# Concentrated Liquidity Expenses Methodology

## 1. Overview

Expenses measures the total cost Etherex incurs to operate its business. For the Concentrated Liquidity product, these costs are specifically comprised of token incentives paid to supply-side users (liquidity providers). These incentives are distributed in the protocol's native REX asset to reward participation and liquidity depth within the Concentrated Liquidity pools.

## 2. Data sources

- **Blockchain events**: `NotifyReward` events from `GaugeV3` contracts on Linea
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Concentrated Liquidity incentive tracking

- **Purpose**: To identify and capture REX asset emissions distributed to liquidity providers as rewards.
- **Logic**: `NotifyReward` events are parsed from `GaugeV3` contracts. Data is filtered to isolate the REX asset address, and the reward quantity is extracted from the `amount` field. Only non-removed events are included to ensure data integrity.
- **Key fields**: `token_address` (identification of the REX asset), `amount` (quantity of assets distributed).

### Component B: USD conversion and aggregation

- **Purpose**: To normalize asset amounts and convert them into a standardized USD value.
- **Logic**: Asset quantities are normalized by decimal precision using asset metadata. These normalized values are multiplied by end-of-day price feeds corresponding to the REX asset. Daily totals are aggregated using UTC day boundaries, with zero-filling applied to dates where no emission events are recorded.
- **Key fields**: `block_timestamp` (timing), `amount` (quantity), `token_address` (price mapping).

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

Total project operating and incentive expenses.

Expenses

Concentrated Liquidity

Archived

Expenses

Expenses