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

Pika Protocol is a non-custodial exchange for perpetual contracts built on Optimism. Pika Protocol was founded by an anonymous team and was launched in 2021.

PIKA tokenholders own and govern the protocol. Pika Protocol has no private investors.

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Pika Protocol

# Pika Protocol Earnings Methodology

## 1. Overview

Pika Protocol earnings represents the protocol's net profit from operating a decentralized perpetual trading platform on Optimism. Earnings are calculated as total revenue minus total expenses, where revenue comes from trading and liquidation fees charged to users, and expenses consist of OP token incentives distributed to traders. This metric measures the protocol's financial performance after accounting for user acquisition and retention costs through token incentive programs.

## 2. Data sources

The calculation relies on several key data sources:

- **Pika Protocol smart contract events**: Parsed event logs from PikaPerp contracts across versions v2, v3, and v4 deployed on Optimism, including `NewPosition`, `ClosePosition`, and `PositionLiquidated` events
- **Token incentive events**: Parsed `RewardPaid` events from VaultTokenReward contracts in v3, representing OP token distributions to traders
- **End-of-day price feeds**: Daily closing prices for USDC and OP tokens to enable USD conversion
- **Token metadata**: Decimal precision information for proper amount normalization (8 decimals for USDC fees, standard decimals for OP tokens)

## 3. Step-by-step calculation

### Component A: Revenue calculation

- **Purpose**: Calculate total protocol revenue from trading activity
- **Logic**: Revenue is derived from two fee sources. First, perpetual trading fees are extracted from `NewPosition` and `ClosePosition` events across all protocol versions (v2, v3, v4) on Optimism. The `fee` field from these events represents fees paid by traders when opening or closing positions. Second, liquidation fees are extracted from `PositionLiquidated` events in v2 and v3, combining `remainingReward` and `liquidatorReward` amounts. All fees are denominated in USDC with 8 decimal places. A revenue percentage of 50% is applied to all fees, representing the protocol's share versus the liquidity providers' share. This percentage has been constant since the protocol's launch on 2022-01-22.
- **Key fields**: `fee` amounts from trading events, `remainingReward` and `liquidatorReward` from liquidation events, all normalized from 8 decimals and converted to USD

### Component B: Expenses calculation  

- **Purpose**: Calculate total protocol expenses from token incentive programs
- **Logic**: Expenses consist entirely of OP token incentives paid to traders to encourage platform usage. These are captured from `RewardPaid` events in the VaultTokenReward contract (v3 only), where the `reward` field represents OP tokens claimed by individual traders. The OP token address is hardcoded as the Optimism system token. These token amounts are converted to USD using end-of-day price feeds to match the revenue currency denomination.
- **Key fields**: `reward` amounts representing OP token distributions, converted to USD using daily price feeds

### Final aggregation

- **Combining components**: Revenue and expenses are calculated separately and then combined using the standard earnings formula: earnings = revenue - expenses
- **Currency conversion**: All amounts are converted to USD using end-of-day price feeds for consistent calculation across USDC fees and OP token incentives
- **Time aggregation**: All blockchain events are aggregated to daily boundaries using timestamp truncation, ensuring consistent daily reporting
- **Final calculation**: The earnings metric represents the protocol's daily net profit, calculated as the USD value of fee revenue (after revenue split) minus the USD value of token incentives distributed to users

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

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

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