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.

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Aave | Data breakdown

# Aave Supply-side fees Methodology

## 1. Overview

Supply-side fees measures the share of fees that is distributed to the service providers (liquidity providers or suppliers) across Aave markets. These fees are earned by depositors who supply assets to the protocol's lending pools to facilitate borrowing, liquidations, and flash loans. The metric is calculated across Aave V2, Aave V3, and Aave V4. This metric is utilized to evaluate the primary yield incentives provided to depositors.

## 2. Data sources

- **Blockchain events**: `Mint` and `Burn` events from `VToken` and `TokenBase` contracts, `FlashLoan` events from `LendingPool` and `FlashLoanLogic` contracts, `LiquidationCall` events from `LendingPool`, `LiquidationLogic`, and `Spoke` contracts, `MintedToTreasury` and `ReserveDataUpdated` events from `LendingPool` contracts, `ReserveDataUpdated` events from `PoolLogic` contracts, `ReserveInitialized`, `LiquidationProtocolFeeChanged`, and `ReserveFactorChanged` events from `PoolTokenLogic`, `PoolConfigurator`, and `LendingPoolConfigurator` contracts, `UpdateAsset`, `MintFeeShares`, and `UpdateAssetConfig` events from Hub contracts (such as `CoreHub`, `PlusHub`, and `PrimeHub`), and ERC-20 `Transfer` events, covering Ethereum, Arbitrum, Avalanche, Base, and 11 other chains
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Aave V2 interest fees

- **Purpose**: Calculates the supply-side share of interest fees for Aave V2.
- **Logic**: ERC-20 `Transfer` events representing aToken mints to the protocol treasury are parsed. The total interest accrued is reconstructed by dividing the treasury mint amount by the reserve factor. The supply-side portion is then calculated by multiplying the total interest by the remaining share (one minus the reserve factor).
- **Key fields**: `amount` (minted to treasury), `reserve_factor` (from `LendingPoolConfigurator` events).

### Component B: Aave V3 interest fees

- **Purpose**: Calculates the supply-side share of interest fees for Aave V3 across EVM chains and Aptos.
- **Logic**: For EVM chains, daily interest revenue is calculated from the change in treasury accruals (derived from state snapshots) and `MintedToTreasury` events from `LendingPool` contracts. For Aptos, interest is calculated by multiplying the daily change in the variable borrow index (from `ReserveDataUpdated` events) by the cumulative variable debt balance (derived from `Mint` and `Burn` events from `TokenBase` contracts). The supply-side share is calculated by dividing the protocol's interest revenue by the reserve factor and multiplying by one minus the reserve factor.
- **Key fields**: `treasury_accruals`, `amount` (minted to treasury), `variable_borrow_index`, `reserve_factor`.

### Component C: Aave V4 interest fees

- **Purpose**: Calculates the supply-side share of interest fees for Aave V4.
- **Logic**: Daily protocol interest revenue is calculated by summing the daily change in accrued fees (from `UpdateAsset` events) and the minted fees (from `MintFeeShares` events) from Hub contracts. Total interest fees are reconstructed by dividing this revenue by the reserve factor (liquidity fee in basis points). The supply-side fees are calculated as the difference between the total interest fees and the protocol revenue.
- **Key fields**: `accrued_fees`, `minted_fees`, `liquidity_fee_bps`.

### Component D: Liquidation fees

- **Purpose**: Calculates the supply-side share of liquidation penalties across Aave V3 and Aave V4.
- **Logic**: For Aave V3, collateral transfers from liquidated users to the treasury are identified from ERC-20 `Transfer` events associated with `LiquidationCall` transactions. The liquidator's share (supply-side fee) is calculated by dividing the treasury's share by the liquidation protocol fee factor and multiplying by one minus the liquidation factor. For Aptos V3, the supply-side fee is calculated directly as the liquidated collateral amount multiplied by one minus the liquidation factor. For Aave V4, the protocol's fee is calculated from the difference between total collateral shares liquidated and shares sent to the liquidator (from Spoke contract `LiquidationCall` events). The supply-side fee is calculated as the total liquidation bonus (liquidated collateral minus the debt covered converted to collateral units using daily prices) minus the protocol's fee.
- **Key fields**: `liquidated_collateral_amount`, `debt_to_cover`, `collateral_shares_liquidated`, `collateral_shares_to_liquidator`, `liquidation_factor`.

### Component E: Flash loan fees

- **Purpose**: Calculates the supply-side share of flash loan premiums.
- **Logic**: Flash loan premiums are extracted from `FlashLoan` events from `LendingPool` contracts (EVM) and `FlashLoanLogic` contracts (Aptos). A constant protocol fee split of 0.04% is applied, with the remaining 99.96% allocated to the supply side (depositors).
- **Key fields**: `amount` (premium).

### Component F: Aave GHO (Ethereum) stability module fees

- **Purpose**: Accounts for fees generated by the GHO stability module.
- **Logic**: Transfers of GHO to and from the stability module are tracked to calculate total fees. Because Aave GHO (Ethereum) is a self-custody product without liquidity providers, the supply-side fee portion is hardcoded to zero.
- **Key fields**: `amount` (transferred value).

### Component G: USD conversion and aggregation

- **Purpose**: Normalizes supply-side fees to USD and aggregates them.
- **Logic**: Supply-side fee amounts are normalized by the decimal precision of each underlying asset. The normalized amounts are multiplied by end-of-day asset prices to convert them to USD. The values are then aggregated by day, chain, and product version.
- **Key fields**: `fees_supply_side`, `decimals`, `price_usd`.

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

Portion of fees distributed to service providers or supply-side participants.

AaveAAVE

Supply-side fees

Supply-side fees

Competitive landscape

Chain breakdown