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 Expenses Methodology

## 1. Overview

The Perpetual Protocol expenses metric measures the daily cost incurred by the protocol in the form of PERP token incentives paid to liquidity mining participants. This metric represents the protocol's direct expenses for incentivizing liquidity provision on their perpetual trading platform. The calculation captures all claimed PERP token rewards and converts them to USD values, providing insight into the protocol's daily operational costs for user acquisition and retention through token incentives.

## 2. Data sources

- **Blockchain events**: Parsed `Claimed` events from the Perpetual Protocol v2 `PerpLiquidityMining` contract on Optimism (contract address `0x9e1028f5f1d5ede59748ffcee5532509976840e0`)
- **External data**: End-of-day price feeds for PERP token to enable USD conversion
- **Token metadata**: PERP token decimal information for proper amount calculations

## 3. Step-by-step calculation

### Component A: Token incentive extraction
- **Purpose**: Extract all PERP token incentive claims from blockchain events
- **Logic**: Process all `Claimed` events from the `PerpLiquidityMining` contract on Optimism. Each event represents a user claiming their earned PERP token rewards from liquidity mining activities. Extract the claiming account address, claim amount from the `_balance` field, transaction details including block timestamp, transaction hash, and log index for deduplication
- **Key fields**: Block timestamp for daily aggregation, account address (`address`), claimed amount (`_balance`), transaction identifiers for uniqueness

### Component B: Daily aggregation and classification  
- **Purpose**: Aggregate claimed incentives by day and apply business classifications
- **Logic**: Group all claims by day using timestamp truncation to daily boundaries. Classify all records with consistent business metadata including chain identification as Optimism, business line as "Perpetual trading", market sector as "derivatives", business segment as "perpetual", and version as "v2". Maintain the PERP token contract address for downstream processing
- **Key fields**: Daily timestamp, chain identifier, business classification fields, token address, aggregated `token_incentives` amount

### Component C: USD conversion and decimal correction
- **Purpose**: Convert PERP token amounts to USD values with proper decimal handling
- **Logic**: Apply decimal correction to raw token amounts using PERP token metadata to ensure proper unit representation. Convert the decimal-corrected amounts to USD using end-of-day price feeds for PERP token. This ensures consistent USD valuation across all dates
- **Key fields**: Corrected token amounts, USD-converted values, price feed timestamps

### Final aggregation
- **Combining components**: The expenses metric directly uses the USD-converted token incentives values without additional transformation
- **Currency conversion**: PERP token amounts are converted to USD using end-of-day price feeds, with decimal correction applied first to ensure accurate amount representation  
- **Time aggregation**: Daily boundaries are established through timestamp truncation, with time series processing ensuring complete daily coverage
- **Final calculation**: The final expenses value equals the total USD value of PERP token incentives claimed each day. Missing dates are filled with zero values to maintain complete time series continuity

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

Total project operating and incentive expenses.

Perpetual ProtocolPERP

Expenses

Expenses

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