This is our independent Velodrome Review (2026). Is Optimism's OG DEX still relevant after merging with Aerodrome? How do the DNS attacks in 2023 and 2025 affect trust? And should you migrate to Aerodrome or stay on Velodrome?
⚠️ Merger Notice (Q2 2026): Velodrome is merging with Aerodrome to form "Aero" in Q2 2026. VELO holders will receive 5.5% of new AERO supply (compared to 94.5% for current AERO holders). This has significant investment implications — read the merger section below.
Velodrome wrote the playbook that Aerodrome followed. As the original ve(3,3) DEX, it pioneered the model that now dominates L2 liquidity — and with the Q2 2026 merger, it's no longer a standalone Optimism DEX but part of the unified Aero Superchain platform.
Summary of this Velodrome review: Velodrome Finance launched in June 2022 as Optimism's central liquidity hub, introducing the ve(3,3) tokenomics model to EVM DeFi. The protocol established itself as essential Optimism infrastructure, though TVL has declined significantly to ~$55M (down from $142M peak). The Q2 2026 merger with Aerodrome under Dromos Labs creates "Aero" — a unified platform for Superchain liquidity spanning Optimism, Base, and future OP Stack chains.
Critical investor note: VELO holders receive only 5.5% of the new AERO supply in the merger, while current AERO holders receive 94.5%. This reflects Velodrome's smaller TVL (~$55M) compared to Aerodrome (~$475M). Consider this before making new VELO investments.
The ve(3,3) mechanics are identical to Aerodrome: lock VELO tokens for veVELO voting power, vote weekly on pool emissions, earn 100% of trading fees from supported pools plus external bribes. The key difference is ecosystem positioning — Velodrome serves Optimism-native protocols, while Aerodrome serves Base.
One concern: veVELO concentration. The top 100 wallets control approximately 63% of voting power, creating potential governance centralization. This is worth monitoring, though it's common in ve-model protocols where early adopters accumulate significant positions.
For Optimism-focused users, Velodrome remains the liquidity backbone until the merger completes. For multi-chain users, the Aero merger simplifies access to unified Superchain liquidity.
Velodrome Review — What is Velodrome Finance?
Velodrome launched in June 2022 as an Optimism-native DEX built on ve(3,3) tokenomics. The model combines:
- Curve's vote-escrowed mechanics: Lock tokens for governance power
- Solidly's (3,3) game theory: Incentive alignment for long-term holders
- Convex-style bribe markets: Protocols pay for liquidity votes
Key Facts (Updated February 2026):
- Launched: June 2022
- Chain: Optimism (+ Superchain via Aero merger)
- TVL: ~$55M (declined from $142M peak)
- Token: VELO — governance and fee capture
- Model: ve(3,3) (original implementation)
- Status: Merging with Aerodrome → "Aero" (Q2 2026)
Who is Velodrome for?
- Optimism-focused LPs seeking yield
- Protocols needing Optimism liquidity
- ve(3,3) governance participants
- Those who want Superchain exposure via the Aero merger
Who should skip Velodrome?
- Casual swappers (use aggregators)
- Beginners unfamiliar with ve(3,3)
- Those primarily active on Base (use Aerodrome instead)
- Investors seeking favorable merger terms (AERO gets 94.5%)
Velodrome Review — The Aero Merger (Critical)
In November 2025, Dromos Labs announced the merger of Velodrome and Aerodrome into a unified platform:
Merger Details
- New unified DEX: "Aero"
- Launch: Q2 2026
- Chains: Base, Optimism, Ethereum mainnet, Circle's Arc
- VELO allocation: 5.5% of new AERO supply
- AERO allocation: 94.5% of new AERO supply
Why the Unequal Split?
The token allocation reflects relative TVL:
- Velodrome TVL: ~$55M
- Aerodrome TVL: ~$475M
AERO holders get significantly better merger terms. This is important for anyone considering new VELO positions.
What Changes for Users
| Before Merger | After Merger |
| Velodrome (Optimism) vs Aerodrome (Base) | Aero (Superchain) |
| Separate governance | Unified governance |
| Chain-specific liquidity | Cross-chain liquidity via MetaSwaps |
| Competing protocols | United front vs Uniswap |
New Features Coming
- MetaDEX03 engine: Reduced value leakage
- Cross-chain MetaSwaps: Unified liquidity across chains
- MEV auctions: Capture MEV for protocol
- Ethereum mainnet: Expansion beyond L2s
Velodrome Review — ve(3,3) Mechanics
Velodrome's ve(3,3) model works identically to Aerodrome (because Aerodrome forked it):
The Core Loop
- Lock VELO → Get veVELO: Up to 4-year lock, longer = more voting power
- Vote Weekly: Direct VELO emissions to pools every Thursday
- Earn Rewards: 100% of trading fees + bribes from voted pools
- Rebase: Weekly token distribution offsets dilution
Why It Works
The genius of ve(3,3) is incentive alignment:
- Protocols bribe for liquidity → pays veVELO holders
- veVELO holders vote for bribed pools → earn bribes + fees
- LPs provide liquidity to voted pools → earn VELO emissions
- Traders get deep liquidity → generate fees
- Everyone wins → flywheel spins faster
Velodrome Review — Fees
| Pool Type | Fee | Fee Destination |
| Volatile Pairs | 0.30% | 100% to veVELO voters |
| Stable Pairs | 0.05% | 100% to veVELO voters |
| Slipstream (CL) | Variable | 100% to veVELO voters |
Key point: LPs earn VELO emissions, not trading fees directly. Fees go to governance participants who lock and vote.
