# Gearbox V1 Fees Methodology

## 1. Overview

Fees measures the total value paid by users of Gearbox V1, including Gearbox V2 credit accounts which report under Gearbox V1. This includes interest paid by borrowers to lenders (supply-side interest), protocol revenue collected in the treasury, and liquidator premiums generated during liquidations. These fees represent the economic value generated by the protocol's leverage and credit account offerings. All fees are denominated in their respective underlying assets and converted to USD.

## 2. Data sources

- **Blockchain events**: `RepayCreditAccount`, `LiquidateCreditAccount`, `CloseCreditAccount`, and `OpenCreditAccount` events from `CreditManager` and `CreditFacade` contracts, `Repay` and `RemoveLiquidity` events from `Pool` contracts, and ERC-20 asset transfers, covering Ethereum
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Supply-side interest accrual

- **Purpose**: To calculate the interest accrued on active borrows to be paid to liquidity providers.
- **Logic**: Daily interest is calculated for active pools using the total borrowed amount and the borrow APY (denominated in ray). The accrued interest is calculated as the product of the total borrowed amount and the borrow APY, divided by 365, and multiplied by the number of days since the previous read. Specific inactive pools, such as the V1 WBTC pool on Ethereum, are excluded from this calculation.
- **Key fields**: `total_borrowed`, `borrow_apy_ray`, `pool_address`

### Component B: Protocol revenue collection

- **Purpose**: To capture protocol revenue collected in the treasury.
- **Logic**: Protocol revenue is identified from ERC-20 asset transfers to the treasury address. This includes diesel assets minted to the treasury on repayment (valued 1:1 with the pool's underlying asset) and pool withdrawal fees. Transfers representing treasury liquidity withdrawals or swaps are excluded.
- **Key fields**: `amount`, `token_address`, `from_address`, `to_address`

### Component C: Liquidator premium calculation

- **Purpose**: To calculate the liquidator's discount (premium) generated during credit account liquidations.
- **Logic**: Liquidator premiums are calculated from liquidation events. Because a fixed percentage of the collateral's value is paid by the liquidator (95% for V1, 96% for V2), the discount is calculated based on the total funds paid (the sum of remaining funds, debt to cover, and pool profit). The premium is calculated as the product of the funds paid and the remaining percentage, divided by the paid percentage.
- **Key fields**: `remaining_funds`, `debt_to_cover`, `profit`

### Component D: USD conversion and aggregation

- **Purpose**: To normalize all fee components to USD and aggregate them.
- **Logic**: All fee components (supply-side interest, protocol revenue, and liquidator premiums) are normalized by their respective asset decimal precisions. The normalized amounts are multiplied by end-of-day asset prices to convert them to USD. The daily fees are then aggregated by day and chain.
- **Key fields**: `fees`, `price_usd`

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

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

Fees

Lending

Lenders deposit funds into Gearbox and receive interest payments from borrowers.

Gearbox is a non-custodial lending protocol built on Ethereum. Gearbox was founded by Mikhail Lazarev and launched in 2021.

GEAR tokenholders own and govern the protocol. They currently take a cut of the total interest paid by borrowers (revenue).

Gearbox V1

Fees

Fees

Chain breakdown