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 Liquidity turnover Methodology

## 1. Overview

Liquidity turnover is measured as trading volume relative to total liquidity on the decentralized exchange. The efficiency of liquidity utilization to facilitate trades is shown by this metric. For PancakeSwap, this is calculated as the ratio of daily trading volume to total value locked (TVL). Trading volume from both PancakeSwap V2 and PancakeSwap V3 protocols is aggregated across multiple chains and divided by the corresponding TVL.

## 2. Data sources

- **Blockchain events**: `Swap` and `Sync` events from `Pair` contracts (V2), and `Swap`, `Mint`, `Collect`, `CollectProtocol`, and `Flash` events from `Pool` contracts (V3), covering Ethereum, Arbitrum, Base, BSC, and 2 other chains. `PairCreated` and `PoolCreated` events from `Factory` contracts are also used for trading pair metadata and fee tiers.
- **External data**: End-of-day price feeds for USD conversion and asset metadata including decimals and symbols.
- **External filters**: Asset metadata and allowlist data are used to filter unreliable or manipulated assets, alongside denylists for problematic trading pairs.

## 3. Step-by-step calculation

### Component A: PancakeSwap V2 and V3 trading volume

- **Purpose**: Daily trading volume is calculated in USD across all PancakeSwap pools.
- **Logic**: `Swap` events are extracted from V2 `Pair` contracts and V3 `Pool` contracts. Transaction data is joined to identify user addresses. Asset amounts are normalized by decimal precision and converted to USD using end-of-day price feeds. Price manipulation is mitigated by using the minimum USD value between the two assets in a pair. Additionally, trades are filtered using a per-trade oracle price band, where trades with asset values diverging by more than 100x are excluded as price outliers. Denylists are applied to exclude problematic trading pairs and specific assets, while external allowlist data is used to filter unreliable assets (except on zkSync Era and Robinhood Chain). Daily volumes are aggregated by summing all trade values.
- **Key fields**: `amount0In`, `amount0Out`, `amount1In`, `amount1Out` for V2; `amount0`, `amount1` for V3; `block_timestamp`, `transaction_hash`, `pool_address`.

### Component B: PancakeSwap V2 and V3 total value locked (TVL)

- **Purpose**: Daily TVL is calculated to represent total liquidity available in PancakeSwap pools.
- **Logic**: For V2 pools, reserve balance changes are tracked using `Sync` events. For V3 pools, liquidity-affecting events are combined: positive flows from `Mint` events, negative flows from `Collect` and `CollectProtocol` events, trading impacts from `Swap` events, and flash loan fees calculated by applying pool fee tiers to `Flash` event amounts. All amounts are normalized by decimal precision, converted to USD, and filtered using external allowlist data (except on zkSync Era and Robinhood Chain) and denylists for problematic trading pairs. TVL is determined by the cumulative sum of daily net flows.
- **Key fields**: `reserve0_amount`, `reserve1_amount` for V2 `Sync` events; `token0_amount`, `token1_amount` for V3 liquidity events; `fee_tier` from pool creation events.

### Component C: Final aggregation and turnover calculation

- **Purpose**: Trading volume and TVL are combined to produce the liquidity turnover ratio.
- **Logic**: Trading volume and TVL are calculated independently using the same time boundaries. Daily boundaries are established using UTC timestamp truncation. The liquidity turnover ratio is produced by dividing daily trading volume by daily TVL, with a zero-fill strategy applied to maintain consistent time series.

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

Trading volume divided by total liquidity.

PancakeSwapCAKE

Liquidity turnover

Liquidity turnover

Competitive landscape