# Concentrated Liquidity Supply-side fees Methodology

## 1. Overview

Supply-side fees for Concentrated Liquidity measure the total earnings distributed to liquidity providers as compensation for providing capital to the protocol. These earnings are composed of the liquidity providers' share of swap fees generated by trading activity and additional external rewards distributed through gauges. The portion of fees retained by the protocol treasury is excluded to isolate the value flowing directly to service providers.

## 2. Data sources

- **Blockchain events**: `PoolCreated` events from `Factory` contracts, `SetPoolFeeProtocol` and `FeeAdjustment` events from `PoolFactory` contracts, `Swap` events from `Pool` contracts, and `NotifyReward` events from `GaugeV3` contracts, covering Linea
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Fee and split configuration tracking

- **Purpose**: Establishes the fee tiers and protocol fee splits for each liquidity pool.
- **Logic**: Fee tiers are extracted from `PoolCreated` and `FeeAdjustment` events. Protocol fee split configurations, which define the share of fees diverted from liquidity providers, are parsed from `PoolCreated` and `SetPoolFeeProtocol` events. These values are normalized by decimal precision and maintained as time-dependent configurations to ensure accurate historical fee calculation.
- **Key fields**: `fee_tier`, `fee_split`, `pool_address`

### Component B: Trading volume and swap fee calculation

- **Purpose**: Calculates the total trading fees generated and determines the supply-side share.
- **Logic**: `Swap` events from `Pool` contracts are parsed to extract token amounts. Trading volume is determined by taking the lesser USD value of the two swapped tokens to mitigate the impact of price manipulation. Total swap fees are calculated by applying the pool-specific `fee_tier` to the trading volume. The supply-side portion is then isolated by multiplying the total swap fees by the complement of the protocol `fee_split` (1 - protocol split).
- **Key fields**: `amount0`, `amount1`, `fee_tier`, `fee_split`

### Component C: Incentive reward capture

- **Purpose**: Capture additional rewards distributed to liquidity providers via gauges.
- **Logic**: `NotifyReward` events are parsed from `GaugeV3` contracts. These events represent external incentives or emissions added to specific liquidity pools. Rewards denominated in the protocol's native REX asset are excluded from this specific metric calculation to focus on external value distribution.
- **Key fields**: `reward_token`, `amount`

### Component D: Aggregation and USD conversion

- **Purpose**: Normalizes all earnings to USD and aggregates them by product and chain.
- **Logic**: Supply-side swap fees and incentive rewards are summed on a daily basis. Amounts are normalized by asset-specific decimal precision and multiplied by end-of-day price feeds. All calculations are performed using UTC day boundaries and aggregated to the Concentrated Liquidity product level.

*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

Concentrated Liquidity

Archived

Supply-side fees

Supply-side fees