# Fathom DEX Supply-side fees Methodology

## 1. Overview

Supply-side fees measures the share of trading fees generated by Fathom DEX that is distributed to liquidity providers. These fees serve as the primary compensation for users who supply assets to the protocol's automated market maker (AMM) pools. For Fathom DEX, supply-side fees are calculated as a fixed percentage of the total fees collected from swaps executed across the platform's liquidity pools.

## 2. Data sources

- **Blockchain events**: `Swap` events from `Pair` contracts and `PairCreated` events from `Factory` contracts, covering XDC Network
- **External data**: End-of-day price feeds for assets traded within the liquidity pools

## 3. Step-by-step calculation

### Component A: Trading pair and fee tier identification

- **Purpose**: Identify the universe of active trading pools and their associated fee structures
- **Logic**: All active trading pairs are identified through `PairCreated` events emitted by `Factory` contracts on XDC Network. For each pair, the underlying asset addresses are recorded. The default fee tier is defined as 0.3% of the total trade value, which is applied to all swap operations within these identified pools.
- **Key fields**: `token0_address`, `token1_address`, `fee_tier`

### Component B: Trading volume calculation

- **Purpose**: Calculate the total gross value of trades processed by the DEX
- **Logic**: `Swap` events are parsed from `Pair` contracts to identify every trade execution. The change in asset balances for both tokens in a pair is calculated for each event. These quantities are normalized by decimal precision and converted to USD using end-of-day price feeds. If the price for the bought asset is unavailable, the value of the sold asset is utilized to determine the trade volume.
- **Key fields**: `block_timestamp`, `token0_amount`, `token1_amount`, `account_address`

### Component C: Total fee generation

- **Purpose**: Determine the total revenue generated from trading activity before distribution
- **Logic**: Daily trading volumes are aggregated by pool and version. Total fees are calculated by multiplying the daily USD trading volume by the designated fee tier of 0.3%.
- **Key fields**: `trading_volume`, `fee_tier`

### Component D: Supply-side fee allocation

- **Purpose**: Extract the portion of fees allocated specifically to liquidity providers
- **Logic**: A 25% allocation is applied to the total fees calculated in Component C. This value represents the specific share of the 0.3% swap fee that is distributed to the supply-side participants (liquidity providers), while the remaining portion is retained by the protocol or treasury. Values are aggregated to a daily granularity with UTC day boundaries.
- **Key fields**: `fees`, `product_id`

*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

Exchanges (DEX)