Lenders deposit funds into BENQI and receive interest payments from borrowers (supply-side fees).

BENQI is a non-custodial lending protocol built on Avalanche. BENQI was founded by an international team of software developers and launched in 2021.

 QI tokenholders own and govern the protocol. They currently take a cut of the total interest paid by borrowers (revenue). BENQI’s investors include Dragonfly Capital, Mechanism Capital, Spartan, etc.

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BENQI

# BENQI Earnings Methodology

## 1. Overview

BENQI earnings measures the protocol's net profit from its lending operations on Avalanche. The calculation follows the standard formula: Earnings = Revenue - Expenses. Revenue comes from the protocol's share of interest accrued on lending markets (determined by reserve factors), while expenses consist of token incentive distributions to users and staking rewards. This metric answers the business question: "How much profit is BENQI generating after accounting for user incentive costs?"

## 2. Data sources

The calculation relies on several Avalanche blockchain data sources:

- **Interest accrual events**: Parsed `AccrueInterest` events from BENQI lending market contracts that record total interest accumulated on each market
- **Reserve factor events**: Parsed `NewReserveFactor` events that track changes to the protocol's revenue share percentage for each market
- **Incentive distribution events**: Parsed `DistributedBorrowerReward` and `DistributedSupplierReward` events from the BENQI Comptroller contract showing QI and WAVAX token distributions
- **Staking reward transfers**: Avalanche token transfer events from BENQI's staking contract to users, representing staking incentive payments
- **Token metadata**: Information about token symbols, decimal places, and contract addresses for proper amount calculations
- **End-of-day price feeds**: USD price data for QI tokens, WAVAX, and underlying lending market tokens to enable currency conversion

## 3. Step-by-step calculation

### Component A: Market definition and allowlist
- **Purpose**: Define the complete set of BENQI lending markets to include in calculations
- **Logic**: Uses a hardcoded allowlist of market contract addresses paired with their underlying token addresses. Each pair represents a lending market (e.g., qiAVAX market for AVAX, qiUSDC market for USDC). The allowlist includes 12 markets covering major tokens like AVAX, USDC, WETH, and others. Token symbols are retrieved for both the market contracts and underlying tokens to enable proper identification.
- **Key fields**: Market contract address (`account_address`), underlying token address (`token_address`), token symbol (`token_symbol`), market name (`account_name`)

### Component B: Reserve factor tracking  
- **Purpose**: Track the protocol's revenue share percentage for each market over time
- **Logic**: Processes `NewReserveFactor` events to build a timeline of reserve factor changes for each market. Each event contains the old and new reserve factor values (as 18-decimal mantissa values). Uses lead timestamps to determine when each reserve factor is active - from its set timestamp until the next change occurs. Reserve factors typically range from 10% to 25% and determine what portion of accrued interest goes to the protocol versus liquidity providers.
- **Key fields**: Reserve factor percentage (`new_reserve_factor`), effective timestamp range, market address (`account_address`)

### Component C: Interest accrual processing
- **Purpose**: Calculate protocol revenue from lending market interest
- **Logic**: Processes `AccrueInterest` events from lending markets to identify total interest accumulated. Joins with market definitions to determine underlying tokens and with reserve factor data to calculate the protocol's share. Applies reserve factors chronologically based on when interest accrues relative to factor change timestamps. If interest accrues after a reserve factor is set but before the next change, uses that factor. Converts token amounts using proper decimal precision (typically 18 decimals for most tokens). Only counts interest where reserve factors were active at accrual time.
- **Key fields**: Total accrued interest (`accrued_interest`), protocol revenue share (`revenue`), accrual timestamp (`block_timestamp`), underlying token address (`token_address`)

### Component D: Token incentive aggregation
- **Purpose**: Calculate total token incentives distributed to users as protocol expenses  
- **Logic**: Combines two types of incentive distributions. First, processes `DistributedBorrowerReward` and `DistributedSupplierReward` events from the Comptroller contract, which distribute QI tokens and WAVAX to borrowers and suppliers based on their activity. Second, includes staking rewards by identifying token transfers from BENQI's staking contract to users. Token type indicators in distribution events determine whether QI or WAVAX was distributed. Aggregates all incentive types into daily totals per token.
- **Key fields**: Incentive amount (`amount`), token address (`token_address`), distribution type, recipient information

### Final aggregation
- **Combining components**: Revenue from interest accruals and expenses from token incentives are calculated separately, then combined using the earnings formula. Both components are aggregated to daily totals before combination.
- **Currency conversion**: All token amounts are converted to USD using end-of-day price feeds. Decimal correction is applied based on each token's precision (typically 18 decimals). Conversion happens after decimal correction but before daily aggregation.
- **Time aggregation**: Data is aggregated to daily boundaries using day-truncated timestamps. Missing days are filled with zeros to ensure continuous time series data.
- **Final calculation**: Daily earnings equals daily revenue minus daily expenses, where revenue represents the protocol's share of accrued interest (determined by reserve factors) and expenses represent total token incentive distributions and staking rewards paid to users.

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

Net profit (also profits, net income, profitability) — revenue remaining after subtracting expenses.

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