# Aave V3 Expenses Methodology

## 1. Overview

Expenses measures the total cost incurred by Aave V3 to operate its lending markets and incentivize protocol growth. For Aave V3, these costs consist of token-based incentives distributed from the Aave Treasury to external entities responsible for incentive management and distribution, such as Angle. These expenditures are utilized to bootstrap liquidity and reward participants across the Aave V3 ecosystem.

## 2. Data sources

- **Blockchain events**: ERC-20 token transfers from Aave Treasury addresses, covering Ethereum
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Aave V3 incentive tracking

- **Purpose**: Identify and isolate token incentive payments distributed from the protocol treasury.
- **Logic**: ERC-20 token transfers are parsed where the sender is the Aave Treasury address. These transfers are filtered to identify payments directed to the Angle Distributor or Angle Management contracts. Assets identified as GHO are excluded from this calculation and attributed to the GHO product.
- **Key fields**: `from_address`, `to_address`, `token_address`, and `value`.

### Component B: USD conversion and aggregation

- **Purpose**: Normalize incentive values to USD for cross-asset comparison.
- **Logic**: Token amounts are normalized by decimal precision using asset metadata. These values are multiplied by end-of-day price feeds for each respective asset. Daily totals are aggregated using UTC day boundaries to produce the final metric.

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

Total project operating and incentive expenses.

Expenses

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 V3

Expenses

Expenses

Chain breakdown