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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Exchanges (DEX)

Verse

# Verse Supply-side fees Methodology

## 1. Overview

VerseDX supply-side fees represent the portion of trading fees that accrue to liquidity providers on the VerseDX decentralized exchange. This metric calculates 83.33% (5/6) of total trading fees generated from swaps on VerseDX trading pairs. The calculation multiplies daily trading volume by the protocol's fixed 0.3% fee rate, then allocates 5/6 of those fees to liquidity providers as supply-side revenue.

## 2. Data sources

- **Blockchain events**: Parsed Ethereum `SwapsFactory_PairCreated_event` logs that establish trading pairs and their fee structures
- **Swap events**: Ethereum `SwapsPair_Swap_event` logs containing trade execution data with token amounts and user information  
- **Transaction data**: Ethereum transaction records providing user addresses and transaction metadata
- **Token metadata**: Token registry data including symbols, decimal places, and contract addresses for amount normalization
- **External data**: End-of-day token price feeds for USD conversion of trading volumes

## 3. Step-by-step calculation

### Component A: Trading pair identification
- **Purpose**: Establish all VerseDX trading pairs with their fee structures
- **Logic**: Extract trading pairs from `SwapsFactory_PairCreated_event` logs on Ethereum, capturing the pair contract address, token0 address, token1 address, and version. Apply a hardcoded fee tier of 0.3% (3000/1000000) to all pairs, as VerseDX uses a fixed fee structure. Join with token metadata to obtain token symbols and decimal places for both tokens in each pair.
- **Key fields**: `pair` address as the trading pair contract, `token0` and `token1` addresses, `decimals` for both tokens, and `fee_tier` set to 0.003

### Component B: Trade event processing  
- **Purpose**: Process individual swap transactions to calculate token amount changes
- **Logic**: Parse `SwapsPair_Swap_event` logs from Ethereum to extract swap details including amounts in and out for both tokens. Calculate the net change for each token as the difference between amounts in and amounts out. Join with Ethereum transaction data to obtain the actual user address from the transaction sender, as the event contains the contract interaction address. Filter trades to start from June 14, 2022 when VerseDX began operations.
- **Key fields**: `amount0In`, `amount0Out`, `amount1In`, `amount1Out` for calculating token changes, `transaction_hash` for linking to transaction data, and `user_address` for attribution

### Component C: Volume aggregation and normalization
- **Purpose**: Aggregate trading activity by day and normalize token amounts
- **Logic**: Group trades by day, trading pair, and user to calculate daily volumes. Join trade data with trading pair information to access token decimal places. Normalize token amounts by dividing the absolute value of each token change by 10 raised to the token's decimal places. This converts raw blockchain amounts to human-readable token quantities. Sum these normalized amounts across all trades for each day and trading pair.
- **Key fields**: `token0_amount` and `token1_amount` after decimal correction, `timestamp` truncated to day, `account_address` for the trading pair

### Component D: USD conversion with manipulation protection
- **Purpose**: Convert normalized token amounts to USD values while preventing price manipulation
- **Logic**: Join the normalized trading volumes with end-of-day price feeds for both tokens in each trading pair. Calculate USD values by multiplying each token amount by its corresponding price. To prevent manipulation from inflated token prices, take the lesser of the two USD values (token0_usd vs token1_usd) as the final trading volume. This ensures that manipulated prices for one token don't inflate the overall volume calculation.
- **Key fields**: `price_usd` from price feeds, `trading_volume` as the lesser of the two token USD values

### Component E: Fee calculation
- **Purpose**: Calculate total fees generated from trading activity
- **Logic**: Multiply the daily trading volume (in USD) by the trading pair's fee tier of 0.3%. This represents the total fees collected from traders on each swap transaction. Aggregate these fees by day, chain, and product dimensions to create daily fee totals.
- **Key fields**: `fees` calculated as `trading_volume` multiplied by `fee_tier` (0.003)

### Final aggregation
- **Combining components**: Join the fee calculations across all trading pairs and aggregate by day, chain, and product dimensions to create comprehensive daily fee totals
- **Currency conversion**: All amounts are already in USD from the volume calculation step using end-of-day price feeds
- **Time aggregation**: Fees are aggregated at daily boundaries using timestamp truncation to day level
- **Final calculation**: Apply the supply-side share of 5/6 (83.33%) to total fees, representing the portion that accrues to liquidity providers. The remaining 1/6 represents protocol fees retained by VerseDX. The final supply-side fees equal total daily fees multiplied by 5/6.

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

Portion of fees distributed to service providers or supply-side participants.

VerseVERSE

Supply-side fees

Supply-side fees

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