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

PancakeSwap is a non-custodial exchange protocol built on Binance Smart Chain and other blockchains (originally a fork of Uniswap). PancakeSwap was founded by an anonymous team and launched in 2020.

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

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PancakeSwap

# PancakeSwap Earnings Methodology

## 1. Overview

PancakeSwap earnings is calculated as total revenue minus total expenses, representing the protocol's daily net profit. Protocol profitability is measured from decentralized exchange operations across multiple blockchains. Revenue is generated from trading fees collected from users, while expenses are comprised primarily of liquidity mining incentive distributions paid to liquidity providers.

## 2. Data sources

- **Blockchain events**: `Swap` events from V2 `Pair` and V3 `Pool` contracts, `PairCreated` events from V2 `Factory` contracts, `PoolCreated` events from V3 `Factory` contracts, and `UpdateCakeRate` events from `MasterChefV2` contracts, covering BNB Chain, Ethereum, Arbitrum, Base, and 2 other chains
- **External data**: End-of-day price feeds, block timestamps, and asset metadata

## 3. Step-by-step calculation

### Component A: Trading volume calculation

- **Purpose**: Daily trading volumes are aggregated from all PancakeSwap pairs across supported chains
- **Logic**: Trade amounts are extracted from `Swap` events from V2 `Pair` and V3 `Pool` contracts. For V2, net asset changes are calculated using `amount0In`, `amount0Out`, `amount1In`, and `amount1Out` fields. For V3, direct `amount0` and `amount1` fields are used. Absolute values are applied to determine trade magnitude. Amounts are normalized by decimal precision. Trading pair metadata is joined to retrieve asset addresses and fee tiers. Denylisted pairs with poor price feed support are excluded. Both asset amounts are converted to USD using end-of-day price feeds, and the minimum USD value between the two assets is selected to prevent price manipulation from affecting volume calculations.
- **Key fields**: `amount0In`, `amount0Out`, `amount1In`, `amount1Out`, `amount0`, `amount1`, `sender`

### Component B: Revenue calculation
- **Purpose**: Protocol revenue is calculated from trading fees
- **Logic**: For V2 pairs, a fixed protocol fee rate of 0.08% is applied to the calculated trading volume. For V3 pairs, direct protocol fee amounts are extracted from `protocolFeesToken0` and `protocolFeesToken1` fields in `Swap` events. Protocol fees are converted to USD using end-of-day price feeds for the respective assets. All protocol fees are aggregated daily across all chains and versions.
- **Key fields**: `trading_volume`, `protocolFeesToken0`, `protocolFeesToken1`

### Component C: Liquidity incentives calculation

- **Purpose**: CAKE distributions to liquidity providers are tracked as protocol expenses
- **Logic**: `UpdateCakeRate` events from the `MasterChefV2` contract are monitored to track changes in emission rates and burn rates over time. Block number ranges are used to determine which emission parameters apply to each day. Daily CAKE emissions are calculated by multiplying emissions per block by the number of blocks, and the burn rate is applied to determine the net distributed amount using the formula: `emissions_per_block * (1 - burn_rate)`. Manual initialization data is included for the genesis emission parameters. Emission data is mapped to specific incentive accounts, including the Cake Pool and MasterChef V2 contracts. CAKE amounts are converted to USD using end-of-day price feeds.
- **Key fields**: `burnRate`, `cake_emissions_per_block`

### Component D: Final aggregation

- **Purpose**: Revenue and expenses are combined to calculate net earnings
- **Logic**: Revenue and expenses are calculated independently, then combined using a subtraction operation where earnings equals total daily revenue minus total daily expenses. All asset amounts are converted to USD using end-of-day price feeds matched by asset address, chain, and timestamp. All data is aggregated to daily granularity using timestamp truncation to day boundaries. Gap-filling with zero values is applied for missing dates to ensure continuous time series data, and daily earnings are output as the difference between aggregated protocol revenue and total liquidity incentive expenses.

*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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