# Aave V3 Fees Methodology

## 1. Overview

Fees for Aave V3 are measured as the total value paid by users to utilize the protocol's lending and borrowing services. Interest paid by borrowers, premiums paid for flash loans, and liquidation penalties incurred during collateral liquidations are captured by this metric. Additionally, positive slippage revenue from Velora (ParaSwap) and yield earned on treasury-held assets are included. Collected fees are distributed to supply-side participants (liquidity providers and liquidators) and the Aave treasury.

## 2. Data sources

- **Blockchain events**: `FlashLoan`, `LiquidationCall`, `MintedToTreasury`, and `ReserveDataUpdated` events from `LendingPool` contracts; `ReserveDataUpdated` events from `PoolLogic` contracts; `FlashLoan` events from `FlashLoanLogic` contracts; `LiquidationCall` events from `LiquidationLogic` contracts; `ReserveFactorChanged` and `LiquidationProtocolFeeChanged` events from `LendingPoolConfigurator` and `PoolConfigurator` contracts; `Mint` and `Burn` events from `VToken` and `TokenBase` contracts; `Mint`, `Burn`, and `BalanceTransfer` events from `AToken` contracts; `ReserveInitialized` events from `LendingPoolConfigurator` and `PoolTokenLogic` contracts; and ERC-20 and native asset transfers to the Aave Collector, covering Ethereum, Arbitrum, Avalanche, Base, and 12 other chains
- **External data**: End-of-day price feeds for native and ERC-20 assets, and asset metadata

## 3. Step-by-step calculation

### Component A: Lending pool interest fee calculation

- **Purpose**: Calculate interest paid by borrowers on outstanding debt across Aave V3 lending pools.
- **Logic**: For EVM chains, daily interest is calculated using treasury accruals from state snapshots combined with minted treasury amounts. The daily revenue is derived as the change in cumulative interest (treasury mints plus treasury accruals) from the previous day. Gross interest is reconstructed by dividing the daily revenue by the reserve factor, which is tracked via `ReserveFactorChanged` events from `LendingPoolConfigurator` contracts. For Aptos, interest is calculated from `ReserveDataUpdated` events from `PoolLogic` contracts using the change in the variable borrow index multiplied by the outstanding debt balance (derived from `Mint` and `Burn` events from `TokenBase` contracts). The protocol revenue is calculated as `total_interest * reserve_factor`, and the supply-side share is calculated as `total_interest * (1 - reserve_factor)`.
- **Key fields**: `variable_borrow_index`, `reserve_factor`, `amount`, `balance_increase`

### Component B: Flash loan premium tracking

- **Purpose**: Capture premiums paid by users for executing flash loans on Aave V3.
- **Logic**: `FlashLoan` events are parsed from `LendingPool` contracts (EVM) and `FlashLoanLogic` contracts (Aptos). The premium amount is extracted from the event parameters and aggregated daily.
- **Key fields**: `premium`, `amount`

### Component C: Liquidation fee calculation

- **Purpose**: Calculate fees generated from collateral liquidations in Aave V3 pools.
- **Logic**: For EVM chains, liquidation transactions are identified by matching `LiquidationCall` events from `LendingPool` contracts with `BalanceTransfer` events from `AToken` contracts where assets are transferred from the liquidated user to the treasury. The protocol revenue is defined as the transferred amount, and the supply-side fee (liquidator bonus) is calculated by dividing the revenue by the liquidation protocol fee factor (tracked via `LiquidationProtocolFeeChanged` events) and multiplying by `(1 - liquidation_factor)`. For Aptos, liquidation fees are calculated directly from the liquidated collateral amount in `LiquidationCall` events from `LiquidationLogic` contracts, where protocol revenue is computed as `collateral * liquidation_factor` and supply-side fees are computed as `collateral * (1 - liquidation_factor)`.
- **Key fields**: `liquidated_collateral_amount`, `liquidation_factor`, `debt_to_cover`

### Component D: Treasury yield and Velora slippage revenue integration

- **Purpose**: Integrate treasury-held asset yield and Velora positive slippage revenue.
- **Logic**: Treasury yield is calculated by tracking the treasury's total aToken asset position (real balance from `Mint`, `Burn`, and `BalanceTransfer` events from `AToken` contracts plus virtual accrued balance) and multiplying the previous day's balance by the daily change in the liquidity index. Velora positive slippage revenue is captured by tracking ERC-20 and native asset transfers from Velora Fee Claimer contracts to the Aave Collector.
- **Key fields**: `amount`, `liquidity_index`, `interest_accrued`

### Component E: USD conversion and final aggregation

- **Purpose**: Normalize all fee components to USD and aggregate them.
- **Logic**: All fee components (interest, flash loans, liquidations, treasury yield, and Velora revenue) are summed by day, chain, and product. Asset amounts are normalized by decimal precision using asset metadata and multiplied by end-of-day asset prices. Daily values are aggregated with UTC day boundaries.
- **Key fields**: `fees`, `price_usd`, `decimals`

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

Total value users pay to use a protocol (gross fees, user-paid fees).

Fees

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

Fees

Fees

Chain breakdown