# Tokenomics

## Value Distribution

Aerodrome operates as a zero-leak economy, where 100% of value is distributed to contributors to the system: the veAERO token operators who coordinate and optimize the flow of liquidity, and the liquidity providers who make low-slippage trades possible.

The protocol has two revenue streams:

- 100% of swap fees generated by staked liquidity + a percentage of swap fees generated by unstaked liquidity in specific emissions-eligible pools
- 100% of voting incentives

Liquidity providers (LPs) on Aerodrome can choose to stake their deposit in emissions-eligible pools to earn AERO (Aerodrome's native token), or leave their deposit unstaked to earn a share of trading fees.

All protocol revenue is internalized and distributed to token operators, a diverse and global stakeholder group composed of institutional investors, protocols, retail traders, and more—any and all tokenholders are on equal footing, earning according to their participation without privilege or preference. This is an open and decentralized network anyone can join by locking AERO.

The Aerodrome Foundation, the protocol’s neutral steward, and Dromos Labs, its core contributing development company, both earn revenue through participation in this system.

The Aerodrome Foundation uses its share of revenue to grow the platform with efforts like token buybacks. Dromos Labs uses its share to fund ongoing development. To ensure long-term competitiveness, Dromos Labs is also allotted a small percentage of weekly AERO emissions (100% of which is compounded into its max-locked position).

This token-centric economic system aligns the interests of all stakeholders—LPs, traders, and tokenholders—to help Aerodrome maintain maximum efficiency and sustainability for the long term.

---

Aerodrome Finance uses two tokens to manage its utility and governance:

- `$AERO` &mdash; ERC-20 utility token of the protocol
- `$veAERO` &mdash; ERC-721 governance token in the form of an NFT
  (non-fungible token)

`$AERO` is distributed to liquidity providers through emissions.

`$veAERO` is used for governance. Any `$AERO` holder can vote-escrow their
tokens and receive a `$veAERO` (also known as Lock or veNFT) in exchange.
Additional tokens can be added to the `$veAERO` NFT at any time.

The lock period (also known as vote-escrowed period, hence the _ve_ prefix) can
be up to 4 years, following the linear relationship shown below:

- 100 `$AERO` locked for 4 years will become 100 `$veAERO`
- 100 `$AERO` locked for 1 year will become 25 `$veAERO`

The longer the vesting time, the higher the voting power (voting weight) of the
underlying locked balance.

Additionally, Aerodrome Locks (veNFTs) can be set into Auto-Max Lock, which are
treated by the protocol as being locked for the maximum duration of 4 years,
and their voting power does not decay. The Auto-Max Lock feature can be turned
on and off for each Lock (veNFT).

## Initial Distribution

{

<table className="min-w-full w-full divide-y divide-accent-10 rounded-xl overflow-hidden bg-accent-0 mb-12">
  <thead>
    <tr>
      <th className="px-6 py-3 text-left font-medium uppercase text-xs text-accent-50 w-2/3">
        AERO
      </th>
      <th className="px-6 py-3 text-right font-medium uppercase text-xs text-accent-50">
        Amount
      </th>
      <th className="px-6 py-3 text-right font-medium uppercase text-xs text-accent-50">
        Percentage
      </th>
    </tr>
  </thead>
  <tbody className="divide-y divide-accent-10">
    <tr className="bg-accent-5">
      <td className="px-6 py-4">Voter Incentives</td>
      <td className="px-6 py-4 text-right">40M</td>
      <td className="px-6 py-4 text-right">8%</td>
    </tr>
    <tr>
      <td className="px-6 py-4">Genesis Liquidity Incentives</td>
      <td className="px-6 py-4 text-right">10M</td>
      <td className="px-6 py-4 text-right">2%</td>
    </tr>
  </tbody>
</table>
}

{

<table className="min-w-full w-full divide-y divide-accent-10 rounded-xl overflow-hidden bg-accent-0 mb-12">
  <thead>
    <tr>
      <th className="px-6 py-3 text-left font-medium uppercase text-xs text-accent-50 w-2/3">
        veAERO
      </th>
      <th className="px-6 py-3 text-right font-medium uppercase text-xs text-accent-50">
        Amount
      </th>
      <th className="px-6 py-3 text-right font-medium uppercase text-xs text-accent-50">
        Percentage
      </th>
    </tr>
  </thead>
  <tbody className="divide-y divide-accent-10">
    <tr className="bg-accent-5">
      <td className="px-6 py-4">Airdrop for veVELO Lockers</td>
      <td className="px-6 py-4 text-right">200M</td>
      <td className="px-6 py-4 text-right">40%</td>
    </tr>
    <tr>
      <td className="px-6 py-4">Public Goods Fund (Auto Max-Locked)</td>
      <td className="px-6 py-4 text-right">105M</td>
      <td className="px-6 py-4 text-right">21%</td>
    </tr>
    <tr className="bg-accent-5">
      <td className="px-6 py-4">Development Team Funding (Auto Max-Locked)</td>
      <td className="px-6 py-4 text-right">95M</td>
      <td className="px-6 py-4 text-right">19%</td>
    </tr>
    <tr>
      <td className="px-6 py-4">Flight School (Auto Max-Locked)</td>
      <td className="px-6 py-4 text-right">50M</td>
      <td className="px-6 py-4 text-right">10%</td>
    </tr>
  </tbody>
</table>
}
