What is Aerodrome Finance?
I needed to dig into the latest news of Aerodrome Finance, a crypto payment platform taking the DeFi community by storm. The platform has been on my radar as it recently surged in price, reaching heights we haven't seen in months. It peaked at 1.9446 on December 6, after rising for eight days straight. This kind of movement doesn’t just happen. With that many days of pure green, it caught my attention.
When I first heard of Aerodrome Finance, I thought it was just another project in the crypto-sphere. I quickly learned it was a decentralized exchange (DEx) on Base Blockchain. The activity on the platform has been explosive. In the last 30 days, they processed coins worth $7 billion. When I started looking at it, they had 1.46 billion volume in 24 hours, with a cumulative volume of 81.18 billion. That is a lot of trading! And yes, it is the leading DEX protocol on the Base Blockchain. It even beat Uniswap and PancakeSwap.
Why is Aerodrome Finance Surging?
So what is behind the surge? Apparently it’s been the smartest money that has been buying in droves. According to crypto data analytics, 45 smart money wallets currently hold AERO tokens, the most it has ever had and they own nearly 14 million tokens worth $26.6 million. This tells you the level of confidence these big players have in the project.
These wallets have been buying up a ton of tokens. Transactions are visible on-chain, meaning traders are able to see when smart money is making moves. These movements can show the start of trends much like we saw in the past with LINK.
How Did We Get Here?
They were one of the winners of the Base Blockchain boom. The Base Blockchain became popular in cryptocurrency for meme coins like Brett, Keyboard Cat, Degen, etc. These meme coins sitting somewhere around $3.6 billion in combined market cap. Can you imagine all of this user activity? This created a boom and surge in popularity.
They have features that DEXs offer. Things like Slipstream generated a record $950,000 in fees on December 4, proving the high demand for the low slippage swaps for high-volume assets.
Is It Sustainable?
Looking at technical analyses, it appears that AERO has been on a consistent upward trajectory for several months. It recently broke through a blue trendline connecting the highest swings since July 18. It was important to move above this level to invalidate the rising wedge pattern that was forming.
As long as bulls remain in control, AERO can stay above the 50-day and 25-day EMAs. That means that bulls are still controlling the price. The RSI has climbed up to 71. The next point to watch will be at $2.3727, which is its highest level in March. It is about 25% above the current level.
But here is where it can go wrong. A move below the 25 EMA level at $1.50 will invalidate bullish signals.
What Are Aerodrome Finance's Prospects?
Regulatory challenges are always going to be a risk for platforms like Aerodrome. KYC and AML measures have always been difficult in the crypto space. Other platforms have tried operating in less-regulated jurisdictions to penetrate the market.
But with challenges come opportunities and Aerodrome has its eyes on growing in the DeFi space. Between 2024-2028, the market is expected a compound annual growth rate (CAGR) of 42.3%. Growth that is bought on the back of things like scalability solutions, institutional participation, and clear regulatory structures will push DeFi further into the mainstream.
Aerodrome has two of the key pillars for success: A strong user experience and a well-designed liquidity incentive engine.
