# Aave V4 Active loans Methodology

## 1. Overview

Active loans measures the value of user deposits that are lent out to borrowers. The portion of deposits that borrowers have to pay interest on is tracked, which is correlated with the lending project's ability to generate revenue. Capital utilization and credit demand within the Aave V4 ecosystem are reflected by this metric.

## 2. Data sources

- **Blockchain events**: `Draw`, `Restore`, `UpdateAsset`, `AddAsset`, and `AddSpoke` events from Hub contracts (including `CoreHub`, `PlusHub`, `PrimeHub`, `GlobalDollarHub`, `CashHub`, and `EquitiesHub` contracts), and `AddReserve` events from `Spoke` contracts, covering Ethereum, Avalanche, Optimism, Base, and Arc
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Market and asset registry mapping

- **Purpose**: Map Hub assets and Spoke reserves to their underlying assets.
- **Logic**: Underlying assets are mapped by parsing `AddAsset` events from Hub contracts to associate each asset ID with its underlying asset address. Spoke reserves are mapped by parsing `AddReserve` events from `Spoke` contracts to link Spoke-local reserve IDs to Hub asset IDs. Spoke addresses and names are registered by parsing `AddSpoke` events from Hub contracts.
- **Key fields**: `hub_address`, `asset_id`, `spoke_address`, `spoke_reserve_id`, `underlying_token_address`

### Component B: Borrow and repayment flow extraction

- **Purpose**: Capture borrow and repayment actions to determine net loan flows.
- **Logic**: Borrow flows (draws) are extracted from `Draw` events from Hub contracts, representing positive flows where assets leave the Hub. Repayment flows (restores) are extracted from `Restore` events from Hub contracts, representing negative flows where assets are returned to the Hub (including any premium amounts). Each draw and restore event is joined with the nearest preceding `UpdateAsset` event within the same transaction to capture the borrow index (`drawnIndex`) at the time of the event.
- **Key fields**: `block_timestamp`, `amount`, `drawn_index`

### Component C: Share scaling and cumulative debt tracking

- **Purpose**: Calculate cumulative active loans accounting for accrued interest.
- **Logic**: Raw flow amounts are scaled to shares by dividing the sum of the flow amount and half of the borrow index by the borrow index itself. Cumulative shares are calculated per chain, pool, and asset by summing the scaled shares chronologically. Actual outstanding active loans are calculated by multiplying the cumulative shares by the latest borrow index, which dynamically accounts for accrued interest over time.
- **Key fields**: `cumulative_shares`, `drawn_index`, `active_loans`

### Component D: USD conversion and aggregation

- **Purpose**: Normalize active loan values to USD and aggregate to daily intervals.
- **Logic**: Active loan balances are normalized by the decimal precision of each underlying asset. Normalized balances are converted to USD using end-of-day price feeds. Daily active loan values are aggregated, and any missing days are filled forward to maintain a continuous daily time series.
- **Key fields**: `active_loans`, `price_usd`, `timestamp`

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

Value of loans currently outstanding to borrowers.

Active loans

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 V4

Active loans

Active loans

Chain breakdown