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 Supply-side fees Methodology

## 1. Overview

Supply-side fees measures the portion of trading fees that goes to liquidity providers on PancakeSwap. This metric quantifies the financial incentives earned by users who provide liquidity to PancakeSwap's automated market maker (AMM) pools. The calculation follows the principle: Supply-side fees = Total fees - Protocol revenue, where total fees are generated from trading activity and flash loans, while protocol revenue is the portion retained by PancakeSwap.

## 2. Data sources

- **Blockchain events**: `Swap` events from `Pair` contracts, `Swap` and `Flash` events from `Pool` contracts, and `PairCreated` and `PoolCreated` events from `Factory` contracts, covering Arbitrum, Base, BSC, Ethereum, and 2 other chains
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Trading pair identification

- **Purpose**: Establish the universe of valid PancakeSwap trading pairs and their fee structures
- **Logic**: Pair creation events are extracted from PancakeSwap V2 and V3 factory contracts. For V2, pairs have a fixed 0.25% fee tier. For V3, fee tiers are specified in the creation event (`fee` field). Asset metadata is joined to obtain decimal places and symbols for proper pair naming and amount calculations. A denylist is applied to exclude pairs with limited price feed support that could skew calculations.
- **Key fields**: `pair`/`pool` addresses, `token0` and `token1` addresses, `fee` tiers, asset `decimals` and `symbol` data

### Component B: Trading volume calculation

- **Purpose**: Calculate daily USD-denominated trading volumes across all PancakeSwap pairs
- **Logic**: Swap events from both V2 and V3 contracts are processed. For V2, net asset movements are calculated using `amount0In` minus `amount0Out` and `amount1In` minus `amount1Out`. For V3, `amount0` and `amount1` are used directly. Raw amounts are normalized by decimal precision using asset metadata, then converted to USD using end-of-day price feeds. To prevent manipulation from price discrepancies, the lesser USD value between the two assets in each pair is used for volume calculation. Daily totals are aggregated and grouped by chain, pair, and fee tier.
- **Key fields**: Asset `amount` fields, `block_timestamp` for daily aggregation, `transaction_hash` and `log_index` for deduplication

### Component C: Flash loan volume calculation
- **Purpose**: Capture additional fee-generating activity from flash loans
- **Logic**: V3 `Flash` events from `Pool` contracts containing `amount0` and `amount1` fields representing flash loan amounts are extracted. The same decimal normalization and USD conversion process as trading volumes is applied. Fees equal to the loan amount multiplied by the pool's fee tier are generated by flash loans. Both asset amounts are summed in USD terms since flash loans involve temporary borrowing of liquidity.
- **Key fields**: Flash loan `amount0` and `amount1`, pool addresses for fee tier lookup

### Component D: Total fees calculation

- **Purpose**: Calculate gross fees generated from all PancakeSwap activity
- **Logic**: Trading fees are calculated by multiplying trading volumes by their respective fee tiers. Flash loan fees are calculated by multiplying flash loan volumes by their fee tiers. Both components are summed to get total daily fees. Fee tiers are expressed as decimals (e.g., 0.0025 for 0.25%), so fee amounts in USD are directly yielded by multiplication.
- **Key fields**: Calculated volumes multiplied by `fee_tier` percentages

### Component E: Protocol revenue calculation

- **Purpose**: Determine the portion of fees retained by PancakeSwap protocol
- **Logic**: Different methodologies are applied for V2 versus V3. For V2, trading volume is multiplied by a fixed protocol fee rate of 0.08% (hardcoded value). For V3, actual protocol fees are extracted from swap events using `protocolFeesToken0` and `protocolFeesToken1` fields, and converted to USD using the same price feed and decimal normalization process. Daily protocol revenue is aggregated across all pairs and versions.
- **Key fields**: Version identifier, `protocolFeesToken0` and `protocolFeesToken1` for V3, trading volume for V2 fee calculation

### Component F: Supply-side fees aggregation

- **Purpose**: Combine fee and revenue components to calculate the final supply-side fees
- **Logic**: Supply-side fees are calculated by subtracting protocol revenue from total fees. This represents the portion that flows to liquidity providers. All amounts are normalized to USD using end-of-day price feeds matched by timestamp, asset address, and chain. Daily boundaries are determined by truncating the block timestamp to the day level in the UTC timezone. The final calculation is expressed as: Supply-side fees = (Trading volume × Fee tier) + (Flash loan volume × Fee tier) - Protocol revenue.
- **Key fields**: `fees`, `revenue`, `timestamp`

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

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

PancakeSwapCAKE

Supply-side fees

Supply-side fees

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