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 Fees Methodology

## 1. Overview

The Velodrome fees metric measures total daily fee revenue generated by the Velodrome decentralized exchange protocol on Optimism, expressed in USD. This includes both trading fees collected from automated market maker (AMM) pools and voting incentives paid to governance participants. The metric combines fees from three versions of the protocol: Velodrome v1, v2, and v3 (Slipstream), providing a comprehensive view of all fee-generating activities across the ecosystem.

## 2. Data sources

The calculation relies on several raw blockchain data sources:
- **Trading fee events**: Parsed Optimism event logs for `Claim` events from Velodrome v1 `Pair` contracts, v2 `Pool` contracts, and v3 `CLPool` `CollectFees` events
- **Voting incentive events**: Parsed `NotifyReward` events from Velodrome v2 bribe voting reward contracts on Optimism
- **Pool creation events**: `PairCreated` events from v1 PairFactory, `PoolCreated` events from v2 Factory, and `PoolCreated` events from v3 CLPoolFactory contracts
- **End-of-day price feeds**: Token price data for USD conversion
- **Token metadata**: Token symbols and decimal precision information for proper amount calculations

## 3. Step-by-step calculation

### Component A: Trading fee collection
- **Purpose**: Captures fees claimed by liquidity providers and fee collectors from trading activity across all Velodrome versions
- **Logic**: Extracts fee claim events from three protocol versions on Optimism. For v1, uses `Pair` contract `Claim` events with `sender` as collector. For v2, uses `Pool` contract `Claim` events with `sender` as collector. For v3 (Slipstream), uses `CLPool` contract `CollectFees` events with `recipient` as collector. Each event contains amounts for two tokens (`amount0` and `amount1`) representing the fees claimed. The process joins these events with pool creation data to identify the token addresses and decimals for each trading pair. Denylisted trading pairs are excluded due to limited price feed support for low liquidity tokens. Daily aggregation groups by trading pair and sums the fee amounts after correcting for token decimals.
- **Key fields**: `block_timestamp`, `account_address` (pool contract), `fee_collector_address`, `token0_amount`, `token1_amount`, `token0_address`, `token1_address`, `token0_decimals`, `token1_decimals`

### Component B: Voting incentive payments  
- **Purpose**: Captures incentive payments made to governance participants for voting on liquidity gauge allocations
- **Logic**: Extracts `NotifyReward` events from Velodrome v2 bribe voting reward contracts on Optimism. These events occur when incentives are distributed to voters who participate in gauge weight voting. Each event contains a reward token address and amount representing the incentive payment. The system corrects for token decimal places using the `correct_decimals` macro and converts amounts to USD using the `convert_usd` macro with end-of-day price feeds.
- **Key fields**: `block_timestamp`, `account_address` (bribe contract), `token_address` (reward token), `amount` (incentive amount)

### Final aggregation
- **Combining components**: Trading fees and voting incentives are combined using a union operation, with voting incentives mapped to the `fees` field to match the trading fee schema
- **Currency conversion**: Token amounts are converted to USD using end-of-day price feeds matched by timestamp, chain, and token address. For trading fees, both `token0_amount` and `token1_amount` are converted separately and summed together
- **Time aggregation**: All events are aggregated to daily boundaries using `timestamp_trunc` to day, with gaps filled using zero values via the `fill_zeros` strategy in the `finalize_metric_fees` macro
- **Final calculation**: The total daily fees equal the sum of USD-converted trading fees from all pool versions plus USD-converted voting incentives, with proper schema validation and chain availability filtering applied

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

Total value users pay to use a protocol (gross fees, user-paid fees).

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Fees

Fees

Competitive landscape

Chain breakdown