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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Bancor

# Bancor Supply-side fees Methodology

## 1. Overview

Bancor supply-side fees represent the portion of trading fees that goes to liquidity providers rather than the protocol itself. The metric is calculated by taking total trading fees collected from Bancor DEX trades and subtracting the protocol fee percentage, which varies over time based on governance decisions. This metric answers the business question: "How much in fees are liquidity providers earning from providing liquidity to Bancor pools?"

## 2. Data sources

The calculation uses several key data sources:
- **Bancor protocol events**: Parsed `TokensTraded` events from Bancor v3 and `Conversion` events from Bancor v2.1 on Ethereum that contain trading fee amounts
- **Protocol governance events**: `NetworkFeeUpdated` events from Bancor v2.1 and `NetworkFeePPMUpdated` events from Bancor v3 that track changes to protocol fee percentages
- **Token metadata**: Token symbol and decimal information for proper amount normalization
- **End-of-day price feeds**: Token prices for USD conversion
- **Ethereum transaction data**: Block timestamps and transaction details for temporal organization

## 3. Step-by-step calculation

### Component A: Raw fee extraction
- **Purpose**: Extract trading fee amounts from Bancor protocol events across different versions
- **Logic**: The system processes two types of Bancor trading events. For v3 trades, it captures the `targetFeeAmount` field from `TokensTraded` events, which represents the fee charged to traders. For v2.1 trades, it extracts the `conversionFee` field from `Conversion` events. The system also handles special BNT-specific fees from v3 `TokensTraded` events using the `bntFeeAmount` field, but sets this to zero when either token in the trade is BNT itself to avoid double-counting. Native ETH addresses are standardized to WETH addresses for consistency across the system.
- **Key fields**: `targetFeeAmount` and `bntFeeAmount` from v3 events, `conversionFee` from v2.1 events, `sourceToken` and `targetToken` addresses, block timestamps, and transaction identifiers

### Component B: Fee normalization and USD conversion
- **Purpose**: Convert raw fee amounts to standardized USD values for consistent reporting
- **Logic**: Raw fee amounts are first normalized by dividing by the appropriate token's decimal places to get actual token quantities. The system identifies that fees are always paid in the target token (token1) of each trade. These normalized amounts are then converted to USD values by joining with end-of-day price feeds based on the trade date, token address, and chain. If no price data is available, the USD value defaults to zero.
- **Key fields**: Normalized `amount` values, USD `price` from price feeds, calculated `fees` in USD

### Component C: Protocol fee tier tracking
- **Purpose**: Track the percentage of fees that go to the protocol versus liquidity providers
- **Logic**: The system monitors protocol fee percentage changes through governance events. For v2.1, it processes `NetworkFeeUpdated` events, and for v3, it processes `NetworkFeePPMUpdated` events. Fee percentages from v3 events are stored in parts-per-million format and converted to decimal percentages by dividing by one million. The system includes a hardcoded zero protocol fee for v2.1 starting from the protocol launch date of June 16, 2020. To ensure continuous coverage, protocol fee tiers are forward-filled across time periods when no updates occur, meaning each day uses the most recent fee tier update.
- **Key fields**: `protocol_fee_tier` as decimal percentage, version identifiers, and timestamps

### Final aggregation
- **Combining components**: Total fees are aggregated by day, chain, market sector, business segment, product, and version. These aggregated fees are then joined with the corresponding protocol fee tier data based on matching timestamp, chain, and version
- **Currency conversion**: All amounts are converted to USD using end-of-day price feeds, with the conversion happening after decimal normalization but before final aggregation
- **Time aggregation**: All data is aggregated to daily boundaries using day-truncated timestamps, ensuring consistent time-series reporting
- **Final calculation**: Supply-side fees are calculated using the formula: total fees multiplied by (1 minus protocol fee tier). This represents the portion of trading fees that flows to liquidity providers rather than being retained by the protocol as revenue

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

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

BancorBNT

Supply-side fees

Supply-side fees

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