# PancakeSwap V2 Fees Methodology

## 1. Overview

Fees measures the total value paid by users to execute swaps on PancakeSwap V2. These fees are paid by traders to liquidity providers as compensation for facilitating trades and bearing inventory risk. The metric is critical for assessing the economic activity and fee-generation capacity of the PancakeSwap V2 automated market maker (AMM). Fees are calculated by applying the fixed pool fee tier to the daily trading volume of each liquidity pool.

## 2. Data sources

- **Blockchain events**: `PairCreated` events from `Factory` contracts and `Swap` events from `Pair` contracts, covering Arbitrum, Base, BNB Chain, Ethereum, and zkSync Era
- **External data**: End-of-day price feeds for asset valuation, and asset metadata for decimal normalization

## 3. Step-by-step calculation

### Component A: PancakeSwap V2 pool and fee tier identification

- **Purpose**: Identify active PancakeSwap V2 liquidity pools, their associated assets, and their fee tiers.
- **Logic**: `PairCreated` events from `Factory` contracts are parsed to identify pool addresses, asset addresses, and asset decimals. A fixed fee tier of 0.25% is assigned to all PancakeSwap V2 pools. Denylisted pool addresses are excluded to prevent distorted calculations from low-liquidity assets.
- **Key fields**: `account_address`, `token0_address`, `token1_address`, `token0_decimals`, `token1_decimals`, `fee_tier`

### Component B: PancakeSwap V2 swap volume extraction

- **Purpose**: Extract and normalize swap amounts for each transaction.
- **Logic**: `Swap` events from `Pair` contracts are parsed to calculate the net change in asset reserves for each trade. The net change is calculated by subtracting the outgoing asset amount from the incoming asset amount for both assets in the pool. Transaction hashes are joined with native transaction tables to identify the transaction sender. Asset amounts are normalized by decimal precision using asset metadata.
- **Key fields**: `amount0_in`, `amount0_out`, `amount1_in`, `amount1_out`, `transaction_hash`

### Component C: PancakeSwap V2 USD valuation and volume filtering

- **Purpose**: Convert swap volumes to USD and filter out potential price manipulation.
- **Logic**: Normalized asset amounts are multiplied by end-of-day price feeds to determine their USD value. To mitigate price manipulation and pool imbalances, the daily trading volume for each swap is defined as the lesser USD value between the two assets in the pool.
- **Key fields**: `price_usd`, `trading_volume`

### Component D: PancakeSwap V2 fee calculation and aggregation

- **Purpose**: Calculate total fees and aggregate them.
- **Logic**: Daily trading volumes are multiplied by the pool's fee tier (0.25%) to calculate the fees generated. Fees are aggregated by day, chain, and product. Missing days are zero-filled, and chain availability filters are applied to align with data freshness standards.
- **Key fields**: `fees`, `timestamp`

*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)

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).

PancakeSwap V2

Fees

Fees

Chain breakdown