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

Verse is an automated market maker-based decentralized exchange built on Ethereum. Verse was created by Bitcoin.com, and launched in 2022.

VERSE tokenholders own and govern the protocol. They currently take a cut of the total trading fees paid by traders (revenue). Verse's investors include Blockchain.com, KuCoin Ventures and others.

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Verse

# Verse Earnings Methodology

## 1. Overview

VerseDX earnings represents the protocol's net profit, calculated as revenue minus expenses. This metric measures the financial performance of the VerseDX decentralized exchange by subtracting operational costs (primarily liquidity incentives) from protocol revenue (trading fees). The calculation uses a simple profit formula where revenue comes from the protocol's share of trading fees (1/6 of total fees collected), and expenses consist entirely of VERSE token incentives distributed to liquidity providers.

## 2. Data sources

The calculation relies on several blockchain and external data sources:

- **VerseDX protocol events**: Parsed `Swap` events from VerseDX v1 trading pairs on Ethereum, containing token amount changes for each trade
- **Trading pair metadata**: `PairCreated` events from the VerseDX factory contract defining token pairs, fee tiers, and contract addresses  
- **Liquidity incentive events**: `RewardPaid` events from seven VerseDX farm contracts (ETH-DAI, ETH-USDC, VERSE-ETH, WBTC-ETH, WBTC-USDC, ETH-USDT, USDC-HAPI) tracking VERSE token distributions
- **Ethereum transaction data**: Transaction records linking swap events to user addresses
- **End-of-day price feeds**: Daily USD price data for all tokens involved in trading and incentives
- **Token metadata**: Token decimal places and symbols for proper amount calculations and pair naming

## 3. Step-by-step calculation

### Component A: Trading volume calculation
- **Purpose**: Calculates daily USD trading volumes from swap events to determine fee generation
- **Logic**: Extract `Swap` events from VerseDX trading pairs, computing token amount changes by taking the difference between `amountIn` and `amountOut` for both tokens in each trade. Apply absolute value to get trade volume regardless of direction. Correct decimal places using token metadata, then convert both token amounts to USD using end-of-day price feeds. To prevent price manipulation, use the lesser of the two USD values as the final trading volume for each swap. Aggregate these volumes daily by trading pair.
- **Key fields**: `amount0In`, `amount0Out`, `amount1In`, `amount1Out` from swap events, `token0_decimals`, `token1_decimals` from token metadata

### Component B: Fee and revenue calculation  
- **Purpose**: Calculates protocol revenue from trading fees using a fixed fee structure
- **Logic**: Apply a hardcoded fee tier of 0.3% (0.003) to all trading volumes, as VerseDX uses a uniform fee structure across all pairs. Calculate total fees by multiplying daily trading volumes by the fee percentage. Extract protocol revenue by taking 1/6 of total fees, representing the protocol's share while the remaining 5/6 goes to liquidity providers.
- **Key fields**: `trading_volume` multiplied by `fee_tier` (0.003), then by protocol share (1/6)

### Component C: Liquidity incentive expenses
- **Purpose**: Calculates expenses from VERSE token incentives distributed to liquidity providers
- **Logic**: Extract `RewardPaid` events from seven predefined VerseDX farm contracts representing different trading pairs (ETH-DAI, ETH-USDC, VERSE-ETH, WBTC-ETH, WBTC-USDC, ETH-USDT, USDC-HAPI). Each event contains the VERSE token amount distributed to liquidity providers. Convert VERSE token amounts from wei to standard units using token decimals, then convert to USD using end-of-day VERSE price feeds. Aggregate these incentive distributions daily across all farm contracts.
- **Key fields**: `tokenAmount` from `RewardPaid` events, VERSE token address (`0x249ca82617ec3dfb2589c4c17ab7ec9765350a18`)

### Final aggregation
- **Combining components**: Calculate earnings by subtracting total daily expenses (liquidity incentives in USD) from total daily revenue (protocol fees in USD)
- **Currency conversion**: All amounts are converted to USD using end-of-day price feeds, with decimal correction applied based on token metadata
- **Time aggregation**: All data is aggregated to daily boundaries using timestamp truncation to day level
- **Final calculation**: Earnings = Revenue - Expenses, where Revenue = (Trading Volume × 0.003 × 1/6) and Expenses = Sum of VERSE incentive distributions in USD

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

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

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