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# Shadow Expenses Methodology

## 1. Overview

The ShadowExchange expenses metric measures the daily USD value of token incentives paid to liquidity providers as operational expenses. This metric captures the cost of ShadowExchange's liquidity mining program by tracking xShadow token rewards claimed by liquidity providers from gauge contracts. The calculation treats these incentive payments as protocol expenses since they represent direct costs incurred to attract and retain liquidity.

## 2. Data sources

- **Blockchain events**: Parsed `ClaimRewards` events from ShadowExchange V2 and V3 gauge contracts on the Sonic blockchain
- **Transaction data**: Sonic blockchain event logs containing reward claim transactions
- **External data**: End-of-day token price feeds for Shadow token USD conversion and token metadata for decimal precision

## 3. Step-by-step calculation

### Component A: LP reward claims extraction
- **Purpose**: Extract all liquidity provider reward claims from ShadowExchange gauge contracts
- **Logic**: Parse `ClaimRewards` events from both V2 (`Gauge_ClaimRewards_event`) and V3 (`GaugeV3_ClaimRewards_event`) gauge contracts on Sonic blockchain. Filter for non-removed events and extract the reward token address and claimed amount. Assign product identifiers as `Constant Product` or `Concentrated Liquidity` based on the contract version. Only include claims where the reward token is xShadow token with address `0x5050bc082ff4a74fb6b0b04385defddb114b2424`
- **Key fields**: `block_timestamp` for timing, `transaction_hash` and `log_index` for event identification, `address` for gauge contract, `reward` token address, and `amount` for claimed quantity

### Component B: Token incentives calculation
- **Purpose**: Convert xShadow reward amounts to USD values and aggregate by day
- **Logic**: Filter LP reward claims to only include xShadow token rewards, then map the xShadow token address to Shadow token address `0x3333b97138d4b086720b5ae8a7844b1345a33333` for pricing purposes since xShadow represents staked Shadow tokens. Truncate timestamps to daily boundaries and aggregate total incentive amounts by day, chain, and product
- **Key fields**: `timestamp` truncated to day, `chain_id` as Sonic, `product_id` for protocol version, `token_address` mapped to Shadow token, `token_incentives` as daily sum of claimed amounts

### Component C: USD conversion and decimal correction
- **Purpose**: Convert token amounts to standardized USD values with correct decimal precision
- **Logic**: Apply Token Terminal's standard USD conversion process using end-of-day Shadow token price feeds. Correct for token decimal places to ensure amounts are expressed in proper token units rather than raw blockchain integer values
- **Key fields**: `token_incentives` converted to USD with decimal correction applied

### Final aggregation
- **Combining components**: The metric directly uses the calculated token incentives as the expenses value since these represent operational costs for the protocol
- **Currency conversion**: USD conversion applied using end-of-day Shadow token prices with proper decimal adjustment
- **Time aggregation**: Daily aggregation with timestamp truncation to day boundaries
- **Final calculation**: Token incentives paid to liquidity providers are treated as protocol expenses, representing the direct cost of the liquidity mining program. The final `expenses` field equals the USD value of daily xShadow token rewards claimed by liquidity providers

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

Total project operating and incentive expenses.

ShadowSHADOW

Expenses

Expenses

Competitive landscape