Liquidity providers deposit funds into Velodrome and stake their LP tokens to receive VELO tokens in proportion to their share of the votes (token incentives).

Velodrome is a non-custodial exchange protocol built on Optimism. Velodrome was founded by veDAO members and launched in 2022.

VELO tokenholders own and govern the protocol. They vote which pools they wish to earn trading fees from (revenue), while the pools' unstaked liquidity providers earn the remainder of the trading fees (supply-side fees).

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Velodrome

# Velodrome Average fees per user (AFPU) Methodology

## 1. Overview

Average Fees Per User (AFPU) measures the average daily fee revenue generated per active trading user on the Velodrome decentralized exchange. This metric provides insight into revenue efficiency and user monetization by dividing total daily fees (including both trading fees and voting incentives) by the number of daily active users. The calculation combines fee collection data from multiple Velodrome protocol versions (V1, V2, and V3/Slipstream) deployed on Optimism.

## 2. Data sources

The AFPU calculation relies on multiple types of blockchain and external data:

- **Trading activity events**: Parsed `Swap` events from Velodrome V1 Pair contracts, V2 Pool contracts, and V3 CLPool contracts on Optimism blockchain
- **Fee collection events**: Parsed `Claim` events from V1/V2 trading pairs and `CollectFees` events from V3 CLPool contracts capturing fee withdrawals
- **Voting incentive events**: Parsed `NotifyReward` events from V2 bribeVotingReward contracts capturing voting incentive payments
- **Transaction records**: Optimism blockchain transaction data to identify actual user addresses behind contract interactions
- **Trading pair metadata**: Parsed contract creation events from PairFactory, Factory, and CLPoolFactory contracts to map pair addresses to underlying tokens
- **Token metadata**: Token decimals, symbols, and addresses for proper amount calculations
- **Price feeds**: End-of-day token price feeds in USD for currency conversion
- **Denylist data**: Hardcoded list of trading pairs excluded due to limited price feed support

## 3. Step-by-step calculation

### Component A: Daily active user calculation
- **Purpose**: Identify and count unique daily active users across all Velodrome trading activity
- **Logic**: Extract `Swap` events from Velodrome V1 (`Pair_Swap_event`), V2 (`Pool_Swap_event`), and V3 (`CLPool_Swap_event`) contracts on Optimism. Join swap events with Optimism transaction records using `transaction_hash` to retrieve the actual user address from the `from_address` field, as swap events only contain the contract address in the `sender` field. Filter out transactions from denylisted trading pairs. Group by day and count distinct `user_address` values to get daily active users.
- **Key fields**: `user_address` from transaction records, `block_timestamp` for daily aggregation, `transaction_hash` for joining events to transactions

### Component B: Trading fee calculation
- **Purpose**: Calculate total trading fees earned by liquidity providers and claimed from trading pairs
- **Logic**: Process `Claim` events from Velodrome V1/V2 contracts and `CollectFees` events from V3 contracts. These events contain `amount0` and `amount1` fields representing fees claimed in both tokens of each trading pair. Join with trading pair metadata to get token addresses and decimal precision for each token. Correct token amounts by dividing by 10 raised to the power of token decimals. Convert both token amounts to USD using end-of-day price feeds matched by token address, chain, and timestamp. Sum the USD values of both tokens to get total fees per claim event. Aggregate by day to get daily trading fees.
- **Key fields**: `amount0` and `amount1` for fee amounts, `token0_address` and `token1_address` for price lookups, `token0_decimals` and `token1_decimals` for amount correction

### Component C: Voting incentive calculation  
- **Purpose**: Calculate voting incentives paid to governance participants
- **Logic**: Process `NotifyReward` events from V2 bribeVotingReward contracts capturing incentive payments. Extract the `reward` token address and `amount` from each event. Correct for token decimals using token metadata. Convert amounts to USD using end-of-day price feeds matched by token address, chain, and timestamp. Aggregate by day to get daily voting incentive payments.
- **Key fields**: `reward` token address for price lookups, `amount` for incentive values, token decimals for amount correction

### Final aggregation
- **Combining components**: Sum daily trading fees and daily voting incentives to calculate total daily fees revenue for Velodrome
- **Currency conversion**: All fee amounts converted to USD using end-of-day price feeds, ensuring consistent currency across different tokens
- **Time aggregation**: All metrics aggregated to daily boundaries using timestamp truncation to day level
- **Final calculation**: Divide total daily fees by daily active users to get average fees per user (AFPU = Total Daily Fees ÷ Daily Active Users)

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

VelodromeVELO

Average fees per user (AFPU)

Average fees per user (AFPU)

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