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

Level Finance is a non-custodial exchange for spot and perpetual contracts built on BNB Chain. Level Finance was founded by an anonymous team and was launched in December 2022.

LVL tokenholders own and govern the protocol. They currently take a cut of the total trading fees paid by traders (revenue).

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Level Finance

# Level Finance Earnings Methodology

## 1. Overview

Earnings represents Level Finance's net profit calculated by subtracting token incentive expenses from trading fee revenue. This metric measures the protocol's financial performance by capturing the difference between revenue generated from perpetual and spot trading fees (after accounting for the protocol's fee split) and the costs of token incentive programs used to attract and retain users. The calculation provides insight into the protocol's operational profitability across its BSC and Arbitrum deployments.

## 2. Data sources

The earnings calculation relies on several raw data sources:

- **Trading event logs**: Parsed BSC and Arbitrum event logs from Level Finance v1 and v2 smart contracts, including `Pool_Swap_event` for spot trading and `Pool_IncreasePosition_event`, `Pool_DecreasePosition_event`, and `Pool_LiquidatePosition_event` for perpetual trading
- **Fee configuration events**: `Pool_DaoFeeSet_event` logs that define the protocol's revenue share vs. liquidity provider fees
- **Token incentive events**: Multiple event types including `LevelMaster_Harvest_event`, `LyLevel_Claimed_event`, `LevelReferralController_Claimed_event`, and `LevelStake_RewardsClaimed_event` for LVL and LGO token distributions
- **Token metadata**: Protocol token information including symbols, decimal places, and contract addresses
- **End-of-day price feeds**: Daily USD price data for revenue calculation
- **CoinGecko price data**: Daily price feeds specifically for LVL and LGO tokens used in incentive calculations

## 3. Step-by-step calculation

### Component A: Revenue from trading fees

- **Purpose**: Calculate Level Finance's share of trading fees from perpetual and spot trading
- **Logic**: Collect all trading fees from perpetual position events (increase, decrease, liquidation) and spot swap events. Perpetual fees are extracted from the `feeValue` parameter (normalized by dividing by 10^30), while spot fees come from the `fee` parameter in swap events. Both fee types are then multiplied by the applicable `dao_fee_split` ratio to determine the protocol's revenue portion versus what goes to liquidity providers. The fee split is tracked over time using `Pool_DaoFeeSet_event` where the split value is normalized from the raw parameter by dividing by 10^10
- **Key fields**: `feeValue` from position events, `fee` from swap events, `dao_fee_split` from fee configuration events, `indexToken` and `tokenIn`/`tokenOut` for token identification

### Component B: Spot fee processing

- **Purpose**: Process spot trading fees with proper token pair identification
- **Logic**: Spot fees are processed by joining swap events with token metadata to identify trading pairs. Token symbols are capitalized and ordered alphabetically to create consistent pair names (e.g., "ETH-USDC"). The fee amounts are adjusted for token decimals and converted to USD using end-of-day price feeds. Each swap event contributes to the total trading fee pool before fee split application
- **Key fields**: `tokenIn`, `tokenOut` for token addresses, `fee` for fee amounts, token `symbol` and `decimals` from metadata

### Component C: Token incentive expenses

- **Purpose**: Calculate total token incentive costs paid out to users
- **Logic**: Collect all LVL and LGO token distributions across multiple claim event types. This includes harvest rewards from farming (`LevelMaster_Harvest_event`), governance token claims (`LyLevel_Claimed_event`), referral rewards (`LevelReferralController_Claimed_event`), and staking rewards (`LevelStake_RewardsClaimed_event`). Token amounts are extracted from `amount` or `reward` parameters depending on the event type, adjusted for 18 decimal places for both tokens, and converted to USD using CoinGecko daily price data
- **Key fields**: `amount` and `reward` parameters from claim events, `coingecko_id` for price lookup, `token_address` for LVL and LGO identification

### Final aggregation

- **Combining components**: Revenue is calculated by summing all trading fees (perpetual and spot) multiplied by their respective fee splits, aggregated daily by chain. Expenses are calculated by summing all token incentive payouts, also aggregated daily by chain. The final earnings metric subtracts total expenses from total revenue
- **Currency conversion**: All amounts are converted to USD using end-of-day price feeds for standard tokens and CoinGecko daily data for LVL/LGO tokens. Conversion happens after decimal correction but before aggregation
- **Time aggregation**: All events are truncated to daily timestamps and aggregated by day. The fee split mechanism ensures each trading fee uses the correct revenue share ratio based on when the trade occurred relative to fee split updates
- **Final calculation**: Daily earnings equals daily trading fee revenue (after applying protocol fee splits) minus daily token incentive expenses, with missing days filled with zeros to maintain continuous time series data

*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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