Liquidity providers deposit funds into DFX and receive a share of trading fees (supply-side fees).

DFX is a decentralized foreign exchange protocol deployed on Polygon, Ethereum & Arbitrum. DFX was founded in 2021 by Kevin Zhang and Adrian Li.

DFX tokenholders own and govern the protocol. They currently take a cut of the total trading fees paid by traders (revenue).

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DFX Finance

# DFX Finance Earnings Methodology

## 1. Overview

DFX earnings represent the net profit generated by the DFX protocol, calculated as protocol revenue minus operational expenses. The metric measures the protocol's profitability from its automated market maker (AMM) operations across Ethereum, Polygon, and Arbitrum chains. Revenue comes from protocol fees charged on trades, while expenses consist of DFX token incentives paid to liquidity providers.

## 2. Data sources

The calculation uses several types of raw blockchain data and external feeds:

- **Blockchain events**: Parsed `Trade` events from DFX Curve contracts (`Curve_Trade_event`, `CurveV2_Trade_event`, `CurveV22_Trade_event`) across Ethereum, Polygon, and Arbitrum networks
- **Transaction data**: Ethereum, Polygon, and Arbitrum transaction records to identify trade initiators
- **Staking reward events**: `RewardPaid` events from DFX staking reward contracts (`StakingRewards_RewardPaid_event`, `StakingRewardsV2_RewardPaid_event`)
- **Token transfer logs**: DFX token transfer events from staking reward contract addresses
- **Contract creation events**: `NewCurve` events from DFX Curve factory contracts to determine pool fee structures
- **External data**: End-of-day token price feeds for USD conversion and token metadata including decimal precision and symbols

## 3. Step-by-step calculation

### Component A: Trading volume calculation
- **Purpose**: Calculates USD trading volumes for all DFX pools across supported chains
- **Logic**: Extracts trade events from DFX Curve contracts, joining with transaction data to identify users and token metadata for decimal corrections. Trading volume is calculated by converting token amounts using their decimal precision and taking the lesser USD value when both token prices are available (if only one token has pricing data, that token's value is used). Trades are aggregated daily by pool, chain, and version
- **Key fields**: `originAmount` and `targetAmount` for token quantities, `origin` and `target` for token addresses, user addresses from transaction records

### Component B: Fee tier determination
- **Purpose**: Determines the fee percentage charged by each DFX pool
- **Logic**: Combines manually configured fee tiers for specific pools with dynamically determined fees from Curve factory contract creation events. Uses a default initial fee tier of 0.05% (0.0005) for pools without specific configuration. Fee tiers are extracted from factory contract `NewCurve` events by parsing the epsilon parameter and converting from wei to decimal percentage
- **Key fields**: Pool contract addresses, `epsilon` values from factory events converted to fee percentages

### Component C: Protocol revenue calculation
- **Purpose**: Calculates revenue earned by the DFX protocol from trading fees
- **Logic**: Multiplies daily trading volumes by their respective pool fee tiers to get total fees collected. Applies a 50% protocol fee share to determine protocol revenue, but only for dates on or after February 13, 2023 (revenue is zero before this date). Revenue is aggregated daily across all pools and chains
- **Key fields**: Trading volumes in USD, fee tiers as percentages, protocol fee share of 50%

### Component D: Token incentives calculation  
- **Purpose**: Calculates USD value of DFX token incentives distributed to liquidity providers
- **Logic**: Extracts DFX token distributions from two sources: staking reward contract `RewardPaid` events and direct token transfers from predefined staking reward contract addresses. Token amounts are converted to USD using end-of-day DFX token prices and corrected for 18-decimal precision. Incentive payments are aggregated daily across all staking contracts and chains
- **Key fields**: `reward` amounts from events, `value` amounts from transfers, DFX token addresses, staking contract addresses

### Final aggregation
- **Combining components**: Revenue and expenses are calculated separately then combined using the earnings formula
- **Currency conversion**: All components are converted to USD using end-of-day token price feeds before aggregation  
- **Time aggregation**: Data is truncated to daily timestamps and aggregated across all pools, chains, and versions
- **Final calculation**: Earnings equals protocol revenue minus token incentive expenses, with forward-fill applied to handle missing data gaps and ensure continuous daily series

*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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