Aerodrome is a decentralized exchange (DEX) where you can trade tokens without trusting a central authority. Aerodrome is the preeminent DEX on Base, with over $2.2bn traded in the last 7 days (as of 5/5/2025).
Plaza has partnered with Aerodrome to enable independent price discovery of bondETH and levETH via trading on Aerodrome. As part of Season 2 rewards, Plaza is incentivizing providing liquidity to the bondETH/USDC and levETH/USDC pools on Aerodrome with 20 Plaza Points per $ of liquidity per day.
Here is a guide outlining the steps, considerations, and risks of LPing bondETH and levETH on Aerodrome.
What is Liquidity Providing (LPing) and Concentrated Liquidity?
Liquidity providing (LPing) is lending your tokens to help others trade. When you do this, you earn trading fees as a reward.
Concentrated liquidity is providing token liquidity only within a specific price range, allowing you to earn higher fees for trading volume in that range compared to general liquidity pools.
The Plaza incentivized pools on Aerodrome are concentrated liquidity pools.
Manual vs Automated
Monitoring and managing liquidity positions is an active job. For many liquidity providers, it is easier to use automated tools to ensure their liquidity stays in range. These tools generally charge a small fee.
The Automated Approach offers less precision for advanced users and introduces fees and contract risk to a third-party automation provider.
The Manual Approach requires active management and more steps, but offers more control and lower fees.
Either approach is great, and choose what is right for you.
The Automated Approach
We recommend vfat.io, but there are other tools available. You can simply search for “bondETH” or “levETH” on the Yield tab (ensure it’s the correct incentivized Plaza Pool), choose any deposit token, set a range, and select “Automate Rebalancing” to get the most out of your liquidity position.
VFAT users who provide liquidity to the levETH/USDC and bondETH/USDC pools on Aerodrome are eligible for 20 Plaza Points per $ per day.
Be mindful when setting the Max Slippage for rebalances. If you set it too low, your liquidity may not rebalance. If you set it too high, you can suffer significant losses during a rebalance. We recommend 0.5%.
The Manual Approach
Step 1: Choose Your Plaza Token (bondETH or levETH)
To provide liquidity to the bondETH/USDC and levETH/USDC pools on Aerodrome, you need both the Plaza token (bondETH or levETH) and USDC on Base. You are exposed to both the Plaza asset and USDC, so choose the Plaza asset that is best suited to your investment style and risk tolerance.
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bondETH is a high-yield bond backed by ETH that earns stable USDC yield. bondETH is generally less volatile than ETH and offers steadier returns.
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levETH is levered ETH without the risk of liquidation. levETH is generally more volatile than ETH with more potential upside.
Step 2: Get Your Plaza Token and USDC on Base
You can purchase bondETH and levETH on Aerodrome or Plaza using assets on Base. Reserve some ETH (~$1) for gas. Gas on Base is generally <$0.03 per transaction.
If you don’t have assets on Base, you can bridge ETH and other assets to Base via Stargate or Jumper.
Step 3: Know the Risks
Providing liquidity has some risks:
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Impermanent Loss: If the prices of tokens change significantly compared to each other, you might earn less than if you just held the tokens.
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Market Risk: Token prices can rise or fall quickly, affecting the value of your tokens.
Step 4: Set Your Concentrated Range
In concentrated liquidity pools, you select a specific price range:
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Wide Range: Your liquidity stays active longer, but you earn smaller fees per trade.
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Narrow Range: You earn higher fees per trade, but your liquidity may become inactive if prices move outside your range quickly.
Tip: Choose a narrower range (+/- 2%) if you think token prices will stay steady (like for bondETH). Choose a wider range (+/- 5%) if you expect more price movement (like for levETH).
Step 6: Staking Your LP vs. Leaving Your LP Unstaked
After providing liquidity, you have two choices:
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Staking: Locks your tokens to earn Aerodrome emissions. On Aerodrome, veAERO holders can vote (bribe) to direct AERO token emissions to liquidity pools. If there is an active bribe, you can stake to earn these emissions. You give up the majority of trading fees if you stake, so consider your expectations of trading volumes and fees versus the AERO emissions rate if staking is available.
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Unstaked: You earn trading fees every time someone trades against the pool while in your liquidity range.
Regardless of whether you leave your liquidity staked or unstaked, you will receive Plaza incentives for providing liquidity. You will see your Plaza Points on the Plaza UI.
Step 7: Monitor and Rebalance Your Liquidity
As market prices for bondETH and levETH move, your liquidity may move out of range. You should frequently monitor your liquidity position to ensure it is in range and you are earning trading fees or AERO emissions.
If your liquidity moves out of range, simply withdraw your liquidity, rebalance your position between bondETH/levETH and USDC via a swap against the pool, and deposit your liquidity in a new range.
Happy Yield Farming! Open a Support Ticket on Discord if you have any questions or comments about providing liquidity for Plaza assets on Aerodrome.
Stay Connected
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Website: plaza.finance
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Docs: docs.plaza.finance
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Twitter/X: @plaza_finance
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Discord: discord.gg/plazafinance
