# Gearbox V3 Supply-side fees Methodology

## 1. Overview

Supply-side fees measures the share of fees that goes to the service providers of Gearbox V3. These fees are distributed to compensate liquidity providers (lenders), market curators, and liquidators for their respective roles in the protocol. Lenders are compensated with interest and quota fees, market curators are allocated a designated share of pool treasury income, and liquidators are rewarded with