Ethereum News Today: Aero Combats DeFi Fragmentation by Merging Two Leading Ethereum DEXs

The DeFi landscape is set for a major shift as Aerodrome and Velodrome and Velodrome, two leading decentralized exchanges (DEXs) on Ethereum's Layer-2 networks, announce their merger to form Aero, a cross-chain DEX designed to unify liquidity and streamline trading. The new platform, developed by Dromos Labs, will launch in Q2 2026 on Ethereum Mainnet and Circle's Arc blockchain, combining over $530 million in total value locked (TVL) and nearly $190 million in annual fees, according to a Crypto Briefing report. The merger aims to address liquidity fragmentation across Ethereum's Layer-2 ecosystems and position Aero as a scalable, institutional-grade protocol, as noted in a The Block article.

Aero will merge Aerodrome (dominant on Base) and Velodrome (key on Optimism) into a single protocol, leveraging their combined TVL of $480 million and $56 million, respectively. The platform introduces a dual-engine operating system, featuring a dual-engine model (AER and REV) to boost liquidity provider (LP) revenues by 40% while cutting costs by $34 million, according to the Coinotag report. The system also includes cross-chain transfers, enabling cross-chain asset transfers in a single transaction, and embedded MEV (maximal extractable value) auctions to mitigate front-running risks, as reported by The Block.

Dromos CEO Alexander Cutler emphasized Aero's role in transforming Ethereum into a "cohesive trading environment," stating, "Aero is engineered to streamline asset swaps and enhance capital efficiency, benefiting both retail and institutional users," as detailed in the Coinotag report. The platform will support public chains like Base and Optimism, as well as Circle's Arc blockchain, which offers regulatory compliance for institutional investors, as noted in the Crypto Briefing report.

The merger consolidates Aerodrome's AERO and Velodrome's VELO tokens into a single AERO token, with no new minting. Existing AERO holders will receive 94.5% of the new supply, reflecting their larger TVL share, while VELO holders will get 5.5%, as highlighted in the Coinotag report. The token will govern emissions, liquidity incentives, and protocol upgrades, with a dual-engine model optimizing capital deployment. Luis de la Cerda, Aerodrome's executive director, noted that Aero's token design ensures "no dilution and seamless revenue sharing," while maintaining incentives for both protocols' communities, according to the Crypto Briefing report.

Aero's launch coincides with intensified competition in Ethereum's DEX sector. Uniswap, with $5 billion in TVL, recently proposed the "UNIfication" plan to allocate fees toward UNI token buybacks, aiming to reward holders and streamline governance, as described in a Coindesk analysis. Analysts suggest Aero's cross-chain focus and institutional features could capture a share of the growing tokenized asset market, which Bloomberg projects to reach $10 trillion by 2030, according to a Coinotag report.

Pre-merger data shows Aerodrome leading Base with $14.7 million in monthly fees, while Velodrome contributes $5.5 million, as reported in the Crypto Briefing report. Post-merger, Aero is expected to handle $2 billion+ in monthly trading volume across Layer-2 networks, with a roadmap targeting Ethereum mainnet integration to deepen liquidity pools, as noted in the The Block article.

While Aero's technical upgrades and institutional partnerships signal strong potential, challenges remain. Critics highlight risks from regulatory scrutiny and competition from Uniswap's fee-driven model, as noted in the Coindesk analysis. However, Dromos' emphasis on interoperability and MEV protections could differentiate Aero, particularly as Ethereum's Layer-2 transaction volume grows, as described in the Crypto Briefing report. Early simulations suggest Aero could improve multi-chain trade efficiency by 20–30%, according to a Coinotag report.

The Aerodrome-Velodrome merger marks a pivotal step in DeFi's evolution, consolidating fragmented liquidity and introducing scalable infrastructure for cross-chain trading, as noted in the Crypto Briefing report. With its Q2 2026 launch on Ethereum Mainnet and Arc, Aero aims to redefine DEX capabilities, offering enhanced efficiency for retail and institutional users alike. As the DeFi sector navigates regulatory and competitive pressures, Aero's success could set a precedent for future consolidations, reshaping Ethereum's decentralized finance ecosystem.

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