Incentive guidelines
Projects adding incentives must follow guidelines governing Liquidity Payments: limits, qualifying pairs, and grace periods. Adherence keeps emissions flowing to pools generating real economic activity and maintains pool standing.
Important disclaimer
Incentives should not be treated as project endorsement. Enforcement of the guidelines (including suspension of AERO Rewards) rests with Aero governance (the Aero Foundation and Emergency Council).
How it works
| Incentive type | Audience | When it's available | Purpose |
|---|---|---|---|
| Liquidity Payments | Token Operators | After AERO Rewards activation | Growth tool: activates once AERO Rewards are live and governed by guidelines below |
Why these guidelines exist
The guidelines align incentives with Aero's core priorities (security, stability, and sustainable economic activity). Each principle translates to specific rules:
- Safest standards first. Limiting incentives to pools paired with Connector Tokens concentrates liquidity around reliable, widely held assets, reducing systemic risk. This is enforced through the Connector Token list below.
- Reward real economic activity. Tying incentive limits to trading fees prioritizes pools generating real value. Deep liquidity attracts volume, which generates fees and AERO Rewards. Fee-based caps enforce this principle.
- Support new growth. Grace periods let new tokens and pairs establish liquidity before fee-based limits apply, giving emerging projects runway to build activity.
- Prevent exploitation. Anti-manipulation rules stop wash trading and artificial volume from capturing emissions meant for genuine activity.
Connector Tokens
Connector Tokens are foundational assets selected for security, stability, and widespread adoption. They serve as the base pairs for incentive-eligible pools. Required for direct pricing of assets across the Aero app, they are kept small to protect performance and reliability. Incentives (Liquidity Payments) are limited to pools paired with Connector Tokens.
Current Connector Tokens
| Type of asset | Asset ticker(s) / issuer(s) |
|---|---|
| Stablecoins | USDC, USDT, USDG, DAI, frxUSD, EURC, USDS, USDe |
| Wrapped assets | cbBTC, WETH, cbETH, wstETH, WBTC, SOL |
| Ecosystem | AERO, OP, ARB |
| Equities | Any issued by: Coinbase, Robinhood, Centrifuge, xStocks |
Connector Token qualification criteria
A token must meet all of the following to qualify as a Connector Token:
| Criterion | Standard |
|---|---|
| Established reliability | Stablecoins and wrapped assets: maintained above 200M global LP TVL for 1+ years, or fully-collateralized (>100M, 100% of supply) and instantly redeemable. Ecosystem tokens: foundational assets with proven ecosystem growth, such as network governance or gas tokens. |
| Transparency and auditing | Public, frequently third-party-verified data on backing, redemption, and performance. |
| Security | Verified, audited, rigorously tested contracts; preferably insured and bug-bounty-protected; no centralized ability to alter balances, redirect yield, or move collateral. |
| Adoption | Serves as base pair for many assets; carries significant volume on and off Aero. |
Incentive limits
A project can deposit Liquidity Payments up to the lower of the caps that follow, applied per pool. These caps ensure incentives reward real economic activity and prevent abuse.
Fee-based cap
Limit: 15x the trading fees the pool generated in the previous 48 hours.
A pool generating $100 in trading fees can receive up to $1,500 in Liquidity Payments.
Note: High-multiplier periods may raise this cap temporarily to support strategic growth.
TVL-based cap
Limit: 5% of Connector Token value in the pool (0.1% for pools with Peg Stability Modules or Automated Market Operations).
Examples:
- A pool with $100K WETH TVL and $100 in fees can receive up to $1.5K (15x fees, the lower cap).
- A pool with $100K WETH paired with $200K of another token and $1K in fees can receive up to $5K (5% of WETH value, the lower cap).
- A pool running an AMO with $5M USDC paired with $25M of a native token is capped at $5K (0.1% x $5M USDC, the lower cap).
Multi-pool aggregation for non-Connector stablecoins
A non-Connector stablecoin supporting multiple pools of the same pair (for example, Slipstream plus Stable and Volatile Basic Pools) may aggregate incentive limits based on combined fees.
Example: Pools generating $10,000, $2,000, and $500 in fees may collectively receive ($10,000 + $2,000 + $500) x 15 = $187,500 in combined incentives, distributed at the project's discretion across the pools.
Goodwill clause
A non-Connector stablecoin project exceeding its limit may receive a one-time exception if both conditions hold:
- Fees plus incentives do not exceed the 4-week average (including the current week).
- Total incentives over the last 4 weeks stay within the cumulative 15x fee limit for that period.
This clause accommodates temporary spikes in activity without penalty.
sAERO exemption
A project staking liquid AERO as sAERO may exceed standard limits and deposit up to the higher of: the fee/TVL limit above, or 1x the value of its sAERO stake on any Connector-Token pair per program.
