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

Uniswap is a non-custodial exchange protocol built on Ethereum. Uniswap was founded by Hayden Adams and launched in 2018.

UNI tokenholders own and govern the protocol. They do not currently take a cut of the total trading fees paid by traders (revenue). Uniswap's investors include Paradigm, a16z, USV, etc.

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Uniswap

# Uniswap Liquidity turnover Methodology

## 1. Overview

Liquidity turnover is measured as trading volume relative to total liquidity on the decentralized exchange. It is calculated by dividing the daily trading volume by the total value locked (TVL) across Uniswap V2, Uniswap V3, and Uniswap V4. This metric is used to evaluate how efficiently capital is utilized to facilitate trades. Higher capital efficiency is represented by a higher turnover ratio, where more trading volume is generated per dollar of locked liquidity.

## 2. Data sources

- **Blockchain events**: `Swap` and `Sync` events from `Pair` contracts, and `setFeeTo` function calls from `Factory` contracts for Uniswap V2; `Swap`, `Mint`, `Collect`, `Flash`, and `SetFeeProtocol` events from `Pool` contracts, and `PoolCreated` events from `Factory` contracts for Uniswap V3; `Swap` and `Initialize` events from `PoolManager` contracts, alongside ERC-20 standard asset and native asset transfers for Uniswap V4, covering Ethereum, Arbitrum, Base, Polygon, and 11 other chains
- **External data**: End-of-day price feeds for assets, asset metadata, and daily market data

## 3. Step-by-step calculation

### Component A: Uniswap V2, Uniswap V3, and Uniswap V4 trading volume tracking

- **Purpose**: Swap volumes are extracted and normalized across all versions to establish the numerator for the turnover calculation.
- **Logic**: Swap events are parsed from the respective contracts for each version. For Uniswap V2, `Swap` events are extracted from `Pair` contracts. For Uniswap V3, `Swap` events are extracted from `Pool` contracts. For Uniswap V4, `Swap` events are extracted from `PoolManager` contracts. Denylisted trading pairs are excluded. Swap amounts are normalized by decimal precision. To eliminate wash trading and price manipulation, a price band filter is applied: trades where a divergence of more than 100x is identified between the USD values of the two legs are flagged as outliers and excluded. The remaining trades are valued in USD using the lesser value of the two swap legs (except for equity assets, which are valued on the equity leg).
- **Key fields**: `block_timestamp`, `account_address`, `token0_amount`, `token1_amount`, `token0_decimals`, `token1_decimals`

### Component B: Uniswap V2 and Uniswap V3 liquidity flow tracking

- **Purpose**: Daily asset flows are tracked to determine pool-level TVL for Uniswap V2 and Uniswap V3.
- **Logic**: For Uniswap V2, daily reserve balances are extracted from `Sync` events emitted by `Pair` contracts, and daily net flows are calculated as the difference between consecutive reserve balances. For Uniswap V3, daily net flows are calculated by aggregating asset changes from `Mint` (deposits), `Collect` (withdrawals), `Swap` (trades), and `Flash` (flash loans) events emitted by `Pool` contracts. Flash loan amounts are multiplied by the pool's fee tier to ensure the fee accrued to the pool is captured. All flows are normalized by decimal precision and aggregated daily.
- **Key fields**: `block_timestamp`, `account_address`, `token0_amount`, `token1_amount`, `reserve0_amount`, `reserve1_amount`, `fee_tier`

### Component C: Uniswap V4 liquidity flow tracking

- **Purpose**: Daily asset flows are tracked to determine TVL for Uniswap V4.
- **Logic**: Because a singleton architecture is utilized by Uniswap V4 where all assets are custodied in a single contract, TVL is tracked at the asset level rather than the pool level. ERC-20 standard asset and native asset transfers into and out of the `PoolManager` singleton contract are extracted. Daily net flows are calculated for each asset, normalized by decimal precision, and aggregated daily.
- **Key fields**: `block_timestamp`, `account_address`, `token_address`, `amount`, `value`, `decimals`

### Component D: Total value locked (TVL) aggregation and USD conversion

- **Purpose**: The cumulative TVL in USD is calculated across all versions to establish the denominator for the turnover calculation.
- **Logic**: Daily net flows from Uniswap V2, Uniswap V3, and Uniswap V4 are cumulatively summed over time so that the running balance of each asset is determined. A zero-floor guard is applied to ensure cumulative balances are prevented from dropping below zero. These balances are multiplied by end-of-day asset prices for conversion to USD. Missing days are filled forward to ensure continuous daily coverage is maintained.
- **Key fields**: `timestamp`, `chain_id`, `product_id`, `pool_address`, `token_address`, `tvl`

### Component E: Liquidity turnover calculation

- **Purpose**: The final liquidity turnover ratio is calculated.
- **Logic**: Daily trading volume and TVL are aggregated by day, chain, and product. Liquidity turnover is calculated by dividing the daily trading volume by the daily TVL. If either value is zero, the resulting turnover is set to zero or null. The final metric is forward-filled to ensure gaps are prevented in the time series.
- **Key fields**: `timestamp`, `trading_volume`, `tvl`, `liquidity_turnover`

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

Trading volume divided by total liquidity.

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Liquidity turnover

Liquidity turnover

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