# Protocol Value Capture ⎊ Area ⎊ Resource 2

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## What is the Revenue of Protocol Value Capture?

Generation for a decentralized protocol is achieved by extracting a portion of the economic activity facilitated by its smart contracts. This extraction mechanism is fundamental to the protocol's long-term sustainability and the ability to fund development or reward stakeholders. For derivatives platforms, this often manifests as a small percentage fee on settlement or liquidation events.

## What is the Governance of Protocol Value Capture?

structures frequently dictate how this accrued value is utilized, whether it is burned, distributed to token holders, or allocated to a treasury for ecosystem growth. The method of capture directly influences the alignment between protocol incentives and user outcomes.

## What is the Mechanism of Protocol Value Capture?

Design involves embedding fee structures directly into the core logic of the contract, such as charging a small basis point fee on every swap or loan interest payment. Precise calibration of these fees is necessary to remain competitive while ensuring sufficient income generation.


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## [Time-Value of Transaction](https://term.greeks.live/term/time-value-of-transaction/)

## [Value at Risk Security](https://term.greeks.live/term/value-at-risk-security/)

---

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**Original URL:** https://term.greeks.live/area/protocol-value-capture/resource/2/