# Orca Token Swap V2 Fees Methodology

## 1. Overview

The total value paid by users to execute asset swaps through Orca Token Swap V2 is measured by Fees. These fees are paid by traders on every transaction to compensate liquidity providers and generate protocol revenue. The economic activity and fee-generation efficiency of the Orca Token Swap V2 pools are evaluated using this metric. Fees are calculated by applying pool-specific fee rates to the total trading volume of each pool.

## 2. Data sources

- **Blockchain events**: `Initialize` instructions from `TokenSwapV2` programs, and swap trade records from Solana DEX trade logs, covering Solana
- **External data**: End-of-day price feeds and asset metadata for traded assets

## 3. Step-by-step calculation

### Component A: Orca Token Swap V2 trade extraction

- **Purpose**: The extraction of raw swap transactions and trade amounts for Orca Token Swap V2
- **Logic**: Swap transactions executed through the Orca Token Swap V2 program (program ID `9W959DqEETiGZocYWCQPaJ6sBmUzgfxXfqGeTEdp3aQP`) are filtered from Solana DEX trade records. For each trade, the raw base and quote asset amounts are extracted along with their respective vault accounts. These raw amounts are normalized by asset decimal precision, which is retrieved from asset metadata.
- **Key fields**: `block_timestamp`, `pool_address`, `token_address_0`, `token_address_1`, `amount_0`, `amount_1`

### Component B: Orca Token Swap V2 fee rate determination

- **Purpose**: The determination of pool-specific liquidity provider and protocol fee rates
- **Logic**: Pool metadata and fee rates are established by parsing `Initialize` instructions from `TokenSwapV2` programs. The liquidity provider fee rate is calculated by dividing the trade fee numerator by the trade fee denominator. The protocol fee rate is calculated by dividing the owner trade fee numerator by the owner trade fee denominator. The total trade fee rate is then calculated as the sum of the liquidity provider fee rate and the protocol fee rate.
- **Key fields**: `lp_fee_rate`, `protocol_fee_rate`, `trade_fee_numerator`, `trade_fee_denominator`, `owner_trade_fee_numerator`, `owner_trade_fee_denominator`

### Component C: Orca Token Swap V2 trading volume and fee calculation

- **Purpose**: The calculation of daily trading volume and fees in USD
- **Logic**: Normalized trade amounts are mapped to their respective pools and aggregated daily. Trading volume is converted to USD by multiplying the asset amounts by their end-of-day price feeds. Asset valuations are resolved using the lower value of the two trade legs to ensure conservative pricing, except for trades involving exactly one tokenized stock asset, where the valuation is resolved using that specific asset's leg. Daily fees are then calculated by multiplying the USD-denominated trading volume of each pool by its determined total trade fee rate.
- **Key fields**: `trading_volume`, `trade_fee_rate`, `price_usd`

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

Total value users pay to use a protocol (gross fees, user-paid fees).

Fees

Exchanges (DEX)

Users are able to use the Orca protocol to transact with digital assets on a peer-to-peer or peer-to-protocol basis by trading against liquidity  pools, which are created and seeded by other users providing liquidity of a pair of tokens into such liquidity pools in exchange for a stake of the liquidity and trading fees generated by such pools.

Orca is a non-custodial automated market maker (AMM) protocol built on Solana. Orca was founded by Yutaro Mori and Grace Kwan and launched in 2021.

ORCA tokenholders govern the Orca protocol treasury, which receives a portion of the trading fees paid by users of the protocol.