Liquidity providers deposit funds into Polymarket and receive trading fees from traders (supply-side fees). Polymarket has also launched a new peer-to-peer order book with no liquidity providers involved.

Polymarket is a non-custodial prediction market protocol built on Polygon. Polymarket was founded by Shayne Coplan and launched in 2020.

Polymarket team & investors own and govern the protocol. They do not currently take a cut of the total trading fees paid by traders (revenue). Polymarket's investors include Polychain, 1Confirmation, ParaFi Capital, etc.

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Polymarket

# Polymarket Average fees per user (AFPU) Methodology

## 1. Overview

Average fees per user (AFPU) measures the average daily fee contribution of an individual active user on Polymarket. Insight is provided into the unit economics of the prediction market by relating total fee generation to the size of the active user base. The average cost incurred by users for executing trades across both the automated market maker (AMM) and order book models is reflected. Polymarket US is excluded from this metric because user identifiers are not contained within its trade reports.

## 2. Data sources

- **Fees**: Derived from the Fees metric
- **Active users (daily)**: Derived from the Active users (daily) metric

## 3. Step-by-step calculation

### Component A: AMM fee and user tracking

- **Purpose**: Captures activity and fees from the V1 automated market maker (AMM) product
- **Logic**: `FPMMBuy` and `FPMMSell` events are parsed from `FixedProductMarketMaker` contracts. Fee amounts are extracted from the `feeAmount` field. User addresses are identified from the `buyer` and `seller` fields to contribute to the active users (daily) count.
- **Key fields**: `feeAmount` (fee quantities), `buyer` (user identification), `seller` (user identification)

### Component B: Order book fee and user tracking

- **Purpose**: Captures activity and fees from the V2 order book model
- **Logic**: `OrderFilled` events are parsed from `Exchange` and `NegRiskCtfExchange` contracts to identify active users from the `maker` and `taker` fields. Fees are captured by monitoring ERC-20 `Transfer` events to designated fee recipient addresses. For the V1 order book, USDC transfers from specific fee source contracts to V1 fee recipients are tracked. For the V2 order book, Polymarket USD transfers to V2 fee recipient addresses are tracked when associated with transactions containing `OrderFilled` events from `Exchange` or `NegRiskCtfExchange` contracts, or when sent from the Polymarket Combos exchange contract.
- **Key fields**: `value` (fee quantities), `maker` (user identification), `taker` (user identification)

### Component C: Normalization and USD conversion

- **Purpose**: Standardizes fee values for cross-version aggregation
- **Logic**: Fee amounts are normalized by decimal precision based on asset metadata. Values are converted to USD using end-of-day price feeds for USDC and Polymarket USD. Daily granularity is maintained using UTC day boundaries.

### Component D: Final AFPU calculation

- **Purpose**: Calculates the average fee per user on a daily basis
- **Logic**: Total daily fees are aggregated across all versions and products, excluding Polymarket US. Polymarket US is excluded because user identifiers are not contained within its trade reports. The daily active user count is determined by the number of unique addresses interacting with the protocol's AMM and order book contracts. The final metric is calculated by dividing the filtered total daily fees by the number of active users (daily). Any missing days are filled with zero values to ensure a continuous time series.

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

Polymarket

Average fees per user (AFPU)

Average fees per user (AFPU)

Competitive landscape