Grace periods for new tokens and pairs
New projects and pairs receive temporary relief from standard fee-based limits to establish liquidity before regular rules apply.
New tokens (4-week grace period)
Before fee-based limits apply, a new token project uses 5% of its network-wide Connector-Token TVL as the benchmark for Liquidity Payment limits (0.1% for PSM/AMO pools).
Projects staking AERO as sAERO may use up to 4x the value of their sAERO stake in Liquidity Payments during the first week of the grace period.
Example: A new token project stakes 1,000 AERO (worth $5,000) as sAERO. During week one, it can deposit up to $20,000 in Liquidity Payments (4x the sAERO value). In weeks 2-4, it follows the 5% TVL rule. After 4 weeks, fee-based and TVL-based caps apply normally.
New pairs of an existing token (2-week grace period)
A new pool pairing an already-listed token with a different Connector Token may share the incentive limit of one existing pool of that token during the grace period.
Example: TokenA already has a TokenA-WETH pool generating $1,000 in weekly fees (limit: $15,000/week). A new TokenA-USDC pool can share that limit during its 2-week grace period, so the two pools together may receive up to $15,000 weekly. After the grace period, each pool's limit is calculated independently based on its own fees.
Anti-manipulation rules
Manipulating volume or fees to artificially increase incentive eligibility is strictly prohibited. Prohibited activities include:
- Wash trading (repeatedly buying and selling the same tokens)
- Unprofitable arbitrage designed solely to inflate fees
- Unnecessary AMO operations that create false volume
- Any other activity that generates fees without real economic value
Community bounties
Community members who detect and report verified manipulation can earn bounties up to $10,000. Bounty amounts depend on information quality and significance of the violation; amounts may be split across multiple valid reports of the same activity.
Penalties and enforcement
Violations of incentive limits or anti-manipulation rules incur escalating consequences:
| Strike | Violation | Consequence | Next step |
|---|---|---|---|
| Strike One | First overage or minor manipulation | Overage amount is deducted from the pool's allowance in following periods. Example: a $1,000 limit exceeded by $200 reduces the next period's allowance to $800. | Monitor compliance going forward. |
| Strike Two | Second violation within 12 months | Pool's AERO Rewards suspended for one week. Overage is still deducted from future allowances. | The pool can resume if there are no further violations. |
| Strike Three | Third violation within 12 months or severe manipulation | AERO Rewards removed from all pools of the violating token. Token is de-listed from the Token Registry. | De-listing is permanent unless governance votes to restore. |
Enforcement: Enforcement (including the power to suspend a pool's AERO Rewards or de-list a token) rests with Aero governance (the Aero Foundation and Emergency Council).
Pool fee rates
A project may request a fee-rate change on a pool for its listed token. The rate must match the highest-liquidity comparable pair on Aero and may not fall below it.
Example: A stablecoin paired with WETH must match the fee rate of the leading WETH-USDC Volatile Basic Pool or equivalent Slipstream pool on the same network.
Fee-rate requests should be made through official Aero governance channels.
Disclosure and removal
All projects must provide a treasury address for network-based monitoring of incentive activity and AERO Rewards management.
Grounds for removal
A pool's AERO Rewards or a token's listing may be removed for the following reasons:
- Dishonest or obfuscated network-based evidence. This includes minting new supply to artificially inflate TVL, manipulating protocol-owned liquidity (PoL), wash trading, timing price action to inflate incentive value, concentrating LPs unfairly, or failing to disclose OTC Liquidity Payments.
- Excessive AERO selling. New or low-utility projects must not use Aero listings primarily to sell AERO Rewards. Autopilot for Token Operators is an alternative for responsible reward management.
- Lack of traction. Pools generating less than $10K in weekly volume or tokens showing limited roadmap progress may lose listing status.
Removal decisions are made by Aero governance. Projects under review will receive notice and an opportunity to address concerns.
Getting started
Check qualification
- Verify the token meets Connector Token criteria if a Connector-paired pool is planned for launch, or confirm the pairing token is a current Connector Token.
- Review the Incentive limits section to estimate the incentive budget based on expected fees and TVL.
- Determine eligibility to qualify for a grace period (new token or new pair of an existing token).
Add incentives in the app
Incentives are added directly in the app. No request or approval step is needed.
- Open the pool's overview page, open its Incentives window, and select Add incentives.
- Choose the payment token (it must be listed on the Token Registry), enter the amount, and set the From and To dates. The minimum duration is 7 days.
- Acknowledge the terms, allow access to the token in the wallet, and confirm. The program appears under Portfolio > Incentives.
See Creating an incentive program for the full walkthrough.
Monitor compliance
- Track the pool's fees and ensure incentives stay within limits.
- Report any suspected manipulation through the community bounty program.
- Keep the treasury address and allocation strategy up to date.
For technical documentation on creating Liquidity Payments, see Aero's GitHub repositories.