# LayerZero V1 Supply-side fees Methodology

## 1. Overview

Supply-side fees is defined as the share of fees that goes to the service providers of LayerZero V1. These service providers include Decentralized Verifier Network (DVN) operators and message executors who facilitate secure cross-chain verification and message delivery. Because the protocol fee switch has not been activated, one hundred percent of the fees paid by users are routed directly to these infrastructure providers. This metric is utilized to analyze the economic incentives and total compensation distributed to the service providers maintaining the network's security and delivery infrastructure.

## 2. Data sources

- **Blockchain events**: `DVNFeePaid` and `ExecutorFeePaid` events from `SendUln301` contracts, and `send` function calls from `EndpointV1` contracts, covering Ethereum, Arbitrum, Optimism, Polygon, and 17 other chains
- **External data**: End-of-day price feeds for native gas assets and asset metadata

## 3. Step-by-step calculation

### Component A: Decentralized Verifier Network fee extraction

- **Purpose**: To extract fees paid to Decentralized Verifier Networks (DVNs) for message verification
- **Logic**: `DVNFeePaid` events are parsed from `SendUln301` contracts. The fee amounts within the `fees` array are summed to calculate the total DVN fee per message. These fees represent the payments made to DVN operators for verifying cross-chain messages.
- **Key fields**: `block_timestamp`, `transaction_hash`, `fees`

### Component B: Executor fee extraction

- **Purpose**: To extract fees paid to message executors for message delivery
- **Logic**: `ExecutorFeePaid` events are parsed from `SendUln301` contracts. The executor fee amounts are extracted from the `fee` parameter. These fees represent the payments made to executors for executing cross-chain transactions on the destination chain.
- **Key fields**: `block_timestamp`, `transaction_hash`, `fee`

### Component C: Legacy endpoint fee estimation

- **Purpose**: To estimate fees for transactions predating the deployment of `SendUln301` contracts
- **Logic**: `send` function calls are parsed from `EndpointV1` contracts for transactions occurring on or before February 5, 2024. The native message value is extracted from the transaction. If the adapter version is identified as version 2 (indicated by the hex prefix `0x000200` in the adapter parameters), the native airdrop amount is decoded from the adapter parameters and subtracted from the total message value to calculate the estimated fee. If the adapter version is not version 2, the estimated fee is set equal to the total message value.
- **Key fields**: `block_timestamp`, `transaction_hash`, `value`, `adapterparams`, `airdrop_native_amount`, `estimated_fee`

### Component D: Normalization and USD conversion

- **Purpose**: To normalize fee amounts by asset decimals and convert them to USD
- **Logic**: The extracted fees from DVN payments, executor payments, and legacy endpoint transactions are aggregated. The fee amounts are mapped to their respective native gas assets based on the chain. The raw fee amounts are normalized by the decimal precision of each asset. The normalized amounts are then multiplied by the end-of-day price of the respective asset to determine the fee value in USD.
- **Key fields**: `timestamp`, `chain_id`, `fees`, `decimals`, `price_usd`

### Component E: Supply-side fee aggregation

- **Purpose**: To aggregate the total fees captured by supply-side participants
- **Logic**: Because the protocol fee switch has not been activated for LayerZero V1, one hundred percent of the total fees paid by users are allocated to the supply side. The daily USD-denominated fees from all components are summed to produce the final supply-side fees metric. A chain availability filter is applied to ensure data completeness, and any missing days are filled with zeros.
- **Key fields**: `timestamp`, `chain_id`, `product_id`, `fees_supply_side`

*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

Interoperability

LayerZero uses a decentralized network of Validator Nodes to facilitate secure and fast communication between different blockchains.

LayerZero allows users to send and receive messages between different blockchains, and to bridge tokens between different blockchains.

LayerZero is a cross-chain interoperability protocol that enables secure and fast communication between different blockchains.

LayerZero v1

Supply-side fees

Supply-side fees

Chain breakdown