# Raydium CPMM Supply-side fees Methodology

## 1. Overview

Supply-side fees measures the share of fees that goes to the service providers for Raydium CPMM. For this product, service providers are liquidity providers who receive a portion of the trading fees generated by swap activity. These fees serve as the primary incentive for users to deposit assets into the Constant Product Market Maker (CPMM) pools.

## 2. Data sources

- **Blockchain events**: `Initialize`, `CreateAmmConfig`, and `UpdateAmmConfig` instructions from `CPMM` programs, and DEX trade instructions, covering Solana
- **External data**: End-of-day price feeds for assets

## 3. Step-by-step calculation

### Component A: Fee configuration tracking

- **Purpose**: Establishes the specific fee percentages applied to each CPMM pool.
- **Logic**: Fee rates are extracted from the `CreateAmmConfig` and `UpdateAmmConfig` instructions of the `CPMM` programs. Three distinct rates are tracked: the `trade_fee_rate` (total fee charged to the user), the `protocol_fee_rate` (share allocated to the protocol), and the `fund_fee_rate` (share allocated to the ecosystem fund). These configurations are joined to specific pools using the `Initialize` instructions from `CPMM` programs, which map pool accounts to their respective configuration profiles.
- **Key fields**: `trade_fee_rate`, `protocol_fee_rate`, `fund_fee_rate`, `amm_config`, `pool_address`

### Component B: Trading volume and swap fee calculation

- **Purpose**: Determines the gross fees generated by swap activity on Raydium CPMM.
- **Logic**: Swap instructions are parsed from Solana DEX trade data. Trading volume is calculated by identifying the USD value of the base or quote asset involved in each trade. For each trade, the total fee is calculated by applying the specific `trade_fee_rate` associated with the pool at the time of the transaction.
- **Key fields**: `base_amount`, `quote_amount`, `trade_fee_rate`, `pool_address`

### Component C: Protocol revenue calculation

- **Purpose**: Determines the portion of the total fees retained by the protocol and ecosystem funds.
- **Logic**: Protocol revenue for Raydium CPMM is calculated as the product of the trading volume and the combined `protocol_fee_rate` and `fund_fee_rate`. Additionally, fixed pool creation fees (set at 0.15 SOL) are identified from `Initialize` instructions and categorized entirely as protocol revenue.
- **Key fields**: `protocol_fee_rate`, `fund_fee_rate`, `fee_amount` (pool creation)

### Component D: Supply-side fee derivation and USD conversion

- **Purpose**: Isolate the share of fees that goes to the service providers and normalize to USD.
- **Logic**: Supply-side fees are calculated by subtracting protocol revenue from the total fees generated. Since pool creation fees are fully retained as revenue, supply-side fees for Raydium CPMM are derived exclusively from the liquidity provider's share of swap fees. All values are normalized by decimal precision and converted to USD using end-of-day price feeds. Daily totals are aggregated using UTC day boundaries.
- **Key fields**: `fees`, `revenue`, `price_usd`

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

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

Supply-side fees

Exchanges (DEX)