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 Fees Methodology

## 1. Overview

The HMX fees metric measures the total daily fees generated by the HMX perpetual trading protocol on Arbitrum. This metric combines both protocol revenue (fees retained by HMX) and supply-side fees (fees distributed to HLP liquidity providers) to show the total fee generation from the platform's trading activities. The calculation aggregates three types of fees from perpetual trading: borrowing fees charged to traders for holding leveraged positions, liquidation fees collected during position liquidations, and trading fees charged on trade execution.

## 2. Data sources

The calculation relies on the following data sources:

- **Arbitrum event logs**: Parsed events from HMX's TradeHelper contract including `LogSettleBorrowingFeeValue`, `LogSettleLiquidationFeeValue`, and `LogSettleTradingFeeValue` events
- **Fee configuration data**: Hardcoded percentage splits defining how different fee types are allocated between protocol revenue and liquidity provider rewards, with historical changes tracked over time
- **Transaction metadata**: Block timestamps, transaction hashes, and log indices from Arbitrum blockchain data

The fee values in the source events are already denominated in USD with 30 decimal places, eliminating the need for separate price conversion or token metadata.

## 3. Step-by-step calculation

### Component A: Fee extraction from blockchain events

- **Purpose**: Extract and normalize three types of fees from HMX perpetual trading activities
- **Logic**: The system processes three types of Arbitrum event logs from HMX's TradeHelper contract. For borrowing fees, it extracts `LogSettleBorrowingFeeValue` events and converts the `feeUsd` field from 30 decimal places to standard format. For liquidation fees, it processes `LogSettleLiquidationFeeValue` events and normalizes the `usd` field similarly. For trading fees, it extracts `LogSettleTradingFeeValue` events and converts the `feeUsd` field. Each event includes the trader's account address, transaction details, and timestamps. All fee amounts are already USD-denominated in the source events.
- **Key fields**: `feeUsd` or `usd` fields containing fee amounts in 30-decimal USD format, `block_timestamp` for timing, `address` for trader accounts, `transaction_hash` and `log_index` for unique identification

### Component B: Revenue percentage configuration

- **Purpose**: Define how fees are split between protocol revenue and liquidity provider compensation over time
- **Logic**: A hardcoded configuration table defines percentage splits for different fee types across different time periods. The configuration shows that borrowing fees have a 10% protocol revenue share consistently, liquidation fees have 100% protocol revenue share, and trading fees changed from 10% to 35% protocol revenue share on August 10, 2023. The system uses a forward-fill approach to apply the appropriate percentage to each day's fees based on the date the fees were generated.
- **Key fields**: `borrowing_revenue_percentage`, `liquidation_revenue_percentage`, `trading_revenue_percentage`, and `timestamp` for time-based application

### Component C: Revenue calculation

- **Purpose**: Calculate the portion of fees that represents protocol revenue (retained by HMX)
- **Logic**: For each fee type, the system multiplies the fee amount by the corresponding revenue percentage for the day when the fee was generated. Daily aggregation groups fees by timestamp truncated to day boundaries, chain identifier, business line, and product information. The result represents fees that go to HMX protocol stakeholders including token holders and development funds.
- **Key fields**: `revenue` calculated as fee amount multiplied by revenue percentage, aggregated daily with `timestamp`, `chain_id`, and `product_id` grouping

### Component D: Supply-side fee calculation  

- **Purpose**: Calculate the portion of fees distributed to liquidity providers
- **Logic**: For each fee type, the system calculates supply-side fees by multiplying the fee amount by one minus the revenue percentage (1 - revenue_percentage). This represents the complement of protocol revenue, showing fees distributed to HLP liquidity providers who supply liquidity to the protocol. Daily aggregation follows the same grouping structure as revenue calculation.
- **Key fields**: `fees_supply_side` calculated as fee amount multiplied by (1 - revenue_percentage), aggregated daily with matching dimensional grouping

### Final aggregation

- **Combining components**: The revenue and supply-side fee streams are combined using a union operation, then summed together to calculate total daily fees. This approach ensures that the final metric represents the complete fee generation from the protocol rather than just one component.
- **Currency conversion**: No currency conversion is required since fee amounts are already USD-denominated in the source events at 30 decimal precision, which is normalized to standard decimal format during extraction.
- **Time aggregation**: All fees are aggregated to daily boundaries using timestamp truncation, with the system grouping by day-level timestamps, chain identifiers, and product metadata.
- **Final calculation**: The total daily fees equal the sum of all revenue fees plus all supply-side fees generated on each day, providing a comprehensive view of the protocol's fee generation activity from perpetual trading operations.

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

Total value users pay to use a protocol (gross fees, user-paid fees).

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