# Gearbox V1 Supply-side fees Methodology

## 1. Overview

The share of fees that goes to the service providers of Gearbox V1 is measured by the supply-side fees metric. These fees are distributed to liquidity providers as interest on supplied assets and to liquidators as premiums during credit account liquidations. Because liquidity is borrowed from Gearbox V1 pools by Gearbox V2 credit accounts, the associated fees are aggregated under Gearbox V1. All values are normalized to USD using end-of-day price feeds.

## 2. Data sources

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

## 3. Step-by-step calculation

### Component A: Lender interest accrual

- **Purpose**: Calculate the interest accrued and distributed to liquidity providers (lenders) in Gearbox V1 pools.
- **Logic**: Daily interest is calculated for each active Gearbox V1 pool. The total borrowed amount is multiplied by the borrow APY (normalized by ray precision) and divided by 365, then scaled by the number of days since the previous state read to ensure no missed periods are lost. Pools specified on the denylist, such as the inactive V1 WBTC pool, are excluded from this calculation.
- **Key fields**: `total_borrowed`, `borrow_apy_ray`, `pool_address`

### Component B: Liquidator premium extraction

- **Purpose**: Calculate the discount (premium) earned by liquidators during credit account liquidations.
- **Logic**: Liquidation events are parsed from `LiquidateCreditAccount` events emitted by `CreditManager` (for V1) and `CreditFacade` (for V2) contracts, alongside corresponding `Repay` events from `Pool` contracts and `OpenCreditAccount` events to identify credit accounts. The total funds paid by the liquidator are calculated as the sum of remaining funds, debt to cover, and pool profit. Since a fixed percentage of the collateral's value is paid by liquidators—95% for V1 and 96% for V2—the liquidator premium is calculated by applying the respective discount ratio (5/95 for V1, 4/96 for V2) to the total funds paid.
- **Key fields**: `remaining_funds`, `debt_to_cover`, `profit`, `transaction_hash`

### Component C: USD conversion and aggregation

- **Purpose**: Normalize supply-side fee components to USD and aggregate them.
- **Logic**: The calculated lender interest and liquidator premiums are normalized by the decimal precision of their respective underlying assets. These normalized amounts are then multiplied by end-of-day asset prices to convert them to USD. The daily values are aggregated by asset, chain, and product under a daily UTC boundary.
- **Key fields**: `timestamp`, `token_address`, `fees_supply_side`

*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 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

Supply-side fees

Supply-side fees

Chain breakdown