# Gearbox V3 Fees Methodology

## 1. Overview

Fees is defined as the total economic value paid by users to utilize Gearbox V3. Interest accrued on active credit accounts, quota fees, protocol markups, liquidation fees paid to pool treasuries, and liquidator premiums are all captured within this metric. These fee components are distributed to liquidity providers, liquidators, market curators, and the protocol treasury. The economic value generated by the application is represented by this metric.

## 2. Data sources

- **Blockchain events**: `Repay` events from `PoolV3` contracts, and `LiquidateCreditAccount` and `PartiallyLiquidateCreditAccount` events from `CreditFacadeV3` contracts, covering Ethereum, Monad, and Plasma
- **External data**: End-of-day price feeds for pool denomination assets, and asset metadata

## 3. Step-by-step calculation

### Component A: Daily interest and quota fee accrual for Gearbox V3

- **Purpose**: The base interest and quota fees earned by lenders are calculated.
- **Logic**: Daily state reads of pool rates and total borrows are parsed. Supply-side interest is calculated by multiplying the total borrowed amount by the percentage change in the base interest index between consecutive reads. Quota fees are calculated by annualizing the quota revenue over the number of days since the previous read.
- **Key fields**: `total_borrowed`, `base_interest_index`, `quota_revenue`

### Component B: Protocol markup calculation for Gearbox V3

- **Purpose**: The additional interest markup retained from credit managers is calculated.
- **Logic**: Daily credit manager borrow balances are combined with pool interest index changes and credit manager configurations. The interest markup is calculated as the credit manager's borrowed amount multiplied by the base interest index change and the credit manager's interest fee percentage. Quota markup is calculated proportionally based on the credit manager's share of total pool borrows.
- **Key fields**: `credit_manager_borrowed`, `fee_interest_bps`, `base_interest_index`

### Component C: Liquidation fee and liquidator premium extraction for Gearbox V3

- **Purpose**: Protocol fees and liquidator discounts generated during credit account liquidations are captured.
- **Logic**: `LiquidateCreditAccount` and `PartiallyLiquidateCreditAccount` events from `CreditFacadeV3` contracts are joined with `Repay` events from `PoolV3` contracts. For full liquidations, the protocol fee is calculated as the pool's profit exceeding accrued fees, and the liquidator premium is calculated based on the total funds paid and the applicable liquidation discount. For partial liquidations, the protocol fee is extracted directly from the event, and the liquidator premium is calculated using the repaid debt, fee, and applied discount rate.
- **Key fields**: `profit`, `loss`, `remaining_funds`, `repaid_debt`, `fee`

### Component D: Realised accruals for pruned historical state on Gearbox V3

- **Purpose**: Interest and markup on chains with pruned historical state are estimated before daily reads are available.
- **Logic**: On chains where historical state reads are unavailable, `Repay` events from `PoolV3` contracts are parsed. The profit from early repayments is used to estimate supply-side interest and markup based on the credit manager's configured interest fee percentage.
- **Key fields**: `profit`, `fee_interest_bps`

### Component E: Treasury income splitting and USD conversion for Gearbox V3

- **Purpose**: Treasury income is allocated between the protocol and market curators, and all fees are normalized to USD.
- **Logic**: Treasury income, consisting of markups and liquidation fees, is split between the protocol and supply-side market curators based on pool-specific treasury share configurations. For V3.0 pools, 100% of the treasury income is allocated to the protocol, except for designated curator treasury pools where 0% is allocated. For V3.1 pools, a splitter configuration is applied, defaulting to a 50% protocol share. All fee components are normalized by asset decimal precision and converted to USD using end-of-day price feeds.
- **Key fields**: `protocol_share`, `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 V3

Fees

Fees

Chain breakdown