# Concentrated Liquidity Token incentives Methodology

## 1. Overview

The economic value of native assets distributed to liquidity providers is measured by Token incentives for Concentrated Liquidity. These distributions are primarily issued in the form of xShadow to compensate stakeholders for the provision of capital within the protocol's Concentrated Liquidity pools. This metric is utilized as an indicator of the protocol's liquidity acquisition costs, analogous to stock-based compensation in traditional finance.

## 2. Data sources

- **Blockchain events**: `ClaimRewards` events from `GaugeV3` contracts, covering Sonic
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: LP reward extraction

- **Purpose**: Identify and extract emission claims made by liquidity providers.
- **Logic**: `ClaimRewards` events are parsed from `GaugeV3` contracts on the Sonic blockchain. Relevant data points are captured for each event, including the timestamp, transaction hash, and the address of the asset being distributed. Events designated as removed by the blockchain provider are excluded to ensure data integrity.
- **Key fields**: `in_reward` (asset identification), `in_amount` (quantity)

### Component B: Incentive filtering

- **Purpose**: Isolate protocol-native emissions from other potential reward types.
- **Logic**: The dataset is filtered to include only those distributions where the reward asset address matches the protocol's xShadow asset. This ensures that only native protocol incentives are counted, while external rewards or third-party token distributions are excluded from the calculation.

### Component C: USD conversion and aggregation

- **Purpose**: Normalize incentive values into a common currency for cross-chain and cross-asset analysis.
- **Logic**: Quantities are normalized by decimal precision using asset metadata. The normalized amounts are then multiplied by end-of-day price feeds to determine the USD value at the time of the claim. Values are aggregated by day using UTC boundaries, and a zero-filling strategy is applied to ensure a continuous temporal record.

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

Value of native tokens distributed as incentives.

Token incentives