Liquidity providers deposit funds into Buffer Finance and receive trading fees from binary options traders (supply-side fees).

Buffer Finance is a non-custodial binary options exchange built on Arbitrum and Polygon. Buffer Finance was founded by an anonymous team and launched in 2021.

BFR token holders own and govern the protocol. They currently take a cut of the total trading fees paid by binary options traders (revenue).

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Buffer Finance

# Buffer Finance Average fees per user (AFPU) Methodology

## 1. Overview

Average fees per user (AFPU) measures the average settlement fees collected per daily active user on Buffer Finance's binary options platform. This metric is calculated by dividing the total daily settlement fees by the number of unique users who created option positions each day. It provides insight into the average revenue generated per user engaging with the platform's options trading functionality.

## 2. Data sources

- **Parsed `Create` events**: Binary options contract events from Buffer Finance's multiple contract deployments across Arbitrum and Polygon networks
- **Arbitrum blockchain event logs**: Event data from USDC, ARB, and BFR denominated binary options contracts
- **Polygon blockchain event logs**: Event data from USDC denominated binary options contracts  
- **End-of-day token price feeds**: Daily closing prices for USDC, ARB, and BFR tokens used for USD conversion
- **Token metadata**: Decimal precision and symbol information for proper amount normalization

## 3. Step-by-step calculation

### Component A: Daily active users identification
- **Purpose**: Count unique users who created binary options positions each day
- **Logic**: Extract all `Create` events from Buffer Finance binary options contracts across Arbitrum and Polygon. Each contract deployment handles different underlying tokens (USDC, ARB, BFR). The `account` field from each event identifies the user creating the option. Truncate event timestamps to daily boundaries and count distinct user addresses per day using HyperLogLog aggregation for scalability.
- **Key fields**: `account` (user address), `block_timestamp` (for daily grouping), `chain` (Arbitrum or Polygon)

### Component B: Daily settlement fees collection  
- **Purpose**: Calculate total settlement fees collected from option creation
- **Logic**: Use the same `Create` events but focus on the `settlementFee` field which contains the fee amount charged when users create options. Each contract deployment is associated with a specific token address (USDC on both chains, ARB and BFR on Arbitrum). Apply token-specific decimal corrections (6 decimals for USDC, 18 for ARB/BFR) and convert all amounts to USD using end-of-day price feeds. Aggregate fees by day and chain.
- **Key fields**: `settlementFee` (fee amount), `token_address` (for USD conversion), `block_timestamp` (for daily grouping)

### Final aggregation
- **Combining components**: Join daily active user counts with daily fee totals by date and chain. Both metrics use the same time boundaries (daily truncation) and are already aggregated to the same granularity.
- **Currency conversion**: All fee amounts are normalized to USD using end-of-day token prices, ensuring consistent comparison across different underlying tokens
- **Time aggregation**: Both user counts and fees use daily boundaries defined by truncating blockchain timestamps to day precision
- **Final calculation**: Divide total daily settlement fees in USD by the count of distinct daily active users. Apply a zero-filling strategy for days with no trading activity, resulting in zero AFPU values rather than null values.

## Critical implementation details

- **Multi-contract architecture**: Buffer Finance deploys separate contracts for different underlying tokens and versions, requiring union of events across 68 different contract addresses
- **Chain coverage**: Includes both Arbitrum (USDC, ARB, BFR options) and Polygon (USDC options) deployments
- **User classification**: All users creating options are classified as 'Option Trader' type in the derivatives market sector
- **Fee vs volume distinction**: Uses `settlementFee` field rather than `totalFee` to capture only the platform's revenue portion
- **Decimal handling**: Applies proper decimal corrections based on token standards before USD conversion
- **Data availability filtering**: Results are filtered by chain availability windows to ensure complete data coverage

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

Buffer FinanceBFR

Average fees per user (AFPU)

Average fees per user (AFPU)

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