# XRPL AMM Supply-side fees Methodology

## 1. Overview

Supply-side fees measures the portion of trading fees that flows to liquidity providers in XRPL AMM pools. On the XRP Ledger, XRPL AMM trading fees are paid entirely to liquidity providers who supply assets to automated market maker pools. The fee rate for each pool is set through governance votes by LPs, with rates denominated in units of 1/100,000 (e.g., a value of 1000 equals 1%). Supply-side fees are calculated by applying each pool's trading fee rate to swap volumes derived from reserve state changes.

## 2. Data sources

- **Blockchain data**: Reserve state changes from XRPL AMM pools extracted via `AMMCreate`, `AMMVote`, `Payment`, and `OfferCreate` transactions on the XRP Ledger mainnet
- **External data**: End-of-day price feeds for assets traded in XRPL AMM pools

## 3. Step-by-step calculation

### Component A: Reserve-delta volume tracking

- **Purpose**: Infer swap volumes from changes in XRPL AMM pool reserves between consecutive transactions
- **Logic**: For each XRPL AMM pool, reserve balances are tracked across all transactions. When `Payment` or `OfferCreate` transactions execute, the absolute difference in reserves for both assets is calculated relative to the previous transaction state. These deltas represent the swap amounts flowing through each side of the pool. Volumes are aggregated daily and converted to USD using end-of-day asset prices, with the final volume taken as the minimum of both sides to avoid double-counting.
- **Key fields**: `reserve_0`, `reserve_1` (current pool balances), `previous_reserve_0`, `previous_reserve_1` (prior balances for delta calculation), `token_0`, `token_1` (asset identifiers)

### Component B: Trading fee rate extraction

- **Purpose**: Determine the LP fee rate applicable to each swap
- **Logic**: Pool fee rates are extracted from `AMMCreate` and `AMMVote` transactions that set or update the `TradingFee` parameter. Each fee rate is assigned a validity window starting from the transaction timestamp until the next fee update. For each swap, the most recent fee rate is joined based on the swap timestamp falling within the fee validity window. Pools without explicit fee votes default to zero.
- **Key fields**: `trading_fee` (rate in units of 1/100,000), `fee_valid_from`, `fee_valid_to` (validity window boundaries)

### Component C: Supply-side fee calculation

- **Purpose**: Calculate total fees earned by liquidity providers
- **Logic**: For each swap, the trading fee is applied to the USD volume: `fees_supply_side = volume_usd * trading_fee / 100000`. Fees are summed across all pools daily. Pools in the denylist are excluded due to extreme price inconsistencies that would distort volume calculations.

*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)

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.