Kwenta builds on top of Synthetix to create a synthetic perpetuals trading platform. Traders on Kwenta trade futures against the liquidity provided by liquidity providers on Synthetix.

Kwenta is a non-custodial exchange for perpetual contracts built on Optimism. Kwenta was born out of the Synthetix community and launched in 2022.

KWENTA tokenholders own and govern the protocol. They currently do not take a cut of the total trading fees paid by traders (revenue).

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Kwenta

# Kwenta Earnings Methodology

## 1. Overview

Kwenta earnings represents the protocol's net profitability from perpetual trading operations on Optimism. The metric is calculated as revenue minus expenses, where revenue is consistently zero (as Kwenta does not generate protocol revenue) and expenses consist of KWENTA token incentives paid to traders. This results in negative earnings that reflect the net cost of the protocol's trader reward programs.

## 2. Data sources

The calculation relies on several key blockchain data sources:

- **Synthetix perpetual trading events**: Parsed `PositionModified` events from Synthetix v1 and v2 perpetual futures contracts on Optimism, capturing trading activity and fees
- **Synthetix tracking events**: `FuturesTracking` and `PerpsTracking` events that contain Kwenta-specific tracking codes to identify transactions routed through Kwenta's interface  
- **Kwenta reward distributions**: `Claimed` events from Kwenta's `MultipleMerkleDistributor` contracts (v1 and v2) on Optimism, capturing KWENTA token rewards paid to traders
- **Market definition events**: `MarketAdded` events from Synthetix `FuturesMarketManager` contracts that define valid perpetual markets and their underlying synthetic assets
- **Token metadata**: KWENTA token contract information including decimals and symbol
- **End-of-day price feeds**: USD price data for KWENTA tokens used for currency conversion

## 3. Step-by-step calculation

### Component A: Revenue calculation
- **Purpose**: Calculates protocol revenue from trading operations
- **Logic**: Revenue is hardcoded to zero across all time periods and chains. The logic fetches the structure and timestamps from the fees data but sets all revenue values to 0, reflecting that Kwenta does not currently generate protocol revenue from its perpetual trading interface
- **Key fields**: `revenue` is always 0, with standard dimensions including `timestamp`, `chain_id`, and `product_id`

### Component B: Expenses calculation  
- **Purpose**: Calculates expenses from KWENTA token incentives paid to traders
- **Logic**: Captures `Claimed` events from Kwenta's Merkle distributor contracts on Optimism (both v1 and v2 versions). Each claim represents KWENTA tokens distributed as trading rewards. The `amount` field from the claim events is extracted and joined with token metadata to get proper decimals and symbol information. Amounts are converted to USD using end-of-day KWENTA token prices and aggregated daily by chain and product
- **Key fields**: `amount` (KWENTA tokens claimed), `token_address` (KWENTA contract address), `account_address` (recipient), `block_timestamp` for daily aggregation

### Component C: Market validation
- **Purpose**: Validates that trading activity occurs on legitimate Synthetix perpetual markets  
- **Logic**: Uses `MarketAdded` events from Synthetix `FuturesMarketManager` contracts to build a whitelist of valid perpetual markets. Special handling is applied for OP and GBP markets using hardcoded asset addresses, while other markets decode the synthetic asset name from hex-encoded bytes. This ensures only legitimate perpetual trading venues are included in fee calculations
- **Key fields**: `market` (contract address), `asset` (underlying synthetic asset identifier), `synth_name` (decoded asset symbol)

### Component D: Trading fee tracking (used for validation only)
- **Purpose**: Identifies Kwenta-specific trading activity for validation purposes
- **Logic**: Filters Synthetix `PositionModified` events using `FuturesTracking` and `PerpsTracking` events that contain Kwenta's specific tracking code (`0x4b57454e54410000000000000000000000000000000000000000000000000000`). This isolates trading activity that was routed through Kwenta's interface from the broader Synthetix ecosystem. However, the actual fee amounts are not used in earnings calculations since revenue is set to zero
- **Key fields**: `trackingCode` for filtering, `fee` amounts (not used in final calculation), `transaction_hash` for joining events

### Final aggregation
- **Combining components**: Earnings is calculated using the standard formula: Earnings = Revenue - Expenses. Since revenue is always 0, this simplifies to Earnings = 0 - Token Incentives = -Token Incentives
- **Currency conversion**: KWENTA token amounts are converted to USD using end-of-day price feeds with proper decimal adjustment (18 decimals for KWENTA tokens)  
- **Time aggregation**: All data is aggregated to daily boundaries using timestamp truncation to day level, with consistent timezone handling
- **Final calculation**: The result is consistently negative values representing the net cost of Kwenta's trader incentive programs, as the protocol pays out rewards but generates no revenue

*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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