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 revenue per user (ARPU) Methodology

## 1. Overview

Average Revenue Per User (ARPU) measures the average daily revenue generated per active trader on the Velodrome decentralized exchange. This metric answers how much revenue Velodrome generates from each active user on a daily basis. The calculation divides total daily revenue by the number of daily active users, providing insight into user monetization effectiveness across Velodrome's multiple protocol versions (V1, V2, and Slipstream/V3).

## 2. Data sources

The ARPU calculation relies on several categories of blockchain data and external feeds:

- **Blockchain events**: Parsed Optimism event logs from Velodrome smart contracts, including `Swap` events from trading pairs, `Claim` and `CollectFees` events from fee distribution, and `NotifyReward` events from voting incentive contracts
- **Transaction data**: Optimism transaction records that link swap events to actual user addresses (transaction senders)
- **Factory events**: Pool and pair creation events that define the universe of valid Velodrome trading pairs across all protocol versions
- **Governance events**: Gauge creation events that identify legitimate fee collection addresses for revenue attribution
- **External data**: End-of-day token price feeds for USD conversion and token metadata including decimal precision and symbols
- **Configuration data**: Manually maintained denylist of trading pairs with limited price feed support

## 3. Step-by-step calculation

### Component A: Daily active users calculation

- **Purpose**: Identifies and counts unique daily traders across all Velodrome protocol versions
- **Logic**: Extracts trading activity from three types of swap events: V1 `Pair_Swap_event`, V2 `Pool_Swap_event`, and V3 `CLPool_Swap_event` on Optimism. Each swap event is joined with transaction data to identify the actual user address (the `from_address` field from transaction records, not the contract caller). Users are filtered to exclude activity from denylisted trading pairs that lack reliable price feeds. Daily aggregation uses HyperLogLog functions to accurately deduplicate users who may trade across multiple protocol versions or trading pairs on the same day.
- **Key fields**: `block_timestamp` for daily boundaries, `user_address` from transaction records, `account_address` from swap events to identify trading pairs, and `product_id` to distinguish between protocol versions

### Component B: Revenue calculation - trading fees

- **Purpose**: Captures trading fee revenue that flows to veVELO token holders
- **Logic**: Processes fee claim events (`Claim` from V1/V2 pairs and `CollectFees` from V3 pools) where fees are distributed to stakeholders. Claims are filtered to only include those made through legitimate incentive gauge addresses, identified by cross-referencing with gauge creation events. For each claim event, both `token0_amount` and `token1_amount` values are extracted, corrected for token decimals using divisor calculations, and converted to USD using end-of-day price feeds matched on timestamp, chain, and token address. Daily totals combine USD values from both tokens in each trading pair.
- **Key fields**: `token0_amount` and `token1_amount` for fee quantities, `fee_collector_address` for filtering legitimate claims, token addresses for price conversion, and `block_timestamp` for daily aggregation

### Component C: Revenue calculation - voting incentives

- **Purpose**: Captures third-party protocol payments made to influence Velodrome governance voting
- **Logic**: Processes `NotifyReward` events from bribe voting reward contracts where protocols deposit tokens as voting incentives. Each event contains a reward token address and amount, which undergoes decimal correction and USD conversion using the same price feed methodology as trading fees. These incentives represent direct protocol revenue as they are paid to influence vote outcomes that benefit Velodrome's ecosystem.
- **Key fields**: `token_address` for the incentive token, `amount` for payment quantity, and `block_timestamp` for daily grouping

### Final aggregation

- **Combining components**: Trading fee revenue and voting incentive revenue are summed to create total daily revenue. Daily active users are counted using HyperLogLog extraction to get precise unique user counts across all protocol versions
- **Currency conversion**: All token amounts are converted to USD using end-of-day price feeds, with decimal correction applied before price multiplication to ensure accurate valuations
- **Time aggregation**: Both revenue and user metrics use daily timestamp truncation to create consistent 24-hour measurement periods aligned to UTC day boundaries
- **Final calculation**: ARPU equals total daily revenue divided by daily active users, with zero-filling applied for days with no activity to maintain complete time series data

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

VelodromeVELO

Average revenue per user (ARPU)

Average revenue per user (ARPU)

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