Liquidity providers deposit funds into Bancor and receive trading fees from traders (supply-side fees).

Bancor is a non-custodial exchange protocol built on Ethereum. Bancor was founded by Galia Benartzi, Guy Benartzi, Eyal Hertzog, & Yudi Levi and launched in 2016.

BNT tokenholders own and govern the protocol. They currently take a cut of the total trading fees paid by traders (revenue). Bancor's investors include DeFiance Capital, ParaFi Capital, Mechanism Capital, etc.

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Exchanges (DEX)

Bancor

# Bancor Expenses Methodology

## 1. Overview

The Bancor expenses metric measures the total value of token incentives paid by the protocol to liquidity providers and users affected by impermanent loss. This includes direct staking rewards, standard rewards for BNT pool participation, and compensation for impermanent loss across Bancor's v1, v2.1, and v3 protocol versions. The metric answers how much the protocol spends on user incentives and compensation, providing insight into Bancor's operational costs for maintaining liquidity and user retention.

## 2. Data sources

The calculation relies on several types of blockchain data from Ethereum:

- **Bancor contract events**: Parsed `RewardsClaimed` and `RewardsStaked` events from various staking rewards contracts and `RewardsClaimed` events from standard rewards contracts
- **Bancor function call data**: Ethereum transaction traces for liquidity protection functions (`addLiquidity`, `removeLiquidity`) and network functions (`deposit`, `depositFor`, `withdraw`)
- **BNT token events**: Parsed `Issuance` events from the BNT token contract (`0x1f573d6fb3f13d689ff844b4ce37794d79a7ff1c`) and `Transfer` events
- **vBNT token events**: Parsed `Destruction` events from the vBNT token contract for identifying burn transactions
- **External data**: End-of-day token price feeds for USD conversion and token metadata for decimal correction

## 3. Step-by-step calculation

### Component A: Direct liquidity incentives
- **Purpose**: Captures direct token rewards paid to liquidity providers through various incentive programs
- **Logic**: Extracts reward amounts from Bancor staking rewards contract events (`RewardsClaimed` and `RewardsStaked`) and standard rewards events. For standard rewards, only includes rewards where the pool parameter equals the BNT token address. All rewards are denominated in BNT tokens. Events are filtered by timestamp for incremental processing and aggregated by transaction details.
- **Key fields**: `amount` (reward quantity), `account_address` (recipient), `block_timestamp` (timing), contract `address` (payer)

### Component B: Impermanent loss compensation
- **Purpose**: Identifies and quantifies BNT tokens minted as compensation for users experiencing impermanent loss during liquidity withdrawals
- **Logic**: Joins liquidity withdrawal function calls with BNT token issuance events occurring in the same transaction. For v2.1 protocol withdrawals (`removeLiquidity` functions), compensation is only counted if the withdrawing user previously deposited liquidity (verified against depositor addresses). For v3 protocol withdrawals (`withdraw` function), compensation is identified when BNT is minted without corresponding vBNT burns and when BNT is transferred to the vault address (`0x649765821d9f64198c905ec0b2b037a4a52bc373`). The compensation amount equals the BNT issuance amount in the transaction.
- **Key fields**: `amount` (compensation quantity from BNT issuance), `account_address` (recipient from withdrawal), `block_timestamp`, `transaction_hash` (linking withdrawal to issuance)

### Component C: Account filtering
- **Purpose**: Ensures only legitimate protocol incentive payments are counted by filtering to predefined liquidity incentive accounts
- **Logic**: Maintains a hardcoded list of known Bancor liquidity incentive contract addresses, categorized as "Standard Rewards" (1 address), "Staking Rewards" (8 addresses), and "Impermanent loss compensation" (13 addresses). Only payments from these specific addresses are included in the final calculation.
- **Key fields**: `account_address` (payer address), `account_name` (incentive category)

### Final aggregation
- **Combining components**: Direct liquidity incentives and impermanent loss compensation are combined using union operations, creating a unified dataset of all token incentive payments
- **Currency conversion**: Raw BNT token amounts are converted to USD using end-of-day price feeds and corrected for token decimals (18 decimals for BNT)
- **Time aggregation**: All payments are aggregated by day using `timestamp_trunc` on the block timestamp, with the timestamp grain set to "day"
- **Final calculation**: Daily totals are calculated by summing all USD-converted incentive amounts by timestamp, chain, and business metadata. Missing dates are filled with zero values to ensure complete time series data. The final expenses value equals the sum of all token incentives paid on each day.

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

Total project operating and incentive expenses.

BancorBNT

Expenses

Expenses

Competitive landscape

Chain breakdown