# Aave V2 Total value locked Methodology

## 1. Overview

Total value locked (TVL) is measured as the total value of on-chain deposits within Aave V2. User deposits made into the protocol's lending pools are represented by this metric. TVL is calculated as the sum of idle liquidity (deposits minus active borrows) and active borrows (outstanding stable and variable debt) across all supported lending markets. This metric is utilized as a leading indicator for revenue-generating activity, such as borrowing, although the underlying assets can typically be withdrawn by depositors at any time.

## 2. Data sources

- **Blockchain events**: `ReserveInitialized` events from `LendingPoolConfigurator` and `AMMLendingPoolConfigurator` contracts; ERC-20 `Transfer` events; `Mint` and `Burn` events from `SToken`, `VToken`, and `AMMVToken` contracts; `PostTotalShares` events from Lido V1 `Oracle` contracts; and `TokenRebased` events from Lido V2 contracts, covering Ethereum, Avalanche, and Polygon
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Market initialization and registry mapping

- **Purpose**: Identify and map the active lending markets and their associated asset contracts.
- **Logic**: Active lending markets are identified by parsing `ReserveInitialized` events from `LendingPoolConfigurator` and `AMMLendingPoolConfigurator` contracts. For each initialized market, the addresses of the underlying asset, the deposit asset (`aToken`), the stable debt asset (`sToken`), and the variable debt asset (`vToken`) are mapped and stored.
- **Key fields**: `underlying_token_address`, `atoken_address`, `stoken_address`, `vtoken_address`

### Component B: Idle liquidity tracking

- **Purpose**: Calculate the idle (unborrowed) portion of deposited assets.
- **Logic**: Inflows and outflows of underlying assets are tracked by aggregating ERC-20 `Transfer` events. Inflows are captured from transfers where the recipient address matches the mapped `aToken` address, excluding the Lido staked ETH (`stETH`) asset. Outflows are captured from transfers where the sender address matches the `aToken` address. Net daily flows are calculated as inflows minus outflows, and these net flows are cumulatively summed over time to determine the idle balance of each asset.
- **Key fields**: `block_timestamp`, `token_address`, `from_address`, `to_address`, `value`

### Component C: Lido staked ETH integration

- **Purpose**: Calculate the idle balance of the Lido staked ETH (`stETH`) market, accounting for rebases.
- **Logic**: Inflows and outflows of `stETH` to and from the `astETH` contract are tracked via ERC-20 `Transfer` events. Lido rebases are captured by parsing `PostTotalShares` events from Lido V1 `Oracle` contracts and `TokenRebased` events from Lido V2 contracts to calculate a daily rebase index as the ratio of total pooled ether to total shares. Raw transfer amounts are scaled to shares by dividing the transfer value by the prevailing rebase index. The cumulative share balance is calculated and then multiplied by the daily rebase index to determine the rebased `stETH` balance.
- **Key fields**: `block_timestamp`, `value`, `postTotalPooledEther`, `totalShares`, `postTotalEther`, `postTotalShares`

### Component D: Active loans tracking

- **Purpose**: Calculate the outstanding borrowed debt (both stable and variable).
- **Logic**: Stable debt is calculated by tracking the total supply of stable debt assets (`sTokens`) using `Mint` and `Burn` events from `SToken` contracts. Variable debt is calculated by tracking `Mint` and `Burn` events from `VToken` and `AMMVToken` contracts, where raw debt changes are scaled by dividing the transaction amount by the variable borrow index (normalized by decimal precision). The cumulative scaled variable debt is summed over time and multiplied by the daily variable borrow index to determine the outstanding variable debt. Total active loans are calculated as the sum of outstanding stable debt and outstanding variable debt.
- **Key fields**: `block_timestamp`, `amount`, `total_supply`, `index_value`

### Component E: USD conversion and aggregation

- **Purpose**: Convert asset balances to USD and aggregate to calculate total TVL.
- **Logic**: Idle balances and active loans are summed to calculate the total deposits (TVL) per asset. Asset amounts are normalized by decimal precision and multiplied by end-of-day asset prices from price feeds to convert the values to USD. Missing daily values are forward-filled and zero-filled to ensure a continuous daily time series. The final TVL is aggregated by day, chain, and product.
- **Key fields**: `timestamp`, `tvl`, `price_usd`

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

Total value locked (TVL)

Total value locked (TVL) — value deposited into the project's applications.

Total value locked

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

Total value locked

Total value locked

Chain breakdown