Liquidity providers deposit funds into Balancer and receive trading fees from traders (supply-side fees). In addition, Balancer provides liquidity providers with additional yield using boosted pools.

Balancer is a non-custodial exchange protocol built on Ethereum. Balancer was founded by Fernando Martinelli and launched in 2018.

BAL tokenholders own and govern the protocol. They currently take a cut of the total trading and yield fees (revenue). Balancer's investors include DeFiance Capital, Three Arrows Capital, Alameda Research, etc.

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Balancer

# Balancer Earnings Methodology

## 1. Overview

Balancer earnings represents the net profit of the Balancer protocol, calculated as total revenue minus total expenses. This metric measures the protocol's profitability from its automated market maker operations across multiple blockchain networks. Revenue comes from trading fees, flashloan fees, and partnership arrangements, while expenses consist of token incentives distributed to liquidity providers.

## 2. Data sources

- **Protocol fee events**: Parsed Balancer `Vault_PoolBalanceChanged_event` records from Ethereum, Arbitrum, Avalanche, Base, Gnosis, Optimism, and Polygon capturing protocol fee collection
- **Flashloan events**: Parsed Balancer `Vault_FlashLoan_event` records across all supported chains containing flashloan volumes and fees
- **Fee tier updates**: Parsed `ProtocolFeesCollector_SwapFeePercentageChanged_event` and `ProtocolFeesCollector_FlashLoanFeePercentageChanged_event` records tracking governance-approved fee tier changes
- **Incentive distribution events**: Parsed `MerkleOrchard_DistributionClaimed_event` records from Ethereum, Polygon, and Arbitrum tracking BAL token reward distributions
- **Legacy incentive events**: Parsed `MerkleRedeem_Claimed_event` records from Ethereum for historical reward distributions
- **Token transfer events**: ERC20 transfer events from Ethereum capturing direct BAL token distributions from null address
- **Transaction data**: Transaction records from all supported blockchains providing user context and transaction metadata
- **Token metadata**: Token contract information including decimal places and symbols
- **End-of-day price feeds**: Daily token price data for USD conversion

## 3. Step-by-step calculation

### Component A: Protocol fee revenue
- **Purpose**: Calculate revenue from trading fees and yield fees collected by the protocol
- **Logic**: Extract protocol fee collection events from `Vault_PoolBalanceChanged_event` records where protocol fee amounts are greater than zero. These events capture fees collected by the protocol fee collector address `0xce88686553686da562ce7cea497ce749da109f9f` across all chains. Join with fee tier update events to determine the applicable protocol fee percentage at the time of each transaction. Calculate gross fees by dividing collected fees by the protocol fee tier (since collected fees represent only the protocol's share). Handle both token-based fees and LP token-based fees by unnesting token arrays and aggregating by transaction. Convert token amounts to standard decimals and USD values using end-of-day price feeds.
- **Key fields**: `poolid` (pool identifier), `tokens` and `protocolfeeamounts` (token addresses and fee amounts), `block_timestamp` (for daily aggregation)

### Component B: Flashloan fee revenue  
- **Purpose**: Calculate revenue from flashloan fees charged by the protocol
- **Logic**: Extract flashloan events from `Vault_FlashLoan_event` records across all supported chains. Each event contains the flashloan amount and associated fee amount. Join with flashloan fee tier updates to apply the correct fee percentage for each transaction period. Convert token amounts to standard decimals using token metadata and to USD values using end-of-day price feeds. Aggregate fees by day, chain, and token.
- **Key fields**: `token` (borrowed token address), `amount` (loan amount), `feeAmount` (fee charged), `recipient` (borrower address)

### Component C: Beethoven X revenue share
- **Purpose**: Calculate revenue from the partnership with Beethoven X on Optimism
- **Logic**: For Optimism chain only, calculate Balancer's 50% share of protocol fees. Take protocol fees collected through the standard mechanism and multiply by 0.5 to represent Balancer's portion of the partnership revenue. This applies only to fees collected on Optimism where Beethoven X operates as a frontend partner.
- **Key fields**: Protocol fee amounts from Optimism, partnership revenue share percentage (50%)

### Component D: Token incentive expenses
- **Purpose**: Calculate expenses from liquidity mining rewards distributed to users
- **Logic**: Extract incentive distribution events from `MerkleOrchard_DistributionClaimed_event` records on Ethereum, Polygon, and Arbitrum where BAL tokens are distributed to liquidity providers. Include legacy distributions from `MerkleRedeem_Claimed_event` on Ethereum. Also capture direct BAL token transfers from null address to users after April 7, 2022, representing additional incentive programs. Filter to include only BAL token addresses specific to each chain. Convert token amounts to standard decimals and USD values using end-of-day BAL token prices.
- **Key fields**: `token` (reward token address), `amount` (distribution amount), `user` (recipient address), `distributor` (merkle contract address)

### Final aggregation
- **Combining components**: Sum all revenue components (protocol trading fees + flashloan fees + Beethoven X revenue share) and subtract total expenses (token incentive distributions). Revenue and expenses are calculated independently then combined using the earnings formula.
- **Currency conversion**: All token amounts are converted to USD using end-of-day price feeds matched by date, token address, and chain. Token amounts are first normalized by dividing by 10^decimals to account for different token decimal places.
- **Time aggregation**: All events are aggregated to daily boundaries using timestamp truncation. Missing days are filled with zero values to maintain continuous time series.
- **Final calculation**: Daily earnings equals daily revenue minus daily expenses, aggregated across all supported chains and summed to protocol level. The result represents Balancer's net daily profit in USD.

*This methodology was automatically generated by Token Terminal's methodology analyzer.*

Net profit (also profits, net income, profitability) — revenue remaining after subtracting expenses.

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