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.

governance

github

twitter

discord

etherscan

website

Exchanges (DEX)

Balancer

# Balancer Expenses Methodology

## 1. Overview

The Balancer expenses metric measures the total USD value of token incentives distributed by the Balancer protocol to liquidity providers. This metric tracks the protocol's spending on liquidity mining programs and represents a key operational expense. The calculation aggregates BAL token distributions from multiple incentive mechanisms across Ethereum, Polygon, and Arbitrum, converting token amounts to USD values using end-of-day pricing data.

## 2. Data sources

- **Balancer MerkleOrchard events**: Parsed `DistributionClaimed` events from Balancer v2 MerkleOrchard contracts on Ethereum, Polygon, and Arbitrum that track merkle tree-based token distributions
- **Balancer MerkleRedeem events**: Parsed `Claimed` events from the legacy MerkleRedeem contract on Ethereum for historical incentive distributions
- **Ethereum token transfers**: ERC20 `Transfer` events for BAL tokens originating from the null address (`0x0000000000000000000000000000000000000000`) representing token minting and direct distributions
- **End-of-day price feeds**: Daily token price data for USD conversion of BAL token amounts
- **Token metadata**: Token decimal information for accurate amount calculations

## 3. Step-by-step calculation

### Component A: Liquidity incentive event extraction
- **Purpose**: Collects all BAL token distribution events from Balancer's incentive systems
- **Logic**: Extracts events from three sources: MerkleOrchard `DistributionClaimed` events on Ethereum, Polygon, and Arbitrum (filtering for BAL token addresses specific to each chain), legacy MerkleRedeem `Claimed` events on Ethereum, and direct BAL token transfers from the null address on Ethereum after April 7, 2022. Each event captures the recipient address, token amount, block timestamp, and transaction details. The system identifies the chain from the source data and applies chain-specific BAL token addresses for filtering.
- **Key fields**: `block_timestamp` for timing, `account_address` for recipient identification, `amount` for token quantity, `token_address` for asset identification, `chain` for network classification

### Component B: Account validation and classification
- **Purpose**: Validates that distribution events come from legitimate Balancer incentive contracts
- **Logic**: Joins the extracted events with a dimension table containing known Balancer incentive account addresses (Merkle Redeem, Merkle Orchard contracts) across different chains. Only events from these validated contracts are included, filtering out any potential spam or unrelated transfers. The join also adds human-readable account names for tracking purposes.
- **Key fields**: `account_address` for contract identification, `account_name` for contract labeling, `chain` for network matching

### Component C: USD conversion and decimal correction
- **Purpose**: Converts raw token amounts to standardized USD values
- **Logic**: Applies the USD conversion macro that corrects for token decimal places and multiplies by end-of-day BAL token prices. The decimal correction accounts for the fact that BAL tokens have 18 decimal places, so raw amounts are divided by 10^18 to get actual token quantities. These corrected amounts are then multiplied by the corresponding day's BAL token price to get USD values.
- **Key fields**: `token_incentives` as the corrected USD amount, `timestamp` for price lookup matching

### Final aggregation
- **Combining components**: All validated and converted incentive distributions are aggregated by day, chain, and business dimensions (business line as 'Exchange AMM', market sector as 'exchanges', business segment as 'dex')
- **Currency conversion**: Uses end-of-day BAL token prices from price feeds, with amounts converted from raw token units (wei) to actual tokens by dividing by 10^18
- **Time aggregation**: Events are truncated to daily boundaries using the block timestamp, creating daily totals for each chain
- **Final calculation**: The expenses metric equals the daily sum of all USD-converted BAL token distributions to validated incentive accounts across all supported chains, with missing dates filled with zero values to maintain a complete time series

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

Total project operating and incentive expenses.

BalancerBAL

Expenses

Expenses

Competitive landscape

Chain breakdown