AERO (AERO)

Two weeks ago I said @AerodromeFi was approaching breakeven. Tbh getting to breakeven was the easy part. Slash emissions 81%, let costs do the work, losses shrank from -$24.2M to -$1.3M but the model underneath still had a problem... And that's the part that just got addressed👇 Before: ➥ Emissions decayed, losses shrank ➥ The system still allocated rewards using last week's fees ➥ Voters looked backward, conditions moved forward ➥ Across 40 pools over 180 days the protocol placed emissions correctly only 48% of the time You don't scale to Ethereum burning half your incentive budget on the wrong pools. Predictive Allocation solves this entirely as sAERO holders now allocate rewards in real time based on where they believe volume is heading. Revenue streams back live. Get it right, you earn more. Get it wrong, gauge caps burn the excess. ‣ Accuracy jumped from 48% to 64% with 24-hour predictive signals ‣ Severe misallocations dropped from 31% to 8% with gauge caps ‣ 5.1% of emissions burned automatically during the test window For $AERO holders this changes everything about what the token actually is. Old system gave every voter the same return. Now early allocators who correctly anticipated cbBTC volume would have earned 43% higher fees than average. The supply side compounds from here... 1. Momentum Fund now burns instead of just locking 2. Gauge caps burn misallocated emissions automatically 3. Rebases for locked positions gone Three separate mechanisms all reducing supply and none of them depend on market conditions. Now: ➥ The revenue surface is widening ➥ MEV is captured at protocol level instead of leaking to bots ➥ Crosschain swaps keeping fees that used to go to bridges and aggregators separately ➥ Same liquidity doing more work Fewer tokens ➝ More revenue per token ➝ Yield that rewards skill over size I've sat through enough token redesigns to know the difference between a narrative and a system. This is a system.

This is the breakeven post I was talking about👇

A Prediction Market, but for DEX fees? During EthCC @DromosLabs dropped a bombshell that they are moving away from the current epoch based voting and rewards method of @AerodromeFi and moving into real time streaming of rewards and Predictive Allocation voting with Aero AERO is coming in July with the expansion to mainnet If you're too [redacted] to understand what this means, then this thread is for you. 👇

Some background. @AerodromeFi and @VelodromeFi have collectively earned $506M in exchange revenue over the years 100% of this revenue is distributed to voters In July 2026 they are being merged into Aero, along with an expansion to Ethereum mainnet https://t.co/7iQKzFZNhu

A Reactive Epoch based system... The previous system of Aerodrome and Velodrome was based on weekly epochs Every Thursday, Token holders (veAERO lockers) would vote to direct token emissions for the next week And receive the previous weeks fees as rewards A reactive system, where you know the voting rewards before you vote, and changes in emissions have (up to) a 2 week "delay" You react after the fact...

✅ Predictive Allocation With Aero, epochs are gone, voting can be done in real-time and revenue accrual (fees) are streamed to voters in real-time This lets users predict where the volume and fees will move next, so they can have votes in place to earn more revenue as fees increase

What this actually achieves is that increased emissions will increase APR for LPs, which will lead to increased TVL and liquidity, BEFORE the spikes (if predicted correctly) Not after the fact (as with Epoch Voting) Which in turn leads to more fees as more volume is captured when the spike hit because of thiccck liquidity with higher accuracy

The point of being "early" with your prediction is that when volume and fees spike, you have already directed your votes and are capturing fees during the spike that are streamed to voters in real-time Allowing you to beat the average APR for sAERO voters if predicted correctly Backtesting showing you could have made 18x more returns by voting early for the $VVV launch

This will lead to a self-correcting system where rewards can move before volume spikes happen, or immediately after it begins, to capture most fees possible. There's no need to wait for a week to reward the most productive pools And if a pool stops being productive, emissions can move to a better pool immediately

And what happens when the system is self correcting faster? Having real-time updated emissions, compared to a 2 week delay leads to rewarding the correct pools at a much higher rate A massive increase in hitting the target of incentivizing the right pools https://t.co/MzJzkfyFdW

✅Gauge caps To avoid over allocation to unproductive pools, gauge caps will be implemented. This is a limit that can be set via protocol governance, so that if e.g. a protocol is x-amount overfunded compared to the fees it produces, the overflow rewards are burned Gauge caps can be configured on a per-pool basis, and will lead to an even better hit rate for the token emissions

✅ Autopilot But won't it be hard to allocate the votes? Fear not.. the Autopilot vaults will handle voting automatically for you Voting for the most productive pools automatically so you won't have to micro-manage your votes Rewards can be compounded for more sAERO or paid out in your chosen token

✅ Agentic marketplace Aero will also open up for Agents to create their own voting vaults, so custom strategies can be used to predict volatility, move votes early and beat the avg APR Which again will introduce a brand new agentic economy around Aero Who will create the best Agent to predict where fees will flow?

While there's a whole generation of Aero fudders saying its a emission-fueled ponzi and bound to go to zero These have however been proven wrong many times.. Aerodrome actually has generated more revenue than emissions in the last two quarters Based purely on dex trading fees and incentives...

But with Aero, theres a lot more income streams coming - Internal MEV Auctions - Bridge and Aggregator Fees (cross chain swaps) - veNFT marketplace revenue - Auto-compounders - ALM (Automated Liquidity Management tools) revenue - Agent Marketplace 100% of these non-swap revenue feeds accrue value to the ecosystem There's no leakage to 3rd party protocols

Among other updates, veAERO and veVELO (locked tokens) will be replaced by sAERO (staked) and still up to 4 years duration. Rebases are going away to reduce inflation. Current inflation rate of AERO will be maintained at ~11% yearly inflation

✅ Momentum Fund The Momentum Fund is the Aero Foundation’s flagship program, operates a rules-based sAERO position with the goal to: - Vote for strategically important pools (like major token launches) - Extending allocation power to ecosystem builders - Deploying protocol revenue to buy back and burn AERO Which means we're about to see deflationary pressure on AERO causing lower inflation 👀

Anyways, i'm super excited for July My veAERO locks are continuing to pay out every week until Aero launch. As they have been for the last 4 years.. ..and my sAERO will for the next decade

Not financial advice, but you can read more about it here: https://t.co/YHRVePriKv