# Aave V2 Revenue Methodology

## 1. Overview

Revenue is defined as the portion of interest and flash loan fees that is retained by the Aave V2 protocol treasury. This metric is utilized to assess the protocol's financial performance and earning power before operating expenses are deducted. Protocol revenue is generated from a reserve factor applied to interest paid by borrowers, alongside a designated share of flash loan premiums. These fees are collected as interest-bearing assets and are transferred directly to the Aave V2 collector contracts.

## 2. Data sources

- **Blockchain events**: `FlashLoan` and `Withdraw` events from `LendingPool` contracts, `ReserveFactorChanged` events from `LendingPoolConfigurator` contracts, and ERC-20 `Transfer` events, which are captured across Ethereum, Avalanche, and Polygon
- **External data**: End-of-day price feeds and asset metadata, which are used to normalize and convert asset values to USD

## 3. Step-by-step calculation

### Component A: Interest revenue extraction

- **Purpose**: Capture of the protocol's share of interest paid by borrowers.
- **Logic**: ERC-20 `Transfer` events are filtered where the recipient is the designated treasury address for each chain and the sender is the null address. This minting of interest-bearing `aTokens` to the treasury is captured as the protocol's share of interest. Transactions identified as treasury management or specific swapper withdrawals are excluded using a denylist. The underlying asset addresses are mapped using market dimensions.
- **Key fields**: `block_timestamp`, `token_address`, `value`

### Component B: Flash loan revenue extraction

- **Purpose**: Capture of the protocol's share of fees generated from flash loans.
- **Logic**: `FlashLoan` events are parsed from `LendingPool` contracts. The premium paid by the borrower is extracted from the event parameters. The protocol's share of this premium is calculated by applying a hardcoded split of 0.04% (0.0004) to the total flash loan premium amount.
- **Key fields**: `block_timestamp`, `address`, `in_asset`, `in_premium`

### Component C: Reserve factor tracking

- **Purpose**: Maintenance of a continuous record of reserve factors for calculating supply-side fees.
- **Logic**: `ReserveFactorChanged` events are parsed from `LendingPoolConfigurator` contracts to track the historical reserve factor for each asset. These factors are normalized by dividing the raw event values by 10,000. A fill-forward algorithm is applied to ensure a continuous daily time series of reserve factors for each market, which is used to calculate the corresponding supply-side fees.
- **Key fields**: `block_timestamp`, `in_asset`, `in_factor`

### Component D: Normalization and USD conversion

- **Purpose**: Normalization of asset amounts and conversion to USD.
- **Logic**: The raw revenue amounts from interest and flash loans are normalized by the decimal precision of each underlying asset using asset metadata. These normalized amounts are then multiplied by end-of-day asset prices to convert the values into USD. Daily totals are aggregated using UTC day boundaries.
- **Key fields**: `timestamp`, `revenue`, `price_usd`

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

fees * take_rate (illustrative — revenue is observed directly per project, not derived from take_rate)

Fee revenue retained after supply-side payouts. Before cost of revenue (e.g. L2 DA fees) and before operating expenses.

Revenue

Lending

Lenders deposit funds into Aave and receive interest payments from borrowers (supply-side fees).

Aave is a non-custodial lending protocol built on Ethereum and other adjacent blockchains. Aave was founded by Stani Kulechov and launched in 2017.

AAVE tokenholders own and govern the protocol. They currently take a cut of the total interest paid by borrowers (revenue). Aave’s investors include ParaFi Capital, Framework Ventures, Three Arrows Capital, etc.

Aave V2

Revenue

Revenue

Chain breakdown