Liquidity providers deposit funds into HMX and receive trading fees from traders (supply-side fees).

HMX is a non-custodial exchange for perpetual contracts built on Arbitrum. HMX was founded by Shu Wei, Rockman, and Taoree and was launched in 2022.

HMX tokenholders own and govern the protocol. They currently take a cut of the total trading fees paid by traders (revenue). HMX's investors include Coral DeFi, Compound Capital Partners, Cryptomind, etc.

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# HMX Earnings Methodology

## 1. Overview

HMX earnings represents the net profit generated by the HMX perpetual trading protocol, calculated as total revenue minus total expenses. This metric measures the protocol's financial performance by accounting for fee income retained by the protocol after subtracting token incentives paid to users. The calculation follows standard accounting principles where earnings equal revenue minus expenses, providing insight into the protocol's operational profitability.

## 2. Data sources

The calculation uses the following raw data sources:

- **Arbitrum contract events**: Parsed event logs from HMX's TradeHelper contract including `LogSettleBorrowingFeeValue`, `LogSettleLiquidationFeeValue`, and `LogSettleTradingFeeValue` events that capture fee settlements in USD
- **Token incentive events**: Parsed `LogHarvest` events from multiple rewarder contracts on Arbitrum including FeedableESHMXRewarder, FeedableARBRewarder, OpenInterestIncentiveRewarders, StakingESHMXRewarder, SurgeFeedableRewarder, and TLCRewarder contracts
- **End-of-day price feeds**: Token price data for esHMX (`0x83d6c8c06ac276465e4c92e7ac8c23740f435140`) and ARB (`0x912ce59144191c1204e64559fe8253a0e49e6548`) tokens used for USD conversion
- **Token metadata**: Decimal precision information for proper token amount scaling

## 3. Step-by-step calculation

### Component A: Revenue calculation

- **Purpose**: Calculate total USD revenue retained by the HMX protocol from trading activities
- **Logic**: Extract borrowing fees from `LogSettleBorrowingFeeValue` events, liquidation fees from `LogSettleLiquidationFeeValue` events, and trading fees from `LogSettleTradingFeeValue` events. Each event contains a USD-denominated amount with 30-decimal precision that is converted to standard USD values by dividing by 10^30. Different revenue percentage splits are applied based on fee type and date: borrowing fees use 10% revenue percentage, liquidation fees use 100% revenue percentage, and trading fees use either 10% (before 2023-08-10) or 35% (from 2023-08-10 onward). All fee events are aggregated daily by summing the revenue amounts after applying the appropriate percentage splits.
- **Key fields**: `feeUsd` and `usd` fields from contract events (scaled from 30 decimals), `account_address` for user identification, `block_timestamp` for daily aggregation, and revenue percentages from the dimension table

### Component B: Expenses calculation

- **Purpose**: Calculate total USD value of token incentives paid to users as trading rewards
- **Logic**: Extract token incentive distribution amounts from `LogHarvest` events across six different rewarder contracts. Each event contains a `pendingRewardAmount` field representing the token amount distributed. Token amounts are converted to USD using end-of-day price feeds for esHMX and ARB tokens, with decimal corrections applied based on token metadata. All incentive distributions are aggregated daily by summing the USD values of all token rewards paid across all rewarder contracts.
- **Key fields**: `pendingRewardAmount` for token quantities, `token_address` for identifying esHMX vs ARB rewards, `account_address` for recipient tracking, and `block_timestamp` for daily aggregation

### Final aggregation

- **Combining components**: Revenue and expenses are calculated separately and then combined using the earnings formula where earnings equals revenue minus expenses
- **Currency conversion**: All amounts are normalized to USD - fee amounts are already USD-denominated from contract events while token incentive amounts are converted using end-of-day price feeds
- **Time aggregation**: All transaction-level data is aggregated to daily boundaries using the transaction timestamp truncated to day level
- **Final calculation**: Daily earnings equal the sum of all revenue (borrowing fees × 10% + liquidation fees × 100% + trading fees × revenue percentage) minus the sum of all token incentives converted to USD, with forward-fill logic applied to ensure continuous daily data with zero values for days with no activity

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

Net profit (also profits, net income, profitability) — revenue remaining after subtracting expenses.

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