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 Liquidation volume Methodology

## 1. Overview

Liquidation volume is defined as the total USD value of debt covered in liquidations across all lending markets and chains. The total volume of undercollateralized debt liquidated by external liquidators is represented by this metric to assess the overall solvency of the protocol. Risk management, market volatility, and protocol health across Aave V2, Aave V3, and Aave V4 are evaluated using this metric.

## 2. Data sources

- **Blockchain events**: `LiquidationCall` events from `LendingPool`, `LiquidationLogic`, and `Spoke` contracts, covering Ethereum, Avalanche, Polygon, Arbitrum, and 12 other chains
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Aave V2 liquidation tracking

- **Purpose**: To extract debt covered during liquidations on Aave V2.
- **Logic**: `LiquidationCall` events are parsed from `LendingPool` contracts. The `debtToCover` field is extracted to represent the amount of debt repaid by the liquidator. The collateral asset and debt asset addresses are identified using the `collateralAsset` and `debtAsset` fields, which are mapped to the corresponding underlying assets.
- **Key fields**: `debtToCover`, `debtAsset`, `block_timestamp`

### Component B: Aave V3 liquidation tracking

- **Purpose**: To extract debt covered during liquidations on Aave V3.
- **Logic**: `LiquidationCall` events are parsed from `LendingPool` contracts on EVM chains and `LiquidationLogic` contracts on Aptos. The `debtToCover` (or `debt_to_cover` on Aptos) field is extracted to capture the debt covered. The underlying debt asset address is identified using the `debtAsset` (or `debt_asset` on Aptos) field.
- **Key fields**: `debtToCover`, `debt_to_cover`, `debtAsset`, `debt_asset`, `block_timestamp`

### Component C: Aave V4 liquidation tracking

- **Purpose**: To extract debt covered during liquidations on Aave V4.
- **Logic**: `LiquidationCall` events are parsed from `Spoke` contracts. The `debtAmountRestored` field is extracted to represent the debt repaid by the liquidator. Because share-based accounting is utilized by Aave V4 without separate aToken or vToken contracts, the Spoke-local `debtReserveId` is mapped to the underlying asset address using the Spoke reserve registry and Hub asset registry.
- **Key fields**: `debtAmountRestored`, `debtReserveId`, `block_timestamp`

### Component D: Decimal normalization and USD conversion

- **Purpose**: To standardize liquidation volumes to USD.
- **Logic**: The extracted debt covered amounts from Aave V2, Aave V3, and Aave V4 are aggregated by day, chain, product, and debt asset. These raw amounts are normalized by the decimal precision of each respective debt asset using asset metadata. The normalized volumes are then multiplied by the corresponding end-of-day asset prices to calculate the final USD value. Missing days are zero-filled to ensure continuous daily data.
- **Key fields**: `liquidation_volume`, `timestamp`, `chain_id`, `product_id`

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

USD value of debt covered or positions force-closed in liquidations.

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Liquidation volume

Liquidation volume

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