DeFi Deposits on Base Rise as Yield Farmers Input Incentives From Aerodromes Harvest
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DeFi deposits on the Base network have reached an all-time high due to liquidity mining incentives offered by the decentralized exchange Aerodrome.
Coinbase’ Base’ Sees Increase in Value
DeFi deposits within the Base protocol have experienced a remarkable surge, driven by a wave of yield farmers who have deposited their gains from the Aerodrome Harvest.
DeFi, which stands for decentralized finance, has been a transformative force in the cryptocurrency world. It allows users to access traditional financial services without intermediaries such as banks. Instead, smart contracts executed on blockchain platforms handle lending, borrowing, trading, and more.
According to data from DeFiLlama, the total funds locked in various DeFi contracts on the Base network, supported by Coinbase, have reached a fresh all-time high of $301.2 million. This signifies a rapid increase of 53% in just one night.
DeFi Deposits on Base Soar as Yield Farmers Plant Aerodrome Harvest https://t.co/rE8C3ixzB3
— Psyborg® (@PsyborgNFT) August 31, 2023
The significant surge in deposits on the Ethereum layer-2 network is primarily attributed to the introduction of liquidity mining rewards on the recently launched Aerodrome decentralized exchange.
Yield farming, often referred to as “liquidity mining,” is a practice where users provide liquidity to DeFi platforms in exchange for rewards. These rewards typically come as tokens representing a stake in the platform or its governance. In this case, Aerodrome is essentially compensating users for participating in trading activities on the platform.
Aerodrome, launched on August 29, 2023, is a fork of Velodrome, a well-established decentralized exchange operating on the Optimism network. The Velodrome team also introduced liquidity mining for its native governance token, AERO.
Aerodrome is live and the airdrop is in progress. 🛫
The DeFi era on @BuildOnBase has begun.https://t.co/H1s2W8ZSs8
— Aerodrome (@aerodromefi) August 29, 2023
Aerodrome serves as an advanced automated market maker (AMM) designed to act as the primary liquidity hub for Base. It combines a robust liquidity incentive mechanism, a vote-lock governance structure, and a user-friendly interface.
Additionally, on August 30, the emission of AERO tokens, indicating the rate at which new tokens are generated and distributed in the market, commenced.
~50 minutes until emissions begin. pic.twitter.com/CLjSmng5Uu
— Aerodrome (@aerodromefi) August 30, 2023
Out of the initial supply of 500 million tokens for Aerodrome, 10% was allocated to liquidity mining. Furthermore, 40% of this initial supply was distributed to Velodrome’s VELO token holders through an airdrop.
In a brief span, according to DeFiLama data, Aerodrome’s total liquidity saw a remarkable rise from about $3 million to $144 million as users hurried to participate in AERO token farming.
Early Days for Base Network
On August 9, 2023, Coinbase officially announced its layer-2 blockchain, Base Network, to the public.
Base is open and Onchain Summer is here 🟡
Become a part of Base history by minting “Base Day One” to join the story of bringing the world onchain
Our story.https://t.co/qaDj7CBCMd pic.twitter.com/9PZCLQQV7p
— Base 🛡️ (@BuildOnBase) August 9, 2023
Before this grand unveiling, Coinbase introduced the beta version of Base on February 23, 2023, granting exclusive access solely to developers.
Jesse Pollak, the Head of Protocols at Coinbase and responsible for overseeing Base, clearly communicated the primary purpose behind creating Base. He articulated that the project’s central aim is to introduce the next generation of creators and users to blockchain technology.
Pollak also emphasized that the new network offers a repository of 100 deployable and ready-to-use decentralized applications (dApps).
However, it’s worth noting that Base’s decentralized finance (DeFi) ecosystem is still in its early stages.
Currently, activity is primarily dominated by meme coins, and lending protocols like Aave are experiencing limited liquidity. The total collateral Aave hosts is less than $1 million, as reported by DeFiLlama.
Nevertheless, there has been a significant increase in the total value transferred to the Base layer-2. According to data from L2Beat, this value surged from $254.6 million to $311.7 million, marking a remarkable 22% overnight increase.