# LayerZero V2 Supply-side fees Methodology

## 1. Overview

Supply-side fees is defined as the share of transaction fees paid by users that is distributed to the service providers of LayerZero V2. These fees are paid to compensate Decentralized Verifier Network (DVN) operators for message verification and executors for message delivery across destination chains. Because the protocol fee switch has not been activated, 100% of the collected fees are routed directly to these infrastructure providers. This metric is utilized to evaluate the economic incentives and total revenue generated by the protocol's supply-side participants.

## 2. Data sources

- **Blockchain events**: `DVNFeePaid` and `ExecutorFeePaid` events from `SendUln302` contracts, covering Ethereum, Arbitrum, Base, Polygon, and 26 other chains
- **External data**: End-of-day price feeds and asset metadata are ingested to perform currency conversion and decimal normalization

## 3. Step-by-step calculation

### Component A: LayerZero V2 Decentralized Verifier Network fee extraction

- **Purpose**: The capture of fees paid to Decentralized Verifier Networks (DVNs) for message verification.
- **Logic**: `DVNFeePaid` events are parsed from `SendUln302` contracts. The total DVN fee amount is calculated by summing all fee elements within the fees array for each transaction.
- **Key fields**: `fees` (fee array), `block_timestamp` (timing), `transaction_hash` (transaction identification)

### Component B: LayerZero V2 Executor fee extraction

- **Purpose**: The capture of fees paid to message executors for executing transactions on destination chains.
- **Logic**: `ExecutorFeePaid` events are parsed from `SendUln302` contracts. The executor fee amount is extracted from the `fee` field for each transaction.
- **Key fields**: `fee` (fee amount), `block_timestamp` (timing), `transaction_hash` (transaction identification)

### Component C: LayerZero V2 USD conversion and normalization

- **Purpose**: The normalization of fee amounts by decimal precision and conversion to USD.
- **Logic**: Extracted fee amounts are mapped to their respective native or wrapped gas assets based on the chain of origin. These amounts are normalized by the decimal precision of each asset and aggregated daily. The normalized daily fees are then multiplied by end-of-day asset prices, and the final USD value is calculated.
- **Key fields**: `timestamp` (daily boundary), `chain_id` (chain identification), `token_address` (asset identification), `price_usd` (asset price)

### Component D: LayerZero V2 supply-side fee allocation

- **Purpose**: The determination of the portion of total fees allocated to supply-side participants.
- **Logic**: Because the protocol fee switch is inactive, 100% of the total fees collected from DVN and executor operations are allocated to the supply side. The supply-side fees are calculated as equal to the total fees.
- **Key fields**: `fees` (total fees), `fees_supply_side` (supply-side fees)

*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 v2

Supply-side fees

Supply-side fees

Chain breakdown