# Gearbox V1 Liquidation volume Methodology

## 1. Overview

Liquidation volume is defined as the total USD value of debt covered in liquidations across all lending markets and chains. For Gearbox V1, the total debt repaid to lending pools during credit account liquidations is captured. Both Gearbox V1 and Gearbox contracts that repay into Gearbox V1 pools are included in this calculation. The volume is calculated based on the underlying debt assets repaid to the pools, which are then normalized and converted to USD.

## 2. Data sources

- **Blockchain events**: `Repay` events from `Pool` contracts, `LiquidateCreditAccount` and `OpenCreditAccount` events from `CreditManager` and `CreditFacade` 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: Repay and liquidation event extraction

- **Purpose**: Identify liquidation transactions and extract repayment details.
- **Logic**: `Repay` events from `Pool` contracts are parsed to identify transactions with exactly one repayment, from which the pool address, written-off loss, principal (borrowed amount), and profit are extracted. Simultaneously, `LiquidateCreditAccount` events are parsed from `CreditManager` and `CreditFacade` contracts to capture the liquidation timestamp, block number, transaction hash, borrower address, and liquidator address.
- **Key fields**: `block_timestamp`, `block_number`, `transaction_hash`, `log_index`, `pool_address`, `written_off`, `principal`, `profit`, `borrower_address`, `liquidator_address`

### Component B: Credit account mapping

- **Purpose**: Map the liquidated borrower to their specific credit account.
- **Logic**: Because the borrower rather than the credit account is identified in Gearbox V1 and Gearbox V2 liquidation events, `OpenCreditAccount` events from `CreditManager` and `CreditFacade` contracts are parsed. The liquidation events are matched with these account opening events on the emitter and borrower addresses, mapping the liquidation to the most recently opened credit account prior to or at the block of liquidation.
- **Key fields**: `emitter_address`, `borrower_address`, `credit_account`, `block_number`

### Component C: Debt repayment calculation

- **Purpose**: Determine the amount of debt covered during the liquidation.
- **Logic**: ERC-20 token transfers are filtered to identify the pool's underlying debt asset inflows into the pool contract. The debt covered is calculated by taking the pool inflow amount minus the profit, or if the inflow transfer is unavailable, by summing the principal and profit and subtracting the written-off loss. This is done to ensure any write-offs or accrued profits are correctly accounted for in the final debt value.
- **Key fields**: `amount`, `profit`, `principal`, `written_off`

### Component D: USD conversion and aggregation

- **Purpose**: Normalize the liquidation volume and convert it to USD.
- **Logic**: The calculated debt covered is aggregated by day, chain, and debt asset. The raw amounts are normalized by decimal precision using asset metadata and multiplied by end-of-day asset prices to determine the USD value. Daily boundaries are defined using UTC time, and any days without activity are zero-filled.
- **Key fields**: `liquidation_volume`, `timestamp`, `price_usd`, `decimals`

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

USD value of debt covered or positions force-closed in liquidations.

Liquidation volume

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).