Liquidity providers deposit funds into LFJ and receive trading fees from traders (supply-side fees).

LFJ (previously Trader Joe) is a non-custodial exchange protocol built on Avalanche (originally a fork of SushiSwap). LFJ was founded by an anonymous team and launched in 2021.

JOE tokenholders own and govern the protocol. They currently take a cut of the total trading fees paid by traders (revenue). LFJ's investors include Three Arrows Capital, DeFiance Capital, GBV Capital, Mechanism Capital, etc.

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Exchanges (DEX)

# LFJ Earnings Methodology

## 1. Overview

Trader Joe earnings represents the protocol's net profit, calculated as total revenue minus total expenses. This metric measures the protocol's profitability from its decentralized exchange (DEX) operations across multiple chains (Ethereum, Arbitrum, BSC, and Avalanche) and multiple versions (v1, v2, v2.1, v2.2), minus the cost of liquidity incentives distributed to users.

## 2. Data sources

- **Swap events**: Parsed `Swap` events from Trader Joe DEX contracts across all versions and supported chains including Ethereum, Arbitrum, BSC, and Avalanche
- **Factory events**: `PairCreated` and `LBPairCreated` events from factory contracts to identify valid trading pairs
- **Fee parameter events**: `FeeParametersSet` events from LBFactory contracts for protocol fee rate configuration
- **Incentive events**: `Harvest` events from MasterChef contracts (BoostedMasterChefJoe, MasterChefJoeV2, MasterChefJoeV3) on Avalanche for JOE token distributions
- **Transaction data**: Blockchain transaction records for user address mapping
- **Token metadata**: Token symbol, decimal, and contract information for normalization
- **End-of-day price feeds**: Daily token price data for USD conversion

## 3. Step-by-step calculation

### Component A: Revenue calculation
- **Purpose**: Calculate protocol revenue from trading fees across all Trader Joe versions and chains
- **Logic**: Revenue calculation varies by protocol version and chain. For v1 on Avalanche, revenue is computed by multiplying total trading volume by a fixed protocol fee rate of 0.0005 (0.05%). For v1 on BSC, revenue is zero as the protocol does not collect fees on that chain. For v2, v2.1, and v2.2 versions, actual protocol fees are extracted from swap events and multiplied by dynamic protocol fee rates obtained from factory parameter setting events. Trading volume is calculated by aggregating swap amounts from parsed swap events, correcting for token decimals using token metadata, converting to USD using end-of-day price feeds, and taking the minimum USD value between the two tokens in each pair to filter out price manipulation attempts.
- **Key fields**: `trading_volume`, `revenue`, `protocol_fee_tier`, `token0_amount`, `token1_amount`

### Component B: Trading pair identification and filtering
- **Purpose**: Identify valid trading pairs and apply quality filters
- **Logic**: Trading pairs are identified through factory creation events across all Trader Joe versions. Pairs created through `PairCreated` events (v1) and `LBPairCreated` events (v2+) are enriched with token metadata including symbols and decimal places. A denylist of specific trading pair addresses is applied to exclude pairs with limited price feed support for low liquidity tokens. The system tracks protocol fee rates for v2+ pairs through `FeeParametersSet` events, with forward-filling to maintain consistent fee rates across time periods.
- **Key fields**: `account_address`, `token0_address`, `token1_address`, `account_name`, `protocol_fee_tier`

### Component C: Trade data processing
- **Purpose**: Process and normalize trade data across different protocol versions
- **Logic**: Trade processing varies by version due to different event structures. V1 trades use `amount0In`, `amount0Out`, `amount1In`, `amount1Out` fields to calculate net token changes. V2 trades use `swapForY` direction flag with `amountIn` and `amountOut` to determine token allocation. V2.1 and v2.2 trades use JavaScript functions to decode packed amount data from `amountsIn`, `amountsOut`, `protocolFees`, and `totalFees` fields, which contain both token amounts encoded in a single value. All trades are joined with transaction data to map contract user addresses to actual user addresses and filtered through incremental processing boundaries.
- **Key fields**: `token0_amount`, `token1_amount`, `token0_fees`, `token1_fees`, `user_address`, `trade_direction`

### Component D: Expenses calculation
- **Purpose**: Calculate protocol expenses from liquidity incentive distributions
- **Logic**: Expenses consist entirely of JOE token emissions distributed through three MasterChef contracts on Avalanche. `Harvest` events from BoostedMasterChefJoe, MasterChefJoeV2, and MasterChefJoeV3 contracts are captured, with specific pool ID (PID) filtering applied to exclude non-farm incentives and prevent double counting. Excluded PIDs include 66 (emissions sent to MasterChefJoeV3), 35, 36, 67 (non-farm incentives for lending and other purposes), and 69 (emissions sent to BoostedMasterChefJoe). JOE token amounts are corrected for 18 decimal places and converted to USD using end-of-day price feeds.
- **Key fields**: `amount`, `token_address`, `token_incentives`

### Final aggregation
- **Combining components**: Revenue and expenses are calculated separately and then combined using the formula: earnings = revenue - expenses
- **Currency conversion**: All token amounts are converted to USD using end-of-day price feeds matched by timestamp, chain, and token address
- **Time aggregation**: Data is aggregated to daily boundaries using timestamp truncation, with forward-filling applied to handle missing data points
- **Final calculation**: The earnings metric represents the net daily profit of the Trader Joe protocol, with positive values indicating profitability and negative values indicating that incentive expenses exceed trading fee revenue

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

Net profit (also profits, net income, profitability) — revenue remaining after subtracting expenses.

LFJJOE

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