# Concentrated Liquidity Token incentives Methodology

## 1. Overview

Token incentives measures the value of native assets that a project pays out to its supply/demand-side users, core contributors, and/or investors. For Etherex Concentrated Liquidity, this metric specifically tracks the distribution of native REX assets to liquidity providers. These incentives are primarily used to compensate stakeholders and encourage the provision of liquidity within the protocol's Concentrated Liquidity pools.

## 2. Data sources

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

## 3. Step-by-step calculation

### Component A: Reward distribution tracking

- **Purpose**: Identify and extract incentive distribution events for liquidity providers.
- **Logic**: `NotifyReward` events are parsed from `GaugeV3` contracts. Events flagged as removed are excluded from the dataset to ensure data integrity. Each event is mapped to the Concentrated Liquidity product and the specific reward asset address is captured.
- **Key fields**: `in_reward` (token identification), `in_amount` (raw incentive quantity), `block_timestamp` (event timing)

### Component B: Native asset filtering

- **Purpose**: Isolate distributions of the protocol's native REX asset.
- **Logic**: The extracted distribution data is filtered to include only transactions involving the REX asset on Linea. This ensures the metric reflects protocol-emitted incentives rather than third-party reward distributions.
- **Key fields**: `token_address` (contract address of the REX asset)

### Component C: Valuation and aggregation

- **Purpose**: Normalize incentive quantities to USD and aggregate data for reporting.
- **Logic**: Incentive amounts are normalized based on decimal precision. The normalized quantities are multiplied by end-of-day price feeds for the REX asset. Values are aggregated to a daily grain using UTC boundaries. A zero-filling strategy is applied to ensure a continuous time series for the metric.
- **Key fields**: `token_incentives` (final USD value)

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

Value of native tokens distributed as incentives.

Token incentives

Concentrated Liquidity

Archived

Token incentives

Token incentives