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 Supply-side fees Methodology

## 1. Overview

This metric calculates the daily fees paid to Synthetix liquidity providers from perpetual trading activity conducted through the Polynomial Protocol. Polynomial operates as a frontend to Synthetix's perpetual trading infrastructure, and this metric captures the portion of trading fees that flow to liquidity providers who back the synthetic asset positions. The calculation identifies Polynomial-specific trading activity through tracking codes and measures the fees generated for the liquidity providers in the underlying Synthetix system.

## 2. Data sources

- **Synthetix v2 contract events**: Parsed `PerpsTracking` and `PositionModified` events from three versions of Synthetix perpetual trading contracts (ProxyPerpsV2, ProxyPerpsV21, ProxyPerpsV22) deployed on Optimism
- **Optimism blockchain events**: Transaction logs and event data from the Optimism network where Synthetix v2 perpetual contracts operate  
- **End-of-day token price feeds**: USD price data for sUSD token conversion
- **Token metadata**: Decimal precision information for sUSD token normalization

## 3. Step-by-step calculation

### Component A: Transaction allowlisting
- **Purpose**: Identify transactions that originate from Polynomial Protocol users rather than direct Synthetix users
- **Logic**: Extract `PerpsTracking` events from all three Synthetix v2 contract versions on Optimism. Filter these events to only include transactions where the `trackingCode` field equals the Polynomial-specific identifier (`0x706f6c796e6f6d69616c00000000000000000000000000000000000000000000`). This tracking code is embedded in transactions when users trade through Polynomial's interface, allowing differentiation from direct Synthetix trades. Collect the `transaction_hash` and `fee` values from these filtered events to create an allowlist of Polynomial-originated transactions.
- **Key fields**: `transaction_hash` for transaction identification, `fee` amount for matching with trading events, `trackingCode` for protocol identification

### Component B: Fee extraction from trading events  
- **Purpose**: Extract the actual fee amounts paid to liquidity providers from perpetual trading positions
- **Logic**: Query `PositionModified` events from the same three Synthetix v2 contract versions. These events are emitted when perpetual positions are opened, modified, or closed and contain the fee amounts. Join these events with the allowlisted transactions from Component A using both `transaction_hash` and `fee` amount as matching criteria. This ensures only fees from Polynomial-originated trades are included. Extract relevant metadata including block timestamp, account address, and fee amount. Classify all transactions with business line as "Perpetual trading", market sector as "derivatives", and business segment as "perpetual".
- **Key fields**: `block_timestamp` for daily aggregation, `transaction_hash` for allowlist matching, `fee` amount paid to liquidity providers, `address` for the trading account

### Final aggregation
- **Combining components**: Sum all fee amounts from Component B that successfully matched with allowlisted transactions from Component A
- **Currency conversion**: Convert sUSD fee amounts to USD using end-of-day price feeds and apply decimal correction for the sUSD token (address `0x8c6f28f2f1a3c87f0f938b96d27520d9751ec8d9`)
- **Time aggregation**: Truncate timestamps to daily boundaries and group all fees by day, chain, business classifications, and token address
- **Final calculation**: Sum the USD-converted fee amounts for each day to produce daily supply-side fees paid to Synthetix liquidity providers from Polynomial Protocol trading activity. Fill any missing days with zero values to maintain continuous time series data.

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

Portion of fees distributed to service providers or supply-side participants.

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Supply-side fees

Supply-side fees

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