# Fathom Lending Supply-side fees Methodology

## 1. Overview

Supply-side fees measures the portion of total fees generated by Fathom Lending that is distributed to liquidity providers. This value represents the compensation earned by users for supplying assets to the lending markets. These fees are primarily composed of the interest paid by borrowers and the premiums collected from flash loan transactions. The distribution between the protocol treasury and the supply-side participants is governed by a reserve factor that is periodically updated by the protocol.

## 2. Data sources

- **Blockchain events**: `FlashLoan` and `MintedToTreasury` events from `LendingPool` contracts, and `ReserveFactorChanged` and `ReserveInitialized` events from `LendingPoolConfigurator` contracts, covering XDC
- **External data**: End-of-day price feeds for assets and protocol state captures for treasury accruals

## 3. Step-by-step calculation

### Component A: Interest-based fee calculation

- **Purpose**: Calculate the share of interest income allocated to liquidity providers
- **Logic**: Protocol revenue is derived from the daily change in cumulative interest accruals, which are determined by combining protocol state captures with `MintedToTreasury` events from `LendingPool` contracts. Daily reserve factors are identified through `ReserveFactorChanged` and `ReserveInitialized` events from `LendingPoolConfigurator` contracts. The supply-side portion of fees is then calculated by dividing the daily protocol revenue by the reserve factor to determine total interest, which is then multiplied by the liquidity provider share (1 - reserve factor)
- **Key fields**: `amountMinted`, `newReserveFactor`, `asset`

### Component B: Flash loan premium extraction

- **Purpose**: Capture the fees paid by users for utilizing flash loans within Fathom Lending
- **Logic**: `FlashLoan` events are parsed from `LendingPool` contracts for all supported markets. The `premium` amount associated with each event is extracted and allocated entirely as supply-side fees, representing the direct fee paid to the liquidity pool for the service
- **Key fields**: `premium`, `asset`

### Component C: USD normalization and aggregation

- **Purpose**: Standardize fee values to USD for cross-asset reporting and aggregation
- **Logic**: All collected fee amounts are normalized by decimal precision based on asset metadata. Daily totals are converted to USD using end-of-day asset price feeds. Final values are aggregated at the daily level using UTC day boundaries. Amounts are zero-filled for days where no activity is recorded to ensure data continuity
- **Key fields**: `price_usd`, `decimals`, `block_timestamp`

*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