# PancakeSwap V2 Trading volume Methodology

## 1. Overview

Trading volume measures the total value of trades executed on PancakeSwap V2. This metric is utilized as a primary indicator of the protocol's liquidity, market share, and transactional activity. Since trading fees are paid by users on executed trades, trading volume is correlated with the protocol's capacity to generate fees and revenue.

## 2. Data sources

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

## 3. Step-by-step calculation

### Component A: PancakeSwap V2 pool and asset identification

- **Purpose**: To identify active PancakeSwap V2 liquidity pools and their associated assets.
- **Logic**: `PairCreated` events from `Factory` contracts are parsed to extract pool addresses, asset addresses, and fee tiers. Asset metadata is joined to retrieve decimal precision and symbols for each asset in the pair. Denylisted trading pairs with limited price feed support are excluded from the dataset.
- **Key fields**: `account_address` (pool address), `token0_address` (first asset address), `token1_address` (second asset address), `token0_decimals` (first asset decimals), `token1_decimals` (second asset decimals)

### Component B: PancakeSwap V2 trade extraction and normalization

- **Purpose**: To extract raw swap amounts and normalize them by decimal precision.
- **Logic**: `Swap` events from `Pair` contracts are parsed to capture trade activity. The net change for each asset is calculated by subtracting the outgoing amount from the incoming amount. These raw asset amounts are then normalized by dividing by their respective decimal precision.
- **Key fields**: `amount0In` (incoming amount of first asset), `amount0Out` (outgoing amount of first asset), `amount1In` (incoming amount of second asset), `amount1Out` (outgoing amount of second asset)

### Component C: PancakeSwap V2 price outlier filtering

- **Purpose**: To filter out wash trading and price manipulation signatures.
- **Logic**: Each leg of a trade is valued using daily end-of-day price feeds. Trades where the USD value of the two legs diverges by more than 100x (representing an absolute log10 ratio greater than 2) are flagged as price outliers and excluded from the volume calculation. Trades involving unpriced assets are bypassed and retained.
- **Key fields**: `amount_0` (normalized amount of first asset), `amount_1` (normalized amount of second asset), `price_usd` (asset price in USD)

### Component D: PancakeSwap V2 USD conversion and aggregation

- **Purpose**: To convert normalized trade volumes to USD and aggregate them.
- **Logic**: The USD value of each trade is determined by taking the lesser USD value of the two swap legs to prevent pricing errors or manipulation from inflating the metric. The resulting USD values are aggregated daily by pool, chain, and product.
- **Key fields**: `trading_volume_0` (USD value of first asset leg), `trading_volume_1` (USD value of second asset leg), `trading_volume` (final USD trading volume)

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

Total value of spot trades executed on the exchange.

Trading volume

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

Trading volume

Trading volume

Chain breakdown