# PancakeSwap V2 Total value locked Methodology

## 1. Overview

Total value locked (TVL) measures the total USD value of assets deposited in PancakeSwap V2 liquidity pools. It serves as a primary indicator of the protocol's liquidity and capacity to facilitate decentralized trading. TVL is calculated by aggregating the cumulative balances of reserve assets held within the protocol's smart contracts. These asset balances are valued using end-of-day price feeds to represent the total capital locked in the protocol.

## 2. Data sources

- **Blockchain events**: `PairCreated` events from `Factory` contracts and `Sync` events from `Pair` contracts, covering Ethereum, Arbitrum, Base, BNB Chain, and zkSync Era
- **External data**: End-of-day price feeds for asset valuation, and an external asset directory for token allowlisting

## 3. Step-by-step calculation

### Component A: Trading pair identification

- **Purpose**: Identify active PancakeSwap V2 liquidity pools and their associated assets.
- **Logic**: `PairCreated` events from `Factory` contracts are parsed to extract the pool address, token 0 address, and token 1 address. Pool addresses are cross-referenced with a denylist to exclude manipulated or low-liquidity trading pairs. Asset decimals are retrieved from asset metadata to enable proper normalization.
- **Key fields**: `pool_address`, `token0_address`, `token1_address`

### Component B: Reserve tracking and normalization

- **Purpose**: Track the daily reserve balances of assets in each liquidity pool.
- **Logic**: `Sync` events from `Pair` contracts are parsed to extract the reserve amounts for token 0 and token 1. The last reserve values recorded on any given day are selected to represent the end-of-day balances. These raw reserve amounts are normalized by dividing by the respective asset's decimal precision.
- **Key fields**: `reserve0_amount`, `reserve1_amount`

### Component C: Daily asset flow calculation and allowlist filtering

- **Purpose**: Calculate daily net changes in reserves and filter out unverified assets.
- **Logic**: Daily asset flows are calculated by taking the difference between the current day's reserve balance and the previous day's reserve balance. If no sync activity occurs on a given day, the flow defaults to the previous day's reserve balance. An external asset directory is applied as an allowlist filter for all chains except zkSync Era; if an asset is not present on this allowlist, its daily flow is set to zero.
- **Key fields**: `token0_amount`, `token1_amount`

### Component D: Cumulative balance aggregation and USD conversion

- **Purpose**: Calculate the cumulative asset balances and convert them to USD.
- **Logic**: Daily asset flows are unpivoted to create a single time-series of flows per asset. These daily flows are summed cumulatively over time to determine the running balance of each asset in each pool. Missing days are filled forward to maintain a continuous daily record. Finally, the running asset balances are multiplied by end-of-day price feeds to calculate the total value locked in USD.
- **Key fields**: `delta_tvl`, `tvl`, `price_usd`

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

Total value locked (TVL)

Total value locked (TVL) — value deposited into the project's applications.

Total value locked

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

Total value locked

Total value locked

Chain breakdown