Liquidity providers deposit funds into Pangolin and receive trading fees from traders (supply-side fees).

Pangolin is a non-custodial exchange protocol built on Avalanche (originally a fork of Uniswap). Pangolin was founded by an anonymous team and launched in 2020.

PNG tokenholders own and govern the protocol. They currently take a cut of the total trading fees paid by traders (revenue).

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Pangolin

# Pangolin Liquidity turnover Methodology

## 1. Overview

Liquidity turnover measures how efficiently capital is being utilized in Pangolin's liquidity pools by calculating the ratio of daily trading volume to total value locked (TVL). This metric answers the business question: "How many times is the locked liquidity being traded per day?" A higher turnover indicates more active trading relative to the capital deployed, suggesting better capital efficiency.

The calculation follows a simple formula: Liquidity Turnover = Daily Trading Volume ÷ Daily TVL. Both components are calculated independently and then combined to produce the final ratio.

## 2. Data sources

The calculation relies on several key data sources from the Pangolin V1 protocol on Avalanche:

- **Blockchain events**: Parsed Avalanche `Swap` events from Pangolin V1 liquidity pairs showing token exchanges, `Sync` events showing reserve balance updates, and `PairCreated` events from the factory contract containing trading pair metadata
- **Transaction data**: Avalanche transaction records linking events to user addresses and providing transaction context
- **External data**: End-of-day token price feeds for USD conversion and token metadata including decimal places and symbols for proper amount calculations

## 3. Step-by-step calculation

### Component A: Trading volume calculation
- **Purpose**: Calculates the total USD value of trading activity across all Pangolin liquidity pools on a daily basis
- **Logic**: Begins by extracting `Swap` events from Pangolin V1 pair contracts, which contain `amount0In`, `amount0Out`, `amount1In`, and `amount1Out` fields representing token flows. For each swap, calculates the net change in each token by subtracting outgoing amounts from incoming amounts. Joins with trading pair metadata to obtain token addresses, decimal places, and fee information. Corrects raw token amounts by dividing by the appropriate power of 10 based on each token's decimal places. Aggregates swaps by day, summing the absolute values of corrected token amounts to get total volume per token. Converts both token amounts to USD using end-of-day price feeds, then takes the minimum USD value between the two tokens to prevent price manipulation attacks where one side of a pair might have inflated prices. Finally aggregates across all trading pairs to get total daily trading volume
- **Key fields**: `amount0In`, `amount0Out`, `amount1In`, `amount1Out` for swap amounts, `token0_address` and `token1_address` for token identification, `token0_decimals` and `token1_decimals` for amount correction, and `price_usd` for currency conversion

### Component B: Total value locked (TVL) calculation  
- **Purpose**: Determines the total USD value of assets locked in Pangolin liquidity pools at the end of each day
- **Logic**: Starts by capturing `Sync` events from pair contracts, which emit `reserve0` and `reserve1` values showing the current token balances in each liquidity pool after any transaction. Joins with trading pair metadata to get token addresses and decimal information. Corrects reserve amounts using token decimal places by dividing raw amounts by 10 raised to the decimal count. Uses window functions with `last_value` ordered by block timestamp and log index to capture the final reserve state for each pool on each day. Calculates daily net changes in reserves using lag functions to compare each day's ending reserves with the previous day's ending reserves - this represents net deposit/withdrawal activity. For pools with no previous day data, uses the current day's reserves as the net change. Converts token amounts to USD using end-of-day price feeds and aggregates across all pools to get total net deposits. TVL is calculated as the cumulative sum of net deposits, representing the total value currently locked in the protocol
- **Key fields**: `reserve0` and `reserve1` for pool balances, `token0_address` and `token1_address` for token identification, `token0_decimals` and `token1_decimals` for amount correction, and `price_usd` for USD conversion

### Final aggregation
- **Combining components**: The trading volume and TVL metrics are calculated independently as separate tables, then combined using the `calculate_liquidity_turnover` macro which performs a division operation between the two metrics
- **Currency conversion**: Both components use end-of-day token price feeds for USD conversion, ensuring consistent pricing basis across the calculation
- **Time aggregation**: Both metrics use daily boundaries created by truncating timestamps to day level, with TVL representing end-of-day balances and trading volume representing cumulative daily activity
- **Final calculation**: Liquidity turnover is computed as the simple ratio of daily trading volume divided by daily TVL, with the result standardized using the `finalize_metric_liquidity_turnover` macro which applies consistent schema formatting and fills gaps with zeros where no trading activity occurred

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

Trading volume divided by total liquidity.

PangolinPNG

Liquidity turnover

Liquidity turnover

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