# Aave V4 Total value locked Methodology

## 1. Overview

Total value locked (TVL) measures the total value of a project's on-chain deposits and/or the tokenized value of user deposits made offchain. It is used as a leading indicator for revenue-generating activity, such as borrowing, trading, or staking, though the assets can typically be withdrawn by depositors at any time. For Aave V4, TVL is represented by the cumulative supply-side deposits across all active spokes and hubs. Unlike previous versions of the protocol, Aave V4 TVL is calculated directly from supply-side deposits without adding back active loans, preventing double-counting of pooled liquidity.

## 2. Data sources

- **Blockchain events**: `Add`, `Remove`, `AddSpoke`, and `AddAsset` events from `CoreHub`, `PlusHub`, `PrimeHub`, `GlobalDollarHub`, `CashHub`, and `EquitiesHub` contracts, and `AddReserve` events from `Spoke` contracts, covering Ethereum, Avalanche, Optimism, Base, and 1 other chain
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Market and asset registry mapping

- **Purpose**: Map spokes, hub assets, and spoke reserves to identify the underlying assets and their relationships.
- **Logic**: Spoke addresses are identified from `AddSpoke` events emitted by hub contracts. Hub assets are mapped to their underlying asset addresses using `AddAsset` events. Spoke reserves are bridged to their underlying assets by mapping spoke-local reserve identifiers to hub asset identifiers using `AddReserve` events from `Spoke` contracts.
- **Key fields**: `spoke_address`, `spoke_reserve_id`, `hub_address`, `hub_asset_id`, `underlying_token_address`

### Component B: Supply inflow and outflow tracking

- **Purpose**: Capture user deposits and withdrawals to determine net daily flows.
- **Logic**: Inflows are captured from `Add` events emitted by hub contracts, representing user deposits into the hub via a spoke. Outflows are captured from `Remove` events emitted by hub contracts, representing user withdrawals. Daily net flows are calculated by subtracting the total removed amounts from the total added amounts for each spoke, reserve, and asset combination. Borrowing and repayment events are intentionally excluded from this calculation because available liquidity is moved rather than supply-side deposits.
- **Key fields**: `amount`, `block_timestamp`, `spoke_address`, `spoke_reserve_id`, `token_address`

### Component C: Cumulative balance calculation

- **Purpose**: Calculate the running total of deposits to determine the total value locked.
- **Logic**: Daily net flows are aggregated chronologically to calculate a running cumulative balance of deposits for each market. The total idle and active supply-side deposits are represented by this cumulative balance.
- **Key fields**: `amount`, `timestamp`

### Component D: Decimal normalization and USD conversion

- **Purpose**: Normalize asset balances by their decimal precision and convert them to USD.
- **Logic**: Cumulative asset balances are normalized by the decimal precision of each underlying asset using asset metadata. The normalized balances are then multiplied by end-of-day asset prices to determine the USD value of the locked assets. Daily values are forward-filled for days with no activity to ensure a continuous time series.
- **Key fields**: `tvl`, `price_usd`, `decimals`

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

Total value locked (TVL)

Total value locked (TVL) — value deposited into the project's applications.

Total value locked

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

Total value locked

Total value locked

Chain breakdown