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

Merkle Trade is a non-custodial perpetual exchange protocol built on Aptos.

MKL tokenholders own and govern the protocol. They do currently take a cut of the total trading fees paid by traders (revenue). Merkle Trade's investors include Arrington Capital, Hashed, etc.

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Merkle Trade

# Merkle Trade Supply-side fees Methodology

## 1. Overview

Fees supply side measures the daily USD value of fees distributed to liquidity providers on Merkle Trade, a derivatives trading platform on Aptos. This metric captures the portion of trading fees that are paid out to liquidity providers who supply capital to the protocol's liquidity pools. The calculation aggregates fee distribution events from Merkle Trade's smart contracts and converts the native token amounts to USD values.

## 2. Data sources

The metric uses the following raw data sources:
- **Aptos blockchain events**: Parsed `FeeDistributor_DepositFeeEvent_event` logs from Merkle Trade's fee distributor smart contract module on Aptos
- **Token price feeds**: End-of-day price feeds for lzUSDC (layerzero USDC) token conversion to USD
- **Token metadata**: Token decimal information for proper amount normalization

## 3. Step-by-step calculation

### Component A: Fee distribution event extraction
- **Purpose**: Extracts and processes fee distribution events from Merkle Trade's smart contracts
- **Logic**: Retrieves `FeeDistributor_DepositFeeEvent_event` logs from Aptos blockchain containing fee distribution data. Each event includes multiple fee components: `lp_amount` (fees for liquidity providers), `stake_amount` (fees for stakers), and `dev_amount` (development fees). The events are filtered to only include distributions in lzUSDC, which is hardcoded as the only collateral token used by Merkle Trade. All amounts are cast to high-precision numeric types to handle large token amounts accurately.
- **Key fields**: `lp_amount` (liquidity provider fee portion), `token_address` (set to lzUSDC contract address), `block_timestamp` (event timing), `chain_id` (set to 'aptos')

### Component B: Daily fee aggregation
- **Purpose**: Aggregates liquidity provider fees by day and prepares for USD conversion
- **Logic**: Groups the fee distribution events by day using timestamp truncation to daily boundaries. Only the `lp_amount` field is summed as this represents fees distributed to liquidity providers (supply side). The aggregation maintains separate totals for each day, chain, and token combination, though in practice this is always Aptos chain and lzUSDC token. Product ID is set to null as Merkle Trade operates as a single product.
- **Key fields**: `fees_supply_side` (daily aggregated LP fees), `timestamp` (daily boundary), `timestamp_grain` (set to 'day')

### Final aggregation
- **Combining components**: The daily aggregated native token amounts flow directly into USD conversion without additional joining
- **Currency conversion**: Native lzUSDC amounts are converted to USD using end-of-day price feeds, with automatic decimal correction applied based on token metadata to ensure proper scaling
- **Time aggregation**: Data is already aggregated to daily boundaries during the initial grouping step
- **Final calculation**: The final metric value represents the total USD value of fees distributed to liquidity providers each day, with any missing dates filled with zero values to maintain a continuous time series

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

Portion of fees distributed to service providers or supply-side participants.

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