# Concentrated Liquidity Supply-side fees Methodology

## 1. Overview

Supply-side fees measures the total value earned by liquidity providers within Shadow Concentrated Liquidity pools. This metric includes the portion of swap fees retained by liquidity providers after protocol fee splits are applied, as well as external incentives claimed through gauges. It reflects the total economic compensation distributed to service providers for the provision of capital and liquidity within the protocol.

## 2. Data sources

- **Blockchain events**: `PoolCreated` events from `Factory` contracts, `FeeAdjustment` events from `PoolFactory` contracts, `SetFeeProtocol` and `Swap` events from `Pool` contracts, and `ClaimRewards` events from `GaugeV3` contracts, covering Sonic
- **External data**: End-of-day price feeds for assets

## 3. Step-by-step calculation

### Component A: Fee parameter tracking

- **Purpose**: Maintain an accurate record of fee tiers and protocol fee splits for each Concentrated Liquidity pool.
- **Logic**: Initial fee tiers and protocol fee splits are extracted from `PoolCreated` events in `Factory` contracts. Subsequent updates to fee tiers are parsed from `FeeAdjustment` events in `PoolFactory` contracts, while updates to protocol fee splits are parsed from `SetFeeProtocol` events in `Pool` contracts. These values are stored as time-bound intervals to ensure that swap volumes are associated with the correct fee parameters at the time of execution.

### Component B: Swap fee extraction

- **Purpose**: Determine the share of trading fees earned by liquidity providers from swap activity.
- **Logic**: `Swap` events from `Pool` contracts are parsed to identify transaction amounts for both assets in a pair. Trading volume is calculated by taking the lesser USD value between the two swapped assets to mitigate potential price manipulation. The total fees generated by a swap are determined by applying the pool's specific `fee_tier` to the trade volume. The supply-side portion is then isolated by multiplying these total fees by the inverse of the `fee_split` (the protocol's share), resulting in the value retained by liquidity providers.

### Component C: Gauge incentive tracking

- **Purpose**: Capture additional rewards distributed to liquidity providers via gauge mechanisms.
- **Logic**: `ClaimRewards` events from `GaugeV3` contracts are monitored to identify incentive distributions. Reward amounts are extracted and filtered to exclude emissions of the xShadow asset, focusing on other distributed assets. These claimed rewards are treated as a direct component of supply-side earnings.

### Component D: Normalization and USD conversion

- **Purpose**: Standardize all earnings into a common currency and time granularity.
- **Logic**: All fee and reward amounts are normalized by decimal precision based on asset metadata. Daily totals are converted to USD using end-of-day price feeds. The final supply-side fees metric is the sum of swap fees retained by LPs and claimed gauge incentives, aggregated by chain and product using UTC day boundaries.

*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