# Euler Lending Supply-side fees Methodology

## 1. Overview

Supply-side fees measures the portion of interest paid by borrowers that is distributed to liquidity providers within Euler Lending. This metric represents the primary yield earned by users for supplying assets to the protocol's various lending vaults. The value is derived by calculating the total interest accrued and subtracting the protocol's retained revenue, which is determined by governance-controlled fee parameters.

## 2. Data sources

- **Blockchain events**: `VaultStatus`, `ConvertFees`, and `GovSetInterestFee` events from `EVault` contracts, and `ProxyCreated` events from `EVaultFactory` contracts, covering Ethereum, Base, Sonic, Avalanche, and 6 other chains
- **External data**: End-of-day price feeds and asset metadata mappings

## 3. Step-by-step calculation

### Component A: Market and asset identification

- **Purpose**: Identify and map active lending vaults and their associated underlying assets.
- **Logic**: `ProxyCreated` events from `EVaultFactory` contracts are parsed to identify new vault deployments. The underlying asset address is extracted from the trailing data of the creation event to ensure accurate mapping between lending vaults and the assets being supplied or borrowed.

### Component B: Interest fee configuration tracking

- **Purpose**: Determine the protocol's share of interest income used to extrapolate supply-side earnings.
- **Logic**: `GovSetInterestFee` events from `EVault` contracts are monitored to track changes in the protocol's interest fee percentage. A default fee of 10% is applied to markets initialized after the launch of V2, with subsequent updates captured and filled forward to maintain a daily record of the active fee factor for every market.

### Component C: Fee accrual and conversion tracking

- **Purpose**: Calculate the change in accrued interest units for each lending vault.
- **Logic**: `VaultStatus` events from `EVault` contracts are utilized to track the `accumulated_fees` field. The difference between consecutive updates is calculated to determine new fee accruals. In transactions where accumulated fees are reset to zero, `ConvertFees` events are parsed to capture `protocol_shares` and `governor_shares`, which are added to the delta to prevent data gaps during fee harvesting. These values are adjusted by an exchange rate derived from the vault's total cash, total borrows, and total shares to normalize the units to the underlying asset.

### Component D: Supply-side fee derivation

- **Purpose**: Extrapolate the share of fees allocated to liquidity providers based on protocol revenue.
- **Logic**: Total protocol revenue is first calculated by summing the asset-normalized fee accruals. The supply-side portion is then derived by dividing the protocol revenue by the active interest fee percentage and multiplying the result by the remaining percentage (the supplier's share). This calculation ensures that the total interest paid by borrowers is correctly partitioned between the protocol and the asset suppliers.

### Component E: USD conversion and final aggregation

- **Purpose**: Normalize supply-side fee values to USD and aggregate by time and asset.
- **Logic**: Derived asset amounts are normalized by decimal precision. These values are then multiplied by end-of-day price feeds for each specific asset. For specific chains where standard feeds are unavailable, asset metadata mappings are used to source prices. Data is aggregated to a daily granularity using UTC day boundaries.

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

Portion of fees distributed to service providers or supply-side participants.

Supply-side fees

Lending

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

Euler is a non-custodial lending protocol built on Ethereum. Euler was founded by Michael Bentley, Doug Hoyte & Jack Prior and launched in 2021.

EUL tokenholders own and govern the protocol. They currently take a cut of the total interest paid by borrowers (revenue). Euler’s investors include Paradigm, Lemniscap, Launchhub Ventures, etc.

Euler Lending

Supply-side fees

Supply-side fees

Chain breakdown