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 Supply-side fees Methodology

## 1. Overview

Supply-side fees represent the portion of total fees generated by Balancer protocol that flows to liquidity providers rather than the protocol treasury. This metric answers the question: "How much are liquidity providers earning from fees on Balancer?" The calculation determines total fees from flashloans and trading activities, then subtracts the protocol's share to arrive at the amount distributed to liquidity providers.

## 2. Data sources

The calculation uses several types of raw blockchain data:

- **Balancer Vault events**: Parsed `FlashLoan` events from Balancer V2 Vault contracts across Ethereum, Arbitrum, Avalanche, Base, Gnosis, Optimism, and Polygon chains
- **Pool balance events**: Parsed `PoolBalanceChanged` events from Balancer V2 Vault contracts that capture protocol fee collections in non-pool tokens
- **Token transfer events**: ERC20 `Transfer` events to the protocol fee collector address `0xce88686553686da562ce7cea497ce749da109f9f` for protocol fees paid in pool LP tokens
- **Protocol fee updates**: Parsed `FlashLoanFeePercentageChanged` and `SwapFeePercentageChanged` events from Balancer's ProtocolFeesCollector contracts
- **Transaction data**: Blockchain transaction records for linking flashloan events to user addresses
- **Token metadata**: Token contract information including decimals and symbols for proper amount calculations
- **Price feeds**: End-of-day token price feeds for USD conversion

## 3. Step-by-step calculation

### Component A: Flashloan fee collection
- **Purpose**: Captures fees generated from flashloan activities on Balancer
- **Logic**: Extracts `FlashLoan` events from Balancer V2 Vault contracts across all supported chains. For each event, retrieves the `feeAmount` field representing the fee charged for the flashloan. Joins with token metadata to correct for decimal places by dividing raw amounts by 10^decimals. Applies current protocol fee tiers by joining with `FlashLoanFeePercentageChanged` events based on event timing. Converts corrected token amounts to USD using end-of-day price feeds. Aggregates fees by day, chain, and pool address. Excludes the Gnosis staBAL3 token address to avoid double-counting
- **Key fields**: `token_amount` (flashloan principal), `fee_amount` (flashloan fees), `token_address`, `account_address` (pool address), `protocol_fee_tier`

### Component B: Protocol trading fee collection  
- **Purpose**: Captures protocol fees collected from trading activities to reconstruct total trading fees
- **Logic**: Combines two sources of protocol fee collection. First, extracts `PoolBalanceChanged` events where `protocolfeeamounts` arrays contain non-zero values, unnesting token addresses and corresponding protocol fee amounts. Second, identifies token transfers to the protocol fee collector address `0xce88686553686da562ce7cea497ce749da109f9f` from the null address, representing protocol fees paid in pool LP tokens. Joins with `SwapFeePercentageChanged` events to apply current protocol fee tiers based on event timing. Corrects token amounts for decimals and converts to USD using end-of-day price feeds. Aggregates by day and reconstructs total trading fees by dividing protocol fees by protocol fee tier (total_fees = protocol_fees / protocol_fee_tier)
- **Key fields**: `protocolfeeamounts` arrays, `token_addresses` arrays, transfer `value`, `protocol_fee_tier`, `account_address` (pool address)

### Component C: Protocol fee tier tracking
- **Purpose**: Maintains historical protocol fee percentages for accurate fee calculations
- **Logic**: Tracks changes to protocol fee rates over time using `FlashLoanFeePercentageChanged` and `SwapFeePercentageChanged` events. Converts raw percentage values from 18-decimal format to decimal percentages by dividing by 10^18. Creates temporal ranges for each fee tier using window functions to determine the next fee change. This enables proper application of fee tiers to historical events based on timing
- **Key fields**: `newFlashLoanFeePercentage`, `newSwapFeePercentage`, event timing for temporal joins

### Final aggregation
- **Combining components**: Unions flashloan fees (where protocol_fee_tier = 0, excluding Optimism) with reconstructed trading fees (excluding Optimism). Trading fees are calculated as protocol_fees / protocol_fee_tier to get total fees before protocol share is deducted
- **Currency conversion**: Applies USD conversion using end-of-day token price feeds matched by timestamp, token address, and chain. Uses the `convert_to_usd_and_correct_decimals` functionality within the finalization process
- **Time aggregation**: Truncates all timestamps to daily boundaries using `timestamp_trunc(block_timestamp, day)` and aggregates fees by day
- **Final calculation**: Calculates supply-side fees as `total_fees * (1 - protocol_fee_tier)` where total_fees comes from the combined flashloan and trading fee sources, and protocol_fee_tier represents the protocol's share (e.g., 0.5 for 50% protocol share). The result represents the portion flowing to liquidity providers

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

Portion of fees distributed to service providers or supply-side participants.

BalancerBAL

Supply-side fees

Supply-side fees

Competitive landscape

Chain breakdown