# Aave V4 Revenue Methodology

## 1. Overview

Revenue measures the portion of interest and liquidation fees that is retained by the Aave V4 treasury. The protocol's earnings from lending and borrowing operations are represented by this metric before operating expenses and token incentives are deducted. Interest-based protocol fees and the protocol's share of liquidation bonuses are aggregated across all active Hub and Spoke deployments to perform this calculation. A clear view of the protocol's direct cash flows and financial sustainability is provided to institutional investors.

## 2. Data sources

- **Blockchain events**: `UpdateAsset`, `MintFeeShares`, and `UpdateAssetConfig` events from Hub contracts (including `CoreHub`, `PlusHub`, `PrimeHub`, `GlobalDollarHub`, `CashHub`, and `EquitiesHub`), and `LiquidationCall` and `AddReserve` events from Spoke contracts, covering Ethereum, Avalanche, Optimism, Base, and 1 other deployment
- **External data**: End-of-day price feeds for debt and collateral assets, and asset metadata for decimal normalization

## 3. Step-by-step calculation

### Component A: Interest-based revenue extraction

- **Purpose**: Capture the protocol's share of interest accrued from active loans.
- **Logic**: Daily accrued fees are extracted from the last `UpdateAsset` event of each day for each Hub contract and asset ID. To account for resets when the treasury claims fees, daily minted fees are summed from `MintFeeShares` events. The daily interest revenue is calculated by adding the daily delta of accrued fees to the daily minted fees. The reserve factor (liquidity fee in basis points) is retrieved from the latest `UpdateAssetConfig` events to calculate total fees and supply-side fees.
- **Key fields**: `accrued_fees`, `minted_fees`, `liquidity_fee_bps`

### Component B: Liquidation protocol fee extraction

- **Purpose**: Calculate the protocol's share of liquidation bonuses.
- **Logic**: Spoke-local reserve IDs from `LiquidationCall` events are mapped to underlying assets using registries built from Spoke `AddReserve` and Hub `AddAsset` events. Protocol revenue in collateral asset units is calculated by multiplying the liquidated collateral amount by the ratio of protocol fee shares (the difference between collateral shares liquidated and collateral shares sent to the liquidator) to total collateral shares liquidated. The debt repaid is converted into collateral-equivalent units using daily asset prices to determine the total liquidation bonus, and the supply-side fee (liquidator bonus) is derived by subtracting the protocol revenue from this total bonus.
- **Key fields**: `liquidated_collateral_amount`, `collateral_shares_liquidated`, `collateral_shares_to_liquidator`, `debt_to_cover`

### Component C: Normalization and USD conversion

- **Purpose**: Standardize interest and liquidation revenue into USD.
- **Logic**: Raw asset amounts from interest and liquidation components are normalized by their respective decimal precisions. Normalized amounts are multiplied by end-of-day asset prices to convert them to USD. Daily values are aggregated across all chains and deployments using UTC day boundaries.
- **Key fields**: `revenue`, `fees_supply_side`, `price_usd`

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

fees * take_rate (illustrative — revenue is observed directly per project, not derived from take_rate)

Fee revenue retained after supply-side payouts. Before cost of revenue (e.g. L2 DA fees) and before operating expenses.

Revenue

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

Revenue

Revenue

Chain breakdown