000 users , more than double that of second-placed Arbitrum, which had 255,000. The gap has been widening since Base first took the top spot during the week of March 18-25.

Layer-2 Transactions
Layer-2 DEX Users | Credit: Dune

The TVL for Base is also growing and is at an all-time high of $1.64 billion. Nearly half of that is from Aerodrome, which has a TVL of $790 million. While Base’s TVL is still lower than the $2.76 billion on Arbitrum, it has outpaced the near $1 billion on Polygon and Optimism. Moreover, neither Arbitrum’s, Optimism nor Polygon’s TVLs are at all-time highs.

Finally, Base has already achieved a profit  in the first quarter of 2024. This further accentuates that the interest in Base is growing, and the TVL could soon outpace other Ethereum Layer-2s.

AERO Price Prediction: Breakout or Rejection?

The AERO price has increased rapidly since the start of March. The 2,300% increase culminated with a new all-time high price of $2.38 on April 12 (red icon). While the AERO price has fallen since, it still maintains a bullish structure in the form of an ascending support trend line.

The decrease was preceded by bearish divergences in both the RSI and MACD (green lines). However, the RSI also confirmed a hidden bullish divergence (yellow) with its April 19 bounce (green icon), which validated the support trend line.

AERO Price Prediction
AERO/USDT Daily Chart | Credit: TradingView

Currently, AERO trades at the point of convergence between the support trend line and $1.80 resistance area. Due to the mixed readings, whether it breaks out or gets rejected can determine the trend.

A successful breakout can trigger an increase to the next resistance at $2.93. This will be a new all-time high price. Conversely, breaking down from the support trend line begin a decrease to $1.35, in turn creating a horizontal range between $1.35 and $1.80.

Base Primed for Dominance in Layer-2 Space

There is no denying that Base has benefitted the most from the reduction in transaction fees after the Dencun upgrade. The Layer-2 solution has already eclipsed other more established ones in the number of users.

If the current rate of increase holds, it will soon do the same in TVL. Since Base does not have a native token, the native token of its biggest protocol Aerodrome Finance can make the most of this increase. A breakout above $1.80 could lead to new all-time highs.

Was this Article helpful? Yes No