# Constant Product Token incentives Methodology

## 1. Overview

Token incentives measures the value of native assets that Shadow pays out to liquidity providers on the Constant Product platform. These incentives, primarily distributed in the form of xShadow, are used to compensate stakeholders for providing liquidity to the protocol's pools. The metric is analogous to stock-based compensation in traditional finance, representing a cost incurred by the protocol to bootstrap and maintain liquidity.

## 2. Data sources

- **Blockchain events**: `ClaimRewards` events from `Gauge` contracts, covering Sonic
- **External data**: End-of-day price feeds for native assets

## 3. Step-by-step calculation

### Component A: Reward claim tracking

- **Purpose**: Identify reward emissions distributed to liquidity providers
- **Logic**: `ClaimRewards` events are parsed from `Gauge` contracts. Events are filtered to exclude those marked as removed by the blockchain node. The data is specifically restricted to transfers of the xShadow asset address, as these represent the protocol's native emissions to gauges.
- **Key fields**: `amount` (reward quantity), `token_address` (asset identifier), `block_timestamp` (event timing)

### Component B: Normalization and USD conversion

- **Purpose**: Transform raw event data into standardized financial values
- **Logic**: Asset amounts are normalized by decimal precision based on asset metadata. The resulting quantities are multiplied by end-of-day price feeds to determine the USD value at the time of the transaction.

### Component C: Daily aggregation

- **Purpose**: Summarize incentive distributions at a daily granularity
- **Logic**: Normalized USD values are summed by day, chain, and product ID. A daily granularity is maintained using UTC day boundaries. Any days without activity are filled with zero values to ensure a continuous time series.

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

Value of native tokens distributed as incentives.

Token incentives