Uniswap, Aerodrome, and other DEXs: how do liquidity pools work?
Every DEX uses liquidity pools, but not every pool works the same way. Uniswap and Aerodrome, two of the largest DEXs by volume, offer different models: traditional pools, concentrated liquidity, and their own reward systems. Knowing which model you're using is the first step to understanding a position.
The basic model: the x · y = k formula
Most DEXs started out with what's called an automated market maker (AMM). The pool holds two tokens, and the product of their quantities must stay constant:
x · y = k
Example: a pool with 100 ETH and 200,000 USDC has k = 20,000,000. The implied price is 200,000 ÷ 100 = 2,000 USDC per ETH. When someone buys ETH, the amount of ETH in the pool goes down, the amount of USDC goes up, and the price adjusts on its own. In this model, your liquidity covers every price, from zero to infinity.
Uniswap: V2, V3, and V4
- Uniswap V2 (2020): the classic x · y = k model. Simple, but most of the capital sits at prices that are almost never traded.
- Uniswap V3 (2021): introduced concentrated liquidity. The LP picks a price range, and each position becomes an NFT. It also brought per-pool fee tiers: 0.01%, 0.05%, 0.3%, and 1%.
- Uniswap V4 (2025): keeps concentrated liquidity, but brings all pools into a single contract and adds hooks, extensions that allow custom rules such as dynamic fees.
Aerodrome: the leading DEX on Base
Aerodrome runs on the Base network and uses an incentive model called ve(3,3). It has two types of pools:
- Basic: traditional pools with no price range. They come in a volatile version (x · y = k) and a stable version, with its own curve for assets that move together, such as USDC/USDT.
- Slipstream: Aerodrome's concentrated liquidity model, with a price range, like Uniswap V3.
How rewards differ on Aerodrome
On Aerodrome, the LP can stake the position in the pool's gauge. In that case, on top of the trading fees generated by the position, they receive emissions in AERO tokens. Emissions don't replace the fees: the two sources add up.
That's why, in an Aerodrome position, the return comes from fees and, when staked, from AERO as well. Measuring only the fees leaves part of the result out.
Other DEXs
There are many other DEXs, with variations on the same models: Curve, which specializes in stable assets; PancakeSwap, with versions inspired by Uniswap V3; and a number of DEXs derived from Aerodrome and Uniswap on other networks. The concepts in this article apply to almost all of them.
Why the model changes how you analyze a position
- Price range: only exists in concentrated liquidity (V3, V4, Slipstream). In Basic pools, there's no such thing as "out of range."
- Source of return: trading fees, AERO rewards, or both.
- Position format: an NFT in concentrated liquidity; LP tokens in traditional pools.
If you hold positions across several protocols, you need a view that respects these differences. The SafeVault Performance Tracker tracks Uniswap V3 and V4 and Aerodrome Basic and Slipstream, and counts AERO rewards as part of your yield, so comparisons between positions are fair.
Frequently asked questions
Which DEX pays more: Uniswap or Aerodrome?
It depends on the pool, the volume, the current rewards, and the range you choose. Compare specific pools, not protocols.
Does every Aerodrome pool pay AERO?
Only pools with an active gauge and votes receive emissions. And to receive them, the position must be staked.
Did Uniswap V4 replace V3?
No. Both versions run side by side, each with its own pools and liquidity.
Conclusion
Uniswap and Aerodrome share the same principle, two-token pools that reward liquidity providers, but with very different models: the classic formula, concentrated liquidity, hooks, and AERO rewards.
Before comparing results, identify the DEX, the version, and the pool type of each position. That's what determines how the return should be measured.
