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Lending

Dolomite

# Dolomite Fees Methodology

## 1. Overview

The Dolomite fees metric measures the total fees generated by the Dolomite protocol from its decentralized lending and trading operations. Dolomite operates as a margin trading platform with built-in AMM functionality across multiple chains (Arbitrum, Base, Ink, Berachain, and Ethereum). The metric combines supply-side fees paid to liquidity providers with protocol revenue, capturing fees from interest on loans, internal trading, liquidations, and specialized products like oARB options. This provides a comprehensive view of the platform's fee generation across all revenue streams.

## 2. Data sources

- **Dolomite smart contract events**: Parsed events from Dolomite margin trading contracts including `LogIndexUpdate` (interest accumulation), `LogTrade` (internal AMM trades), `LogDeposit`, `LogWithdraw`, `LogTransfer` (balance changes), `LogLiquidate` and `LogVaporize` (liquidation events), and `LogBuy`/`LogSell` (external trades)
- **Market configuration events**: `LogAddMarket` events for market creation, `LogSetEarningsRate` for global fee split settings, `LogSetEarningsRateOverride` for market-specific fee overrides, and `LogSetSpreadPremium` events for liquidation parameters
- **oARB vesting events**: `VesterProxy_PositionClosed_event` and `VesterProxy_VestingPositionCreated_event` from Arbitrum capturing option exercise revenue
- **Account balance tracking**: Balance update events across all operations (trades, deposits, withdrawals, transfers, liquidations) to track lending positions
- **Price data**: End-of-day token price feeds for USD conversions, with Dolomite's internal market prices as fallback
- **Token metadata**: Token symbols, decimal places, and addresses for proper amount calculations

## 3. Step-by-step calculation

### Component A: Interest fees calculation
- **Purpose**: Calculate fees generated from lending interest across all markets
- **Logic**: Track all borrowing positions by identifying balance updates where `par_sign` is false and `par_amount` is positive, indicating debt positions. Monitor `LogIndexUpdate` events that contain borrow and supply index changes representing compound interest accumulation. For each index update, calculate the interest accrued on active loans using the formula: `par_amount × (borrow_index - previous_borrow_index)`. Apply the appropriate fee split percentage, which comes from global `LogSetEarningsRate` events or market-specific `LogSetEarningsRateOverride` events. Convert amounts from Wei to token units using token decimals, then to USD using end-of-day price feeds with Dolomite's market prices as fallback.
- **Key fields**: `par_amount` (loan size), `borrow_index` (compound interest index), `supply_side_fee_share` (fee split percentage), `market_id` (market identifier)

### Component B: Internal trading fees
- **Purpose**: Calculate fees from trades executed through Dolomite's internal AMM
- **Logic**: Extract `LogTrade` events containing input and output market IDs and trade amounts. Apply a fixed 0.3% fee rate to all internal trades. Convert trade amounts from Wei to token units using the input token's decimals, then to USD using price feeds. Sum all trading fee amounts across all trading pairs and chains.
- **Key fields**: `input_amount` (trade input size), `inputMarket` and `outputMarket` (trading pair), `deltaWei` (Wei amounts)

### Component C: Liquidation fees  
- **Purpose**: Calculate fees generated from liquidating undercollateralized positions
- **Logic**: Process `LogLiquidate` events containing liquidation amounts and market information. Calculate liquidation spread premiums using `LogSetSpreadPremium` events, with a default base spread of 5%. The effective liquidation spread premium is calculated as: `base_spread × owed_market_premium × held_market_premium`. Apply this premium to the liquidation volume to determine fees. Convert amounts using token decimals and USD prices.
- **Key fields**: `liquidation_amount` (liquidated value), `heldMarket` and `owedMarket` (liquidation markets), `liquidationSpreadPremium` (fee percentage)

### Component D: oARB option revenue
- **Purpose**: Calculate revenue from Dolomite's oARB (options on ARB token) product on Arbitrum
- **Logic**: Track `VesterProxy_PositionClosed_event` events representing option exercise, which contain ETH amounts paid by users. Match these with corresponding `VesterProxy_VestingPositionCreated_event` events using vesting IDs to ensure proper pairing. Convert ETH payments to USD using end-of-day price feeds. This revenue stream is specific to Arbitrum and represents protocol income from specialized derivative products.
- **Key fields**: `ethCostPaid` (ETH payment), `vestingId` (position identifier), `amount` (option size)

### Final aggregation
- **Combining components**: Union supply-side fees (interest fees multiplied by `supply_side_fee_share` plus all trading and liquidation fees) with protocol revenue (interest fees multiplied by one minus `supply_side_fee_share` plus oARB revenue)
- **Currency conversion**: All amounts converted to USD using end-of-day price feeds, with Dolomite's internal market prices serving as fallback when external prices are unavailable
- **Time aggregation**: Events aggregated to daily boundaries using block timestamps, with proper ordering maintained through block numbers and log indices
- **Final calculation**: Total fees equal the sum of supply-side fees and protocol revenue, representing all fee-generating activities across Dolomite's lending, trading, and liquidation operations on all supported chains

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

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

DolomiteDOLO

Fees

Fees

Competitive landscape

Chain breakdown