Ep. 760 Aerodrome & Velodrome MERGE — What Happens to the AERO Token Now?

Aerodrome and Velodrome are being combined into one exchange under one token, AERO, in the DEX operating system’s third version. At the time of recording, AERO was expected to be live across seven chains, extending beyond Base and OP Mainnet to Ethereum, Arbitrum, Robinhood Chain and other named additions, including Kraken’s chain and Circle’s Arc. Alex Cutler said the expansion would roughly quadruple the market served: existing deployments covered about 17% of the addressable market. The ambition is to become the on-chain exchange and liquidity layer for tokenized assets.

The network’s model routes trading fees, launch payments and liquidity payments to token stakers, who direct token incentives to liquidity providers. Cutler described this distribution as the core moat: rewarding stakers can attract liquidity, improve execution and support further growth without intermediaries or platform fees. He said Aerodrome distributes 100% of protocol revenue to stakers; the Aerodrome Foundation also conducts buybacks as a stabilizing mechanism, but no amounts or mechanics were given. Cutler characterized AERO as a claim on network value, which rises or falls with the value produced by the network. He said the team had not raised capital or sold tokens, operates with a small team, and takes no direct cut.

Tokenized stocks are a key test of that strategy. Cutler said Aerodrome handled more than 57% of tokenized-stock volume across Ethereum and its Layer 2s on October 10. Coinbase’s tokenized-stock product passed $2 billion in Aerodrome trading volume: the first billion took about a month, while the next took roughly two weeks. He described the shares as backed one-to-one by assets held by a regulated custodian and as having splits and dividends. Aerodrome’s aim, he said, is to be best to market rather than first, using deep liquidity and execution; after gaining early traction, it focused on adding stocks and enabling fast, low-cost, around-the-clock trading.

Cutler also argued that on-chain spot markets can provide price discovery outside regular market hours. He cited substantial trading in NVIDIA and Apple on Aerodrome during after-hours earnings events. In his view, derivatives depend on an underlying reference and an oracle, so after-hours prices can diverge without derivatives independently establishing the underlying price. He said Aerodrome had become a leading venue for Bitcoin trading and saw potential for tokenized currencies and FX pairs, with EURC/USDC liquidity driving its position in on-chain FX. He characterized on-chain spot exchanges as crypto’s second-most valuable vertical after stablecoins, citing about $5 billion in fees in 2025.

The merger’s products are intended to strengthen liquidity and execution. MetaDex O3 powers the new Aero, following MetaDex O2, which Cutler said launched more than two years ago and gained dominant share in the ecosystems where it competed. Slipstream V3 raises trade prices dynamically during volatility; its MEV tax captures some value from traders paying to skip the line, while distinguishing retail from programmatic and arbitrage trades to return more AMM value to liquidity providers and stakers. MetaSwaps is designed to let users swap across chains without separately managing destination-chain gas or liquidity; Cutler said it operates fully on-chain, without off-chain solvers or intermediaries.

AERO stakers also choose weekly where liquidity incentives go under predictive allocation, aiming to position capital before trading demand arrives. Cutler said allocators who forecast demand more accurately can earn outsized returns without betting on prices or outcomes or holding the underlying asset, and argued that anticipating demand could make the system more efficient and difficult for competing markets to match. The larger opportunity, in his view, is a shift toward practical uses such as tokenized assets and on-chain trading. He said institutional interest was growing and that the market pullback did not feel like a crypto winter given that activity; he considers crypto Twitter a lagging signal.