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

Cap is a non-custodial exchange for perpetual contracts built on Arbitrum. Cap was founded by an anonymous team and launched in 2021.

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

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# Cap Earnings Methodology

## 1. Overview

Earnings represents Cap protocol's net profit, calculated by subtracting total expenses from total revenue. This metric measures the protocol's financial performance by capturing revenue generated from perpetual trading fees across Cap v3 and v4, minus the cost of token incentives paid to traders. The calculation aggregates data daily and provides insight into the protocol's profitability and sustainability.

## 2. Data sources

The calculation relies on these raw blockchain and external data sources:

- **Cap v3 trading events**: Parsed Arbitrum `Trading_PositionUpdated_event` and `Trading_ClosePosition_event` logs containing fee payments from perpetual trading activities
- **Cap v4 trading events**: Parsed `Positions_FeePaid_event` logs from Arbitrum and Base networks, capturing detailed fee breakdowns including revenue and liquidity provider portions
- **Token incentive events**: Parsed Arbitrum `Rewards_RewardClaimed_event` logs tracking ARB token rewards claimed by traders
- **Price data**: End-of-day token price feeds for USD conversion across all relevant tokens
- **Token metadata**: Contract information for decimal correction and address normalization, including ETH to WETH address mapping

## 3. Step-by-step calculation

### Component A: Revenue from Cap v3 perpetual trading

- **Purpose**: Calculates protocol revenue from Cap v3 trading fees on Arbitrum
- **Logic**: Extracts fee amounts from `Trading_PositionUpdated_event` and `Trading_ClosePosition_event` logs. The `fee` field contains amounts denominated in 8 decimals that are divided by 10^8 for normalization. ETH addresses (null address) are replaced with WETH addresses for consistency. Revenue percentages are applied based on timestamp: 50% of fees before January 7, 2022, 80% between January 7 and February 20, 2022, and 95% thereafter. The remaining percentage goes to liquidity providers and other participants.
- **Key fields**: `fee` amount from events, `currency` token address, `productId` for token symbol extraction, `block_timestamp` for daily aggregation

### Component B: Revenue from Cap v4 perpetual trading

- **Purpose**: Calculates protocol revenue from Cap v4 trading fees on Arbitrum and Base
- **Logic**: Processes `Positions_FeePaid_event` logs which break down fees into four categories. Protocol revenue consists of `stakingFee` plus `treasuryFee` amounts, while `poolFee` plus `keeperFee` amounts go to liquidity providers and oracles. ETH addresses are normalized to WETH addresses for each chain. No percentage calculation is needed as the event already separates revenue from other fee components.
- **Key fields**: `stakingFee` and `treasuryFee` for revenue calculation, `poolFee` and `keeperFee` for liquidity provider fees, `asset` token address

### Component C: Token incentive expenses

- **Purpose**: Tracks ARB token incentives paid to traders as protocol expenses
- **Logic**: Processes `Rewards_RewardClaimed_event` logs from Arbitrum to capture ARB tokens distributed to Cap traders. Each claim event contains the recipient address, token address, and claimed amount. These incentives represent the protocol's cost of encouraging trading activity and user acquisition.
- **Key fields**: `token` address (ARB token), `amount` of tokens claimed, `address` of recipient trader

### Final aggregation

- **Combining components**: Daily revenue amounts from both Cap v3 and v4 are summed together, while daily expenses from token incentives are calculated separately. All amounts are aggregated by timestamp, chain, and other dimensional attributes.
- **Currency conversion**: Token amounts are first corrected for decimals based on token metadata, then converted to USD using end-of-day price feeds matched to the transaction date. This ensures consistent USD valuation across different tokens and chains.
- **Time aggregation**: All events are truncated to daily boundaries using `timestamp_trunc` function. Missing days are filled with zeros to maintain complete time series continuity.
- **Final calculation**: Daily earnings equals the sum of all revenue sources (Cap v3 percentage-adjusted fees plus Cap v4 revenue fees) minus the sum of all token incentive expenses, with the result expressed in USD terms.

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

Net profit (also profits, net income, profitability) — revenue remaining after subtracting expenses.

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