# Constant Product Supply-side fees Methodology

## 1. Overview

Supply-side fees measures the total earnings generated by liquidity providers within the Constant Product pools of Etherex. This metric captures the portion of swap fees retained by liquidity providers after protocol fee splits are subtracted, as well as external incentives distributed to participants. These fees serve as the primary compensation for service providers for supplying liquidity and facilitating trading activity on the Linea network.

## 2. Data sources

- **Blockchain events**: `Swap` events from `Pair` contracts, `SetPairFee`, `SetPairFeeSplit`, and `PairCreated` events from `PairFactory` contracts, and `NotifyReward` events from `Gauge` contracts, covering Linea
- **External data**: End-of-day price feeds for traded assets and reward assets

## 3. Step-by-step calculation

### Component A: Constant Product trading volume and fee tier tracking

- **Purpose**: Calculate the gross trading activity and the applicable fee rate for each pool
- **Logic**: `Swap` events from `Pair` contracts are parsed to determine the change in asset balances for every trade. The volume is calculated using the lower USD value of the two swapped assets to mitigate impact from price manipulation. Fee tiers for each pool are identified from `SetPairFee` and `PairCreated` events emitted by `PairFactory` contracts. If no specific fee event is found for a pair, a default value is applied based on the factory settings at the time of creation.

### Component B: Protocol fee split identification

- **Purpose**: Determine the share of fees retained by the protocol versus the share distributed to liquidity providers
- **Logic**: Protocol fee splits are extracted from `SetPairFeeSplit` events from `PairFactory` contracts. This configuration defines the percentage of the gross swap fee that is diverted to the protocol treasury. The supply-side share is calculated as the remainder of the total fee after the protocol's portion has been deducted.

### Component C: Constant Product liquidity provider incentive tracking

- **Purpose**: Capture additional rewards distributed to liquidity providers beyond trading fees
- **Logic**: Reward distributions are identified via `NotifyReward` events from `Gauge` contracts. These events specify the asset and amount being distributed to liquidity providers of specific pools. Native protocol asset emissions are excluded from this calculation to focus on external or secondary incentives.

### Component D: Aggregation and USD conversion

- **Purpose**: Combine all supply-side earnings and normalize the values to USD
- **Logic**: Total supply-side fees are calculated by summing the supply-side portion of swap fees (gross volume multiplied by fee tier and the provider's share) and the value of incentives from gauges. All amounts are normalized by decimal precision and converted to USD using end-of-day price feeds. Data is aggregated by day using UTC boundaries.

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

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

Supply-side fees

Constant Product

Archived

Supply-side fees

Supply-side fees