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 Fees Methodology

## 1. Overview

The total value paid by users to utilize Aave's lending pools, flash loans, debt modules, and associated integrations is measured by Fees. This metric is used to evaluate the economic value generated by the protocol across its various deployments, including Aave V2, Aave V3, Aave V4, and Aave GHO (Ethereum). Fees are generated from borrower interest, flash loan premiums, liquidation penalties, GHO stability module fees, Chainlink SVR distributions, and Velora positive slippage claims. These fees are split between supply-side participants (liquidity providers and liquidators) and the protocol treasury.

## 2. Data sources

- **Blockchain events**: `Withdraw`, `FlashLoan`, `LiquidationCall`, `MintedToTreasury`, and `ReserveDataUpdated` events from `LendingPool` contracts; `ReserveFactorChanged`, `LiquidationProtocolFeeChanged`, and `ReserveInitialized` events from `LendingPoolConfigurator` and `PoolConfigurator` contracts; `ReserveInitialized` events from `PoolTokenLogic` contracts; `ReserveDataUpdated` events from `PoolLogic` contracts; `Mint` and `Burn` events from `VToken` and `TokenBase` contracts; `BalanceTransfer`, `Mint`, and `Burn` events from `AToken` contracts; `UpdateAsset`, `UpdateAssetConfig`, and `MintFeeShares` events from Hub contracts (including `CoreHub`, `PlusHub`, `PrimeHub`, and `GlobalDollarHub`); `LiquidationCall` and `AddReserve` events from `Spoke` contracts; `AddAsset` events from Hub contracts; ERC-20 token transfers; and native asset transfers, covering Ethereum, Arbitrum, Avalanche, Base, and 12 other chains
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Aave V2 and Aave V3 interest fee calculation

- **Purpose**: Capture of interest paid by borrowers on Aave V2 and Aave V3.
- **Logic**: For Aave V2, fee transfers to the treasury are tracked via ERC-20 transfers from the null address, and total fees are reconstructed by dividing the treasury revenue by the reserve factor. For Aave V3 EVM chains, daily revenue is calculated as the daily change in cumulative treasury accruals (extracted from state snapshots or reconstructed via events for Monad) plus treasury mints, and total fees are reconstructed using the reserve factor. For Aave V3 on Aptos, interest is calculated from `ReserveDataUpdated` events using the change in the variable borrow index applied to the outstanding debt balance (derived from `Mint` and `Burn` events from `TokenBase` contracts), where revenue is calculated as `total_fees * reserve_factor` and supply-side fees are calculated as `total_fees * (1 - reserve_factor)`.
- **Key fields**: `amount`, `reserve_factor`, `variable_borrow_index`, `liquidity_index`

### Component B: Aave V4 interest fee calculation

- **Purpose**: Capture of interest paid by borrowers on Aave V4.
- **Logic**: Daily interest revenue is calculated from the daily change in accrued fees (realized and unrealized fees) from `UpdateAsset` events on Hub contracts, plus minted fees from `MintFeeShares` events. Total fees are reconstructed using the reserve factor (liquidity fee in basis points) from `UpdateAssetConfig` events by dividing the revenue by the reserve factor. Supply-side fees are calculated as the difference between total fees and protocol revenue.
- **Key fields**: `accrued_fees`, `minted_fees`, `liquidity_fee_bps`

### Component C: Flash loan fee collection

- **Purpose**: Capture of premiums paid by users executing flash loans.
- **Logic**: Flash loan premiums are extracted from `FlashLoan` events from `LendingPool` (EVM) and `FlashLoanLogic` (Aptos) contracts. The premium amount is treated as the total fees generated, which are directed entirely to the protocol or split according to pool parameters.
- **Key fields**: `amount`

### Component D: Liquidation fee calculation

- **Purpose**: Capture of fees and bonuses generated during collateral liquidations.
- **Logic**: For Aave V3 EVM chains, liquidation transactions are identified from `LiquidationCall` events, and collateral transfers to the treasury are captured from `AToken` transfer events, with total fees reconstructed using the liquidation protocol fee factor. For Aave V3 on Aptos, fees are calculated directly from `LiquidationCall` events, where revenue is calculated as `liquidated_collateral_amount * liquidation_factor` and supply-side fees are calculated as `liquidated_collateral_amount * (1 - liquidation_factor)`. For Aave V4, protocol revenue is calculated from `LiquidationCall` events on Spoke contracts as `liquidated_collateral_amount * (protocol_shares / total_shares)`, and supply-side fees (liquidator bonus) are calculated as the total bonus (liquidated collateral minus the debt repaid converted to collateral terms using daily prices) minus protocol revenue.
- **Key fields**: `liquidated_collateral_amount`, `liquidation_factor`, `collateral_shares_liquidated`, `collateral_shares_to_liquidator`, `debt_to_cover`

### Component E: Aave GHO (Ethereum) stability module and interest accruals

- **Purpose**: Capture of fees generated by the GHO stablecoin and its stability module.
- **Logic**: Interest accrued on GHO debt is calculated using the percentage change in the variable borrow index applied to the cumulative GHO debt balance (derived from `Mint` and `Burn` events from `VToken` contracts). Stability module fees are tracked via GHO transfers to and from the stability module contracts. All GHO fees are classified as protocol revenue with zero supply-side fees.
- **Key fields**: `amount`, `variable_borrow_index`, `value`

### Component F: Chainlink SVR and Velora slippage revenue

- **Purpose**: Capture of revenue from MEV recapture and positive slippage.
- **Logic**: Weekly native ETH distributions from the Chainlink SVR Gnosis Safe to the Aave Collector are captured from native flow data. Positive slippage claims are captured from ERC-20 and native ETH transfers from Velora Fee Claimer contracts to Aave Collector contracts. These revenues are classified entirely as protocol revenue with zero supply-side fees.
- **Key fields**: `amount`

### Component G: USD conversion and aggregation

- **Purpose**: Normalization of all fee components to USD and daily aggregation.
- **Logic**: All fee and revenue components are normalized by their respective asset decimal precisions. Daily amounts are converted to USD using end-of-day asset prices and aggregated to produce the final daily Fees metric.
- **Key fields**: `price_usd`, `decimals`

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

Total value users pay to use a protocol (gross fees, user-paid fees).

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Fees

Fees

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