# Constant Product Trading volume Methodology

## 1. Overview

Trading volume measures the total value of trades executed on the Constant Product decentralized exchange. Since users pay trading fees on executed swaps, this metric serves as a primary indicator of the protocol's utilization and its capacity to generate fees and revenue. This methodology specifically covers the Constant Product (V2) implementation on the Sonic blockchain.

## 2. Data sources

- **Blockchain events**: `Swap` events from `Pair` contracts and `PairCreated` events from `Factory` contracts, covering the Sonic blockchain
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Trade event extraction

- **Purpose**: Capture raw swap activity from the blockchain
- **Logic**: `Swap` events are parsed from `Pair` contracts. For each event, the net change in asset quantities is determined by calculating the difference between the incoming and outgoing amounts for both assets in the trading pair. The transaction hash, block timestamp, and contract address are retained for valuation and attribution.
- **Key fields**: `amount0In`, `amount0Out`, `amount1In`, and `amount1Out`

### Component B: Asset metadata and pool mapping

- **Purpose**: Associate swap activity with specific assets and their decimal precision
- **Logic**: `PairCreated` events from `Factory` contracts are monitored to identify new liquidity pools. This data is used to map pool addresses to their respective underlying assets. Asset metadata is then applied to ensure swap quantities are correctly normalized by decimal precision.
- **Key fields**: `token0`, `token1`, and `pair` addresses

### Component C: USD valuation and manipulation filtering

- **Purpose**: Normalize trade values to USD and mitigate the impact of price manipulation
- **Logic**: Normalized asset amounts are multiplied by end-of-day price feeds. To ensure data integrity and filter out potential price manipulation or imbalanced trades, the trading volume for each swap is calculated as the lesser USD value between the two assets involved in the trade. This conservative approach ensures that volume is only recorded for the portion of the trade that is fully collateralized by market prices for both assets.

### Component D: Daily aggregation

- **Purpose**: Consolidate trade data into a time-series format
- **Logic**: Individual trade values are summed and categorized by product and chain. Results are aggregated into daily buckets using UTC day boundaries. Any days without recorded activity are zero-filled to maintain a continuous data series.

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

Total value of spot trades executed on the exchange.

Trading volume