Velodrome Review — Slipstream (Concentrated Liquidity)
Velodrome introduced Slipstream — concentrated liquidity pools based on Uniswap V3 mechanics. The November 2025 Slipstream V2 upgrade improved capital efficiency further.
Benefits:
- Higher capital efficiency for LPs
- Lower slippage for traders on active ranges
- Custom fee tiers per pool
Trade-offs:
- More complex LP management
- Impermanent loss risk in concentrated ranges
- Requires active position management
Velodrome Review — Security
Audit History
| Auditor | Scope | Date |
| Code4rena | V1 Peer Review | May 2022 |
| Spearbit | V2 Full Audit | June 2023 |
| Code4rena | V2 Review | 2023 |
Track Record
- 3+ years operation since June 2022
- No major exploits on core contracts
- Codebase is foundation for Aerodrome (battle-tested twice)
Risk Factors
- veVELO concentration: Top 100 wallets control ~63% of voting power
- Smart contract complexity: ve(3,3) mechanics increase attack surface
- L2 dependency: Relies on Optimism network security
- Merger risk: Platform migration complexity
Our Security Rating: 4.5/5 — Longest track record of any ve(3,3) DEX, strong audits, but concentration risk is notable.
Velodrome Review — Velodrome vs Aerodrome
| Factor | Velodrome | Aerodrome |
| Chain | Optimism | Base |
| Launch | June 2022 | August 2023 |
| TVL | ~$55M | ~$475M |
| Pool Creation | Permissionless | Permissioned |
| Merger Allocation | 5.5% | 94.5% |
| Ecosystem | Synthetix, Lyra, Beethoven X | Coinbase ecosystem |
Key difference: Velodrome allows permissionless pool creation — anyone can create a pool. Aerodrome requires permission, giving the team more control over which pools exist.
Investment consideration: If you're looking to invest before the merger, AERO holders get 17x better terms (94.5% vs 5.5%).
Conclusion: Should You Use Velodrome?
Velodrome invented the ve(3,3) model that now powers the largest L2 DEXs. The Aero merger makes it part of the Superchain's liquidity infrastructure — but with significantly unfavorable token terms compared to Aerodrome.
Use Velodrome if:
- You're active on Optimism
- You want permissionless pool creation
- You're providing liquidity to Optimism protocols
- You want Superchain governance participation via Aero
Skip Velodrome if:
- You're primarily on Base (use Aerodrome)
- You want better merger terms (buy AERO instead of VELO)
- You want simple swaps (use aggregators)
- Governance concentration concerns you
Our Rating: 3.8/5
Bottom Line: Velodrome pioneered ve(3,3) and remains essential Optimism infrastructure. However, the 5.5% merger allocation and declining TVL (~$55M vs Aerodrome's ~$475M) make it less attractive for new investors. If you're choosing between VELO and AERO before the merger, AERO is the clear winner on terms. For Optimism-native users, Velodrome still works until the merger completes.
For the dominant ve(3,3) DEX with better merger terms, see our Aerodrome Review. For perp trading, see our Hyperliquid Review.
Frequently Asked Questions
What is the Velodrome-Aerodrome merger?
In November 2025, Dromos Labs announced that Velodrome and Aerodrome will merge into "Aero" in Q2 2026. This creates a unified DEX spanning Optimism, Base, Ethereum mainnet, and Circle's Arc. VELO holders receive 5.5% of new AERO supply, while current AERO holders receive 94.5%.
Should I buy VELO or AERO before the merger?
AERO holders get significantly better merger terms (94.5% vs 5.5% allocation). This reflects Aerodrome's larger TVL (~$475M vs ~$55M). Unless you specifically need Velodrome for Optimism, AERO is the better investment for merger exposure.
What are Velodrome fees?
Volatile pairs charge 0.30%, stable pairs charge 0.05%. All fees go to veVELO voters, not LPs directly. LPs earn VELO emissions instead. This creates the ve(3,3) incentive alignment.
Is Velodrome safe?
Velodrome has operated since June 2022 without major smart contract exploits. Multiple audits from Spearbit and Code4rena. The main risks are veVELO concentration (top 100 wallets control 63%) and general DeFi/L2 risks.
What happens to my VELO after the merger?
VELO tokens will convert to new AERO tokens at a rate reflecting the 5.5% allocation. The exact mechanics will be announced closer to the Q2 2026 merger date. veVELO positions will also convert with the new governance structure.