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

Compound is a non-custodial lending protocol built on Ethereum. Compound was founded by Robert Leshner & Geoffrey Hayes and launched in 2017.

 COMP tokenholders own and govern the protocol. They currently take a cut of the total interest paid by borrowers (revenue). Compound’s investors include a16z, Paradigm, Polychain, etc.

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Compound

# Compound Earnings Methodology

## 1. Overview

Compound earnings represents the protocol's net profit, calculated as total revenue minus total expenses. This metric answers the question: "How much profit does Compound generate after accounting for token incentive costs?" The calculation combines revenue from both V2 and V3 versions of the protocol across multiple blockchains, then subtracts token incentive expenses to arrive at net earnings.

## 2. Data sources

**Blockchain events:**
- Compound V2 Ethereum `AccrueInterest` events from `CEther`, `CErc20`, and `CErc20Delegator` contracts capturing interest accumulation
- Compound V2 Ethereum `NewReserveFactor` events from the same contract types tracking reserve factor changes
- Compound V2 Ethereum token incentive distribution events (`DistributedBorrowerComp` and `DistributedSupplierComp`)
- Compound V3 `RewardClaimed` events from CometRewards contracts on Ethereum, Arbitrum, Base, and Polygon

**State data:**
- Compound V3 revenue state snapshots containing supply rates, borrow rates, supply indexes, borrow indexes, and total supply/borrow base amounts across multiple chains

**External data:**
- End-of-day token price feeds for USD conversion
- Token metadata including decimal places and symbols
- Compound market configuration data mapping contract addresses to underlying tokens

## 3. Step-by-step calculation

### Component A: V2 protocol revenue
- **Purpose**: Calculate protocol revenue share from V2 lending markets on Ethereum
- **Logic**: Start with `AccrueInterest` events that record total interest accumulated for each market. Join these events with `NewReserveFactor` events using time-based lookups to determine the reserve factor applicable at the time of each interest accrual. The reserve factor represents the protocol's share of total interest (remainder goes to suppliers). Apply timestamp filtering to ensure each interest accrual uses the correct reserve factor based on when updates occurred. Multiply accrued interest by the applicable reserve factor to get protocol revenue. Aggregate by day, market contract address, and convert from token decimals to standard units.
- **Key fields**: `interestAccumulated` from accrual events, `newReserveFactorMantissa` from reserve factor events (divided by 10^18), calculated `revenue` as reserve_factor × accrued_interest

### Component B: V3 protocol revenue  
- **Purpose**: Calculate protocol revenue from V3 comet markets across multiple chains
- **Logic**: Use daily state snapshots containing supply rates, borrow rates, supply indexes, borrow indexes, total supply base, and total borrow base for each market. Convert rates from per-second to daily by multiplying by seconds per day. Calculate total interest paid by borrowers as borrow_rate × borrow_index × total_borrow_base. Calculate total interest paid to suppliers as supply_rate × supply_index × total_supply_base. Protocol revenue equals the difference (borrow interest collected minus supply interest paid). Take only positive values as revenue; negative values indicate the protocol subsidizes lending and are excluded from revenue. Aggregate by day and market.
- **Key fields**: `supply_rate`, `borrow_rate`, `baseSupplyIndex`, `baseBorrowIndex`, `totalSupplyBase`, `totalBorrowBase` from state data, calculated `revenue` as the positive portion of (borrow_interest - supply_interest)

### Component C: Token incentive expenses
- **Purpose**: Calculate total cost of token rewards paid to users
- **Logic**: For V2, capture `DistributedBorrowerComp` and `DistributedSupplierComp` events that record COMP token distributions to borrowers and suppliers. For V3, capture `RewardClaimed` events from CometRewards contracts across Ethereum, Arbitrum, Base, and Polygon that record various token rewards claimed by users. Apply special filtering to exclude rewards from September 28 to October 10, 2021, when the rewards contract was compromised. Convert all token amounts to USD using end-of-day prices and aggregate daily.
- **Key fields**: `compDelta` from V2 distribution events, `amount` and `token` from V3 reward claimed events, filtered and converted to USD

### Component D: Market data enrichment
- **Purpose**: Map contract addresses to underlying tokens and add market metadata
- **Logic**: Join revenue calculations with market dimension data that maps each market contract address to its underlying token address, token symbol, and market name. This enables proper decimal correction and price lookup. Use separate market configurations for V2 (from market states) and V3 (from denomination states). Join with token metadata to get decimal places for unit conversion.
- **Key fields**: `account_address` (market contract), `token_address` (underlying token), `token_symbol`, `account_name` (market name), `decimals` from token metadata

### Final aggregation
- **Combining components**: Sum V2 and V3 revenues for total protocol revenue. Use token incentive expenses as total expenses. Combine both through the earnings calculation macro
- **Currency conversion**: Convert all amounts to USD using end-of-day price feeds matched by timestamp, token address, and chain. Apply decimal correction by dividing raw token amounts by 10^decimals
- **Time aggregation**: Aggregate all data to daily timestamps using day truncation. Apply forward-fill logic for missing days
- **Final calculation**: Earnings equals total revenue minus total expenses, where revenue comes from the combined V2 reserve factor revenue and V3 net interest spread, and expenses consist entirely of token incentive payments across all versions and chains

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

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

CompoundCOMP

Earnings

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