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 Operating expenses Methodology

## 1. Overview

The Merkle Trade operating expenses metric measures the daily costs incurred by the protocol in USD, including development team fees and referral program rebates. This metric captures the protocol's operational spending by tracking fee distributions to developers and rebate payments to users from the protocol's revenue. The calculation aggregates these expenses daily and converts them from the native lzUSDC token denomination to USD for standardized reporting.

## 2. Data sources

- **Aptos blockchain events**: Parsed `FeeDistributor_DepositFeeEvent_event` events from Merkle Trade's fee distributor smart contract on Aptos
- **Aptos blockchain events**: Parsed `Referral_RebateEvent_event` events from Merkle Trade's referral system smart contract on Aptos  
- **Token price feeds**: End-of-day price feeds for lzUSDC (LayerZero USDC) token
- **Token metadata**: Decimal precision information for lzUSDC token to ensure accurate amount calculations

## 3. Step-by-step calculation

### Component A: Fee distributions to developers
- **Purpose**: Captures operating expenses paid to the development team from protocol fees
- **Logic**: Extracts `FeeDistributor_DepositFeeEvent_event` events from Aptos blockchain that contain fee distribution data. These events include three components: liquidity provider fees, staker fees, and developer fees. Only the `dev_amount` field is used as it represents payments to the protocol development team for operational expenses. Events are filtered to include only transactions on the Aptos chain using the lzUSDC token address. The `dev_amount` values are safely cast to high-precision numeric format and aggregated daily.
- **Key fields**: `dev_amount` (development team fee allocation), `block_timestamp` (event timing), `token_address` (lzUSDC token identifier), `chain_id` (Aptos chain identifier)

### Component B: Referral program rebates  
- **Purpose**: Captures operating expenses from referral rebates paid to users
- **Logic**: Extracts `Referral_RebateEvent_event` events from Aptos blockchain that track rebate payments made through Merkle Trade's referral program. These rebates represent operational costs as they are paid from protocol revenue to incentivize user referrals. Events are processed to extract the rebate amount, safely cast to high-precision numeric format, and aggregated daily by chain and token address.
- **Key fields**: `rebate` (rebate amount paid to users), `block_timestamp` (event timing), `token_address` (lzUSDC token identifier), `chain_id` (Aptos chain identifier)

### Final aggregation
- **Combining components**: Developer fee distributions and referral rebates are combined using a union operation, creating a unified dataset of all operating expense transactions. Both components are aggregated using the same daily time boundaries and grouped by chain, token address, and timestamp.
- **Currency conversion**: lzUSDC token amounts are converted to USD using end-of-day price feeds through the decimal correction and USD conversion process. The conversion accounts for lzUSDC token decimal precision to ensure accurate dollar amounts.
- **Time aggregation**: All transactions are aggregated to daily boundaries using day-level timestamp truncation. Each day's operating expenses represent the sum of all developer fees and referral rebates processed on that day.
- **Final calculation**: Total daily operating expenses equal the sum of developer fee allocations (`dev_amount`) plus referral rebate payments (`amount`), converted to USD and aggregated by day. Missing days in the time series are forward-filled with zero values to maintain complete daily coverage.

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

Total operating expenses borne by the protocol, excluding token incentives.

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