Liquidity providers deposit funds into Perpetual Protocol to earn a share of trading fees (supply-side fees). Perpetual Protocol leverages Uniswap v3's architecture as a pricing engine, enabling traders to access up to 10x leverage. Perpetual Protocol also offers Hot Tub vaults, which operate trading strategies that generate yield from arbitrage profits. 

Perpetual Protocol is an open-source and non-custodial exchange for perpetual contracts built on Optimism. Perpetual Protocol was founded by Shao-Kang Lee & Yenwen Feng and launched in 2019.

PERP token holders own and govern the protocol. Token holders can boost their governance power and earn 15% of trading fees paid by traders (revenue) by locking PERP into vote-escrowed PERP (vePERP). Perpetual Protocol's investors include CMS Holdings, Binance Labs, and Mechanism Capital.

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Perpetual Protocol

# Perpetual Protocol Earnings Methodology

## 1. Overview

Perpetual Protocol earnings represent the protocol's net profit, calculated as revenue minus expenses. This metric measures the protocol's financial performance by subtracting operational costs (primarily token incentives) from revenue generated through trading and liquidation fees across both v1 (Gnosis) and v2 (Optimism) deployments. The calculation accounts for different fee structures and revenue sharing models between protocol versions.

## 2. Data sources

- **Blockchain events**: Parsed `PositionChanged` events from Perpetual Protocol's ClearingHouse contracts on Gnosis and Optimism chains capturing trading activity and associated fees
- **Blockchain events**: Parsed `PositionLiquidated` events from ClearingHouse contracts on both chains recording liquidation fees
- **Blockchain events**: Parsed `Claimed` events from PerpLiquidityMining contracts on Optimism tracking PERP token incentive distributions
- **External data**: End-of-day token price feeds for USD conversion of fees and incentives
- **Token metadata**: Market address mappings to token symbols for proper categorization and reporting
- **Protocol configuration**: Time-based revenue percentage splits defining protocol's share of fees

## 3. Step-by-step calculation

### Component A: Trading fee revenue calculation
- **Purpose**: Calculate protocol revenue from trading fees across v1 and v2 deployments
- **Logic**: Extract fee amounts from `PositionChanged` events using the `fee` field. Apply version-specific revenue allocation: v1 trading fees contribute 100% to protocol revenue, while v2 trading fees use time-based percentages (10% of fees before June 22, 2022, and 20% thereafter). Map market addresses to token symbols using the markets dimension table. Convert amounts from raw blockchain units by dividing by 10^18 and convert to USD using end-of-day price feeds
- **Key fields**: `fee` amounts, `amm` and `baseToken` market addresses, `block_timestamp` for daily aggregation

### Component B: Liquidation fee handling
- **Purpose**: Process liquidation fees but exclude from protocol revenue
- **Logic**: Extract liquidation fee amounts from `PositionLiquidated` events using the `liquidationFee` field from both v1 and v2 contracts. Set protocol revenue share to 0% for all liquidation fees as these go entirely to liquidators rather than the protocol. Include in data processing for completeness but contribute zero to final revenue calculation
- **Key fields**: `liquidationFee` amounts, market addresses for categorization

### Component C: Token incentive expenses calculation  
- **Purpose**: Calculate protocol expenses from PERP token incentive distributions
- **Logic**: Extract claimed PERP token amounts from `PerpLiquidityMining_Claimed` events on Optimism using the `_balance` field. These represent tokens distributed to users and liquidity providers as incentives, constituting a direct expense to the protocol. Apply decimal correction by dividing by 10^18 and convert to USD using end-of-day PERP token prices
- **Key fields**: `_balance` representing claimed token amounts

### Final aggregation
- **Combining components**: Sum all daily trading fee revenue (applying appropriate version-specific percentages) and subtract total daily token incentive expenses
- **Currency conversion**: All fee and incentive amounts converted to USD using end-of-day price feeds matched by token address and date
- **Time aggregation**: Data aggregated to daily grain using timestamp truncation, with consistent timezone handling
- **Final calculation**: Daily earnings = (v1 trading fees × 100% + v2 trading fees × revenue_percentage) - PERP token incentive expenses, with zero-filling applied for days without activity to maintain continuous time series

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

Net profit (also profits, net income, profitability) — revenue remaining after subtracting expenses.

Perpetual ProtocolPERP

Earnings

Earnings

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