# XRPL AMM Fees Methodology

## 1. Overview

Fees measures the total value paid by users to swap assets through XRPL AMM pools. These fees compensate liquidity providers who deposit assets into automated market maker pools. Fees are calculated as a percentage of swap volume, with the fee rate determined by governance votes on each pool. All fees are converted to USD for cross-asset comparison.

## 2. Data sources

- **Blockchain data**: Reserve state changes from XRPL AMM pools, combined with `Payment` and `OfferCreate` transactions on XRP Ledger. Fee rates are extracted from `AMMCreate` and `AMMVote` transactions
- **External data**: End-of-day price feeds for traded assets

## 3. Step-by-step calculation

### Component A: Pool fee rate tracking

- **Purpose**: Determine the fee percentage charged by each XRPL AMM pool over time
- **Logic**: Fee rates are extracted from `AMMCreate` and `AMMVote` transactions by parsing the `TradingFee` field from affected nodes. When multiple fee events occur in the same partition, the most recent transaction index is selected. Each fee rate is assigned a validity window from its creation timestamp until the next fee vote (or open-ended if no subsequent vote exists). Fee units are expressed in 1/100,000 increments where a value of 1000 represents 1%.
- **Key fields**: `TradingFee` (fee percentage), `block_timestamp` (validity window boundaries), `pool_address` (pool identifier)

### Component B: Swap volume extraction from reserve deltas

- **Purpose**: Calculate trading volume for each swap transaction by tracking reserve changes
- **Logic**: Reserve states are captured for all transactions that modify XRPL AMM pool balances. A lag function computes the previous reserve state for each pool, ordered by timestamp and transaction index. Absolute deltas between current and previous reserves are calculated for both assets in the pool. Only `Payment` and `OfferCreate` transaction types are classified as swaps, excluding liquidity provision operations. Pools listed in the denylist are excluded due to pricing inconsistencies.
- **Key fields**: `reserve_0` and `reserve_1` (current balances), `previous_reserve_0` and `previous_reserve_1` (prior balances), `delta_0` and `delta_1` (absolute reserve changes)

### Component C: Fee calculation and USD conversion

- **Purpose**: Calculate fee value from volume and normalize to USD
- **Logic**: Each swap is joined to its pool's active fee rate based on timestamp overlap with the fee validity window. Reserve deltas are converted to USD using end-of-day prices for both assets. Volume is defined as the lesser of the two USD-denominated deltas to avoid double-counting. Fees are calculated as `volume_usd * trading_fee / 100000`. Values are aggregated to daily granularity with UTC day boundaries.

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

Total value users pay to use a protocol (gross fees, user-paid fees).

Fees

Exchanges (DEX)

Through the use of blockchain and modern APIs, Ripple enables financial institutions who are part of the network, RippleNet, to send money globally, instantly, reliably and for fractions of a penny. RippleNet is built on top of Ripple’s consensus ledger, XRP Ledger (XRPL).

Ripple is the leading provider of crypto-enabled solutions for businesses. Ripple was founded by Chris Larsen and Jed McCaleb and launched in 2012 (previously OpenCoin).

XRP tokenholders own and govern Ripple's consensus ledger 'XRP Ledger' (XRPL). Ripple's investors include a16z, Pantera Capital, Route 66 Ventures, etc.