# dYdX V3 Expenses Methodology

## 1. Overview

Expenses measures the total value of token incentives distributed by dYdX V3 to its users and participants. These costs primarily represent DYDX token rewards issued to liquidity providers, participants in the safety module, and traders via the Merkle distributor. This metric is utilized to understand the protocol's expenditure on user acquisition, liquidity depth, and ecosystem security.

## 2. Data sources

- **Blockchain events**: `ClaimedRewards` events from `LiquidityStaking` and `SafetyModuleV2` contracts, `RewardsClaimed` events from `MerkleDistributor` contracts, and `coin_spent` events from dYdX Chain, covering Ethereum and dYdX Chain
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Ethereum incentive extraction

- **Purpose**: Capture DYDX token rewards claimed by users on the Ethereum network
- **Logic**: `ClaimedRewards` events are parsed from `LiquidityStaking` and `SafetyModuleV2` contracts to identify rewards distributed for staking and liquidity provision. Additionally, `RewardsClaimed` events are parsed from `MerkleDistributor` contracts to capture trading-related incentives. A filter is applied to the `MerkleDistributor` events to exclude transactions where the recipient is the community treasury, ensuring only actual user claims are recorded.
- **Key fields**: `amount` (reward quantity), `token_address` (identification of the DYDX asset), `block_timestamp` (timing of the claim)

### Component B: dYdX Chain incentive extraction

- **Purpose**: Capture incentives issued via the community treasury on the dYdX Chain
- **Logic**: `coin_spent` events are parsed from the dYdX Chain. Records are filtered to include only those where the spender address matches the community treasury. The reward amount is extracted from the event attributes by isolating the numeric value from the asset string (e.g., extracting values suffixed with 'adydx').
- **Key fields**: `amount` (extracted reward quantity), `event_attributes` (source of spender and amount data), `block_timestamp` (timing of the expenditure)

### Component C: USD conversion and aggregation

- **Purpose**: Normalize incentive values and consolidate them into a single daily metric
- **Logic**: All extracted incentive amounts are normalized by their respective decimal precision. These values are then multiplied by the end-of-day price feeds for the DYDX asset. The resulting USD values are aggregated by day using UTC boundaries. For the dYdX Chain components, values are converted from the base denomination to the primary asset denomination before price application. All components are summed to produce the final daily expenses figure.

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

Total project operating and incentive expenses.

Expenses

Exchanges (DEX)

Market makers offer trades through order book & make money on bid-ask spreads (supply-side fees).

dYdX is a non-custodial trading and derivatives protocol initially built on Ethereum and later expanded to their own blcokchain built on top of the Cosmos SDK. dYdX was founded by Antonio Juliano and launched in 2017.

DYDX tokenholders own and govern the protocol. dYdX Trading Inc. currently takes all of the total trading fees paid by traders (revenue). dYdX’s investors include a16z, Polychain, The Spartan Group, etc.

dYdX V3

Expenses

Expenses

Chain breakdown