# PancakeSwap V3 Fees Methodology

## 1. Overview

Fees measures the total value paid by users to execute swaps and perform flash loans on PancakeSwap V3. The economic value generated by the protocol's automated market maker (AMM) pools is represented by this metric. Collected fees are distributed to liquidity providers as compensation for providing assets, with a portion allocated to the protocol as revenue. This metric is utilized as a key indicator of the protocol's transaction volume and overall economic activity.

## 2. Data sources

- **Blockchain events**: `PoolCreated` events from `Factory` contracts, and `Swap` and `Flash` events from `Pool` contracts, covering Arbitrum, Base, BNB Chain, Ethereum, and zkSync Era
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: PancakeSwap V3 pool and fee tier identification

- **Purpose**: Identify active trading pairs, their associated assets, and fee tiers
- **Logic**: `PoolCreated` events from `Factory` contracts are parsed to extract pool addresses, asset addresses, and fee tiers. Fee tiers are normalized by dividing the raw fee value by one million. Asset metadata is joined to retrieve decimal precision and symbols for each asset. Pools matching denylisted addresses are excluded to prevent distorted calculations from low-liquidity assets.
- **Key fields**: `pool` (account address), `token0` (asset 0 address), `token1` (asset 1 address), `fee` (fee tier), `decimals` (decimal precision)

### Component B: PancakeSwap V3 swap volume calculation

- **Purpose**: Calculate the daily USD trading volume for swaps
- **Logic**: `Swap` events from `Pool` contracts are parsed to extract swap amounts for both assets. Swap amounts are normalized by their respective asset decimal precision and converted to USD using end-of-day price feeds. To mitigate price manipulation, the daily trading volume for each swap is calculated as the minimum USD value between the two swapped assets. Transaction hashes are joined with transaction records to identify the originating user addresses.
- **Key fields**: `amount0` (asset 0 amount), `amount1` (asset 1 amount), `price_usd` (asset price)

### Component C: PancakeSwap V3 flash loan volume calculation

- **Purpose**: Calculate the daily USD volume for flash loans
- **Logic**: `Flash` events from `Pool` contracts are parsed to extract flash loan amounts for both assets. Flash loan amounts are normalized by their respective asset decimal precision and converted to USD using end-of-day price feeds. The total flash loan volume is calculated as the sum of the USD values of both assets. Transaction hashes are joined with transaction records to identify the originating user addresses.
- **Key fields**: `amount0` (asset 0 amount), `amount1` (asset 1 amount), `price_usd` (asset price)

### Component D: PancakeSwap V3 fee aggregation and normalization

- **Purpose**: Combine swap and flash loan fees and normalize the final metric
- **Logic**: Daily fees are calculated by multiplying the daily swap volume and flash loan volume by their respective pool fee tiers. These fee components are summed to produce the total daily fees. The final metric is normalized, validated against approved chain and project identifiers, and zero-filled for days with no activity.
- **Key fields**: `trading_volume` (swap volume), `flash_loan_volume` (flash loan volume), `fee_tier` (pool fee tier)

*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 V3

Fees

Fees

Chain breakdown