Exploring 40 Acres Finance: the DeFi Protocol that Unlocks Liquidity for your veNFTs

Part 1 by Mackenzie Patel @HashBasis

Original article can be found on HashBasis’s Blog here

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Introduction

Our foray into the Aerodrome and Velodrome ecosystems continues! Our next deep dive is on 40 Acres Finance, a protocol that launched in early 2025 and lets users borrow against their veNFT positions. I was intrigued by 40 Acres because their business model is simple and elegant. The general flow for a user is:

• Obtain a veNFT position on Aerodrome or Velodrome by locking AERO/VELO into a veNFT

• Deposit this veNFT into 40 Acres → this collateralizes the veNFT and enables the user to borrow USDC according to a predetermined formula (currently average weekly rewards * 8 epochs)

• Debt is automatically repaid over time by the rewards the veNFT generates from Aerodrome and Velodrome

• Users can never be liquidated because their collateral is revenue generating (this avoids liquidation fees and penalties as well)

It’s amazing how automated their system is as well - these loans are literally self-repaying, so it truly is a “set it and forget it” instrument. 40 Acres offers a suite of repayment strategies, so the user gets to decide how and when the repayment happens. For example,

I chose the Balanced strategy, which means 10% of my weekly rewards are compounded/reinvested back into the veNFT while the remaining 90% goes towards the repayment of my loan. You also have the option to customize your repayment plan, but the maximum reinvestment percentage is always 25% (just know that increasing the reinvest percentage will extend how long your loan takes to fully repay). Of course, users can choose to repay their loan at any time and not wait for their weekly rewards to cover the repayment (which could take months to years).

A few other notable features on the borrower side:

• “Auto Top-Up Settings” → based on your available credit, new USDC is automatically sent to your wallet at the beginning of each epoch (i.e. your loan increases without needing to manually click through the UI and borrow)

• Users can add AERO/VELO into their veNFT directly through 40 Acres (this can be done through Aerodrome/Velodrome as well, so it’s just another option for the user)

• 40 Acres has their own relayer! A relayer is software that automates certain veNFT actions like voting for pools, claiming rewards and swapping rewards. Joining the 40 Acres relayer doesn’t mean that you’ve opened a loan (but the veNFT can be converted to a loan later).

  • Note: I originally deposited my veNFT into a relayer hosted by Aerodrome directly → this basically “hid” the veNFT from 40 Acres so I wasn’t able to borrow against it. For anyone looking to use 40 Acres, you create your veNFT lock on Aerodrome first but don’t lock into a relayer immediately.

• There’s also a feature called “Delegated Repayment.” If you have multiple veNFTs locked into 40 Acres, you can pick the veNFT you want to direct all repayments towards (so it repays the debt associated with the Delegated veNFT more quickly). Once this special veNFT debt is repaid, the rewards again go towards repaying the other veNFT debt equally.

Overall, borrowing on 40 Acres is seamless and alleviates fears of surprise liquidations and constant monitoring. For users that are long on Aerodrome, it’s a great way to keep your underlying position locked/safe while getting access to funds. Here’s what it costs to borrow and user the relayer on 40 Acres:

On the other side of this marketplace are the lenders. These actors supply USDC to 40 Acres in exchange for lender fees, creating a dynamic marketplace of borrowers and suppliers, all underpinned by the tokenomics of Aerodrome/Velodrome. It’s a classic example of the “composability” of DeFi we all gloated about during the summer of 2020.

What 40 Acres Transactions Look Like On-Chain

If you’re familiar with Hash Basis, you’ll know that we understand protocols by actually using them. On a lazy Saturday morning, I had oodles of fun creating new veNFT positions, opening loans on 40 Acres and picking strategies. My first step was creating a new veNFT position on Aerodrome…but I didn’t have any AERO so I swapped from USDb into AERO and then created the lock.

I can tell locking is happening because my AERO is being sent into the Aerodrome Voting Escrow account, and in return, I’m being minted a veNFT that represents this position (number 113828). From there, I’m off to the races and hungry to get my new loan. Once I connect my wallet to 40 Acres, it already recognizes that I have a new locked veNFT - it tells me that I can borrow roughly 3 USDC against my (measly) 33 AERO position.

Once I approve and create the loan, a few things happen on-chain:

• The loan amount (3.33 USDC) is deposited into my wallet

• My veNFT is withdrawn from my account and lands into an escrow-type smart contract published by 40 Acres

After getting my funds, I also recalibrated my repayment strategy (choosing to reinvest 10% of my rewards and using the remaining 90% for repayment & fees). This is a 40 Acres feature, not a separate transaction that happens on-chain:

Finally, on the borrower side, I deposited more AERO into my locked position to increase my credit line (more AERO locked = more than I can borrow). I only locked 0.74 AERO, which meant I could borrow an additional 0.08 USDC (that’s right, I’m a big spender!).

And that’s it! Being a lender is even easier - just head to Earn → Supply to the lending vault. The new APR is currently 6.69%, which is a lot better than the measly interest on my fiat high-yield savings account. The drawback here is that there must be enough liquidity available if you ever wanted to withdraw your supplied amount. Let’s say I supplied 500,000 USDC and a few months later, I wanted to withdraw my principal and interest. If there was only 400,000 USDC available in the lending pool, I couldn’t fully exit my position (a risk inherent to DeFi). I started off by depositing 10 USDC. On chain, 10 USDC left my wallet and I received 0.005382 VAULT tokens back (a receipt token that proves I lent on 40 Acres, similar to an LP token):

And that’s a wrap! Hopefully our readers have a better understanding of how to use 40 Acres finance to unlock liquidity and yield. It’s truly a unique financial product that leverages the already-proven ecosystem of Aerodrome and Velodrome. Our next article on the accounting and tax implications of using 40 Acres is coming soon!

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