# Concentrated Liquidity Trading volume Methodology

## 1. Overview

Trading volume measures the total value of trades executed on Shadow's Concentrated Liquidity pools. This metric provides a standardized assessment of market activity and liquidity efficiency within the protocol’s price-range-specific pools. Since trading fees are derived from these swap transactions, volume serves as a primary indicator of the protocol's capacity to generate revenue for liquidity providers and the protocol treasury.

## 2. Data sources

- **Blockchain events**: `PoolCreated` events from `Factory` contracts and `Swap` events from `Pool` contracts, covering Sonic
- **External data**: End-of-day price feeds for assets and asset metadata

## 3. Step-by-step calculation

### Component A: Pool identification and metadata mapping

- **Purpose**: Identifies valid Concentrated Liquidity trading pairs and their associated asset properties.
- **Logic**: `PoolCreated` events from `Factory` contracts are parsed on the Sonic chain to maintain a registry of active liquidity pools. These pool addresses are joined with asset metadata to determine the decimal precision and symbols for both assets in each pair, ensuring subsequent calculations are accurately normalized.

### Component B: Trade event extraction

- **Purpose**: Captures raw swap quantities and transaction metadata from the blockchain.
- **Logic**: `Swap` events from `Pool` contracts are parsed to extract the amount of token 0 and token 1 exchanged. Each event is associated with a specific transaction hash and block timestamp to facilitate granular tracking of trade activity across the Sonic chain.

### Component C: USD normalization and price manipulation filtering

- **Purpose**: Normalizes swap amounts to USD and applies filters to ensure data integrity.
- **Logic**: Raw swap amounts are normalized by the decimal precision of each respective asset. USD values are then calculated for both sides of the trade using end-of-day price feeds. To protect against potential price manipulation or inaccuracies in illiquid price feeds, the final trading volume for each transaction is determined by taking the lesser USD value of the two assets involved in the swap.

### Component D: Final aggregation

- **Purpose**: Consolidates individual swap data into daily volume totals.
- **Logic**: Trading volumes are summed by day, chain, and product. All data is aggregated using UTC day boundaries to produce a consistent daily granularity for the Shadow Concentrated Liquidity product.

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

Total value of spot trades executed on the exchange.

Trading volume