# Aave V3 Token incentives Methodology

## 1. Overview

Token incentives measures the value of native assets that Aave V3 pays out to its supply/demand-side users, core contributors, or ecosystem participants. These assets are primarily used to compensate stakeholders or bootstrap liquidity through distribution programs. This metric is analogous to stock-based compensation in traditional finance and reflects the protocol's cost for ecosystem growth and maintenance.

## 2. Data sources

- **Blockchain events**: ERC-20 token transfers from the Aave treasury address to Angle Protocol distribution and management addresses, covering Ethereum
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Treasury transfer identification

- **Purpose**: Captures the movement of assets from the Aave treasury intended for ecosystem incentives.
- **Logic**: ERC-20 token transfers are parsed where the sender is identified as the Aave treasury address. The transfers are filtered to include only those where the recipient is the Angle Protocol distributor or management address. These transfers represent the funding of incentive programs managed via Angle Protocol.
- **Key fields**: `from_address`, `to_address`, `value`, and `token_address`.

### Component B: Product and asset filtering

- **Purpose**: Ensures that only Aave V3-related incentives are included in the metric while excluding related products.
- **Logic**: Transfers are categorized based on the asset being moved. If the asset transferred is identified as GHO, the data is attributed to the GHO product. All other assets transferred to the designated distribution addresses are attributed to Aave V3.
- **Key fields**: `token_address` and `product_id`.

### Component C: Normalization and USD conversion

- **Purpose**: Converts raw asset quantities into a standardized USD value for cross-chain and cross-asset comparison.
- **Logic**: Asset amounts are normalized by their respective decimal precision as defined in asset metadata. The normalized values are then multiplied by the end-of-day price feed for the specific asset on the date of the transfer. Values are aggregated to a daily granularity using UTC day boundaries.
- **Key fields**: `amount`, `decimals`, and `price_usd`.

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

Value of native tokens distributed as incentives.

Token incentives

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

Token incentives

Token incentives

Chain breakdown