Polynomial Protocol builds on top of Synthetix to create a synthetic perpetuals trading platform. Traders on Polynomial trade futures against the liquidity provided by liquidity providers on Synthetix, with liquidity providers receiving trading fees (supply-side fees).

Polynomial Protocol is a non-custodial exchange for perpetual contracts built on Optimism. Polynomial Protocol was founded by Gautham Santhosh, Salman Naseer Ahmed, & Mubaris NK, and their flagship product Polynomial Trade was launched in 2023.

The Polynomial team own and govern the protocol. Polynomial’s investors include Archetype, Genblock Capital, Caballeros Capital, etc.

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Polynomial Protocol

# Polynomial Protocol Earnings Methodology

## 1. Overview

Polynomial earnings represents the protocol's net profit calculated as total revenue minus total expenses. This metric measures Polynomial's financial performance from its derivatives trading platform built on Synthetix's perpetual contracts infrastructure. The calculation aggregates multiple revenue streams from trading fees and revenue sharing arrangements, then subtracts operational expenses (currently zero) to determine daily earnings in USD.

## 2. Data sources

The calculation relies on several blockchain and external data sources:
- **Synthetix perpetual contract events**: Parsed `PerpsTracking` and `PositionModified` event logs from Synthetix PerpsV2, PerpsV21, and PerpsV22 contracts on Optimism
- **Polynomial smart contract events**: Parsed execution events from Polynomial's limit order and advanced order contracts including `ExecuteRequest`, `ExecuteLimitOrder`, and `ExecutePairOrder` events on Optimism
- **Optimism token transfers**: ERC20 transfer events specifically tracking SNX token movements from Synthetix to Polynomial addresses
- **End-of-day token price feeds**: External price data for converting token amounts to USD values
- **Token metadata**: Token decimal information for proper amount normalization

## 3. Step-by-step calculation

### Component A: Perpetual trading fees collection
- **Purpose**: Captures fees generated from users trading perpetual contracts through Polynomial's interface on Synthetix
- **Logic**: Extract `PerpsTracking` events from Synthetix PerpsV2 contracts filtering for Polynomial's specific tracking code (`0x706f6c796e6f6d69616c00000000000000000000000000000000000000000000`). Join these allowlisted transactions with corresponding `PositionModified` events to identify the actual fee amounts. The tracking code ensures only trades executed through Polynomial's platform are included
- **Key fields**: `transaction_hash` for joining events, `fee` amounts from position modifications, `block_timestamp` for daily aggregation, `trackingCode` for filtering Polynomial-specific transactions

### Component B: Advanced order fees collection  
- **Purpose**: Captures revenue from Polynomial's proprietary advanced order types like limit orders and pair orders
- **Logic**: Extract execution events from Polynomial's own smart contracts including limit order executions and pair order executions. These represent fees collected directly by Polynomial for advanced trading functionality beyond basic perpetual trading
- **Key fields**: `totalFee` representing the total fee collected, `block_timestamp` for daily aggregation, contract `address` identifying the fee recipient

### Component C: Synthetix revenue sharing collection
- **Purpose**: Captures SNX token kickbacks received from Synthetix as part of revenue sharing arrangement (SIP-2002)
- **Logic**: Identify SNX token transfers from Synthetix's kickback sender address (`0x73f671f272f35572d948e377a09b9be61c8e4ee2`) to Polynomial's receiver address (`0x7cb6bf3e7395965b2162a7c2e6876720c20012d6`). Filter token transfers for the specific SNX token address to capture only legitimate kickback payments
- **Key fields**: `value` representing SNX token amount transferred, `from_address` and `to_address` for validating legitimate kickbacks, `token_address` for SNX identification

### Component D: Revenue aggregation
- **Purpose**: Combines all revenue streams into a unified daily revenue figure
- **Logic**: Union the perpetual trading fees, advanced order fees, and SNX kickbacks into a single dataset. Truncate all timestamps to daily boundaries using `timestamp_trunc`. Convert all token amounts from their native decimals to standardized format, then convert to USD using end-of-day price feeds. Sum all USD values by day to create daily revenue totals
- **Key fields**: `amount` or `revenue` representing USD value, `timestamp` truncated to day level, `token_address` for price lookup

### Component E: Expenses calculation
- **Purpose**: Determines total operational expenses to subtract from revenue
- **Logic**: Currently set token incentives to zero across all timestamps and products. Use the same timestamp and product structure as the fees component to ensure consistent data schema. This indicates Polynomial currently has no token incentive programs or other tracked expenses
- **Key fields**: `token_incentives` set to 0, `timestamp` and `product_id` for schema consistency

### Final aggregation
- **Combining components**: Earnings calculated using the standard formula: earnings = revenue - expenses. Since expenses are currently zero, earnings equals total revenue
- **Currency conversion**: All revenue streams converted to USD using end-of-day token price feeds with proper decimal correction applied before aggregation
- **Time aggregation**: All data aggregated to daily boundaries with timestamps truncated to day level
- **Final calculation**: Daily earnings in USD equals the sum of perpetual trading fees, advanced order fees, and SNX kickbacks, minus zero expenses, with gaps filled using zero values for missing days

*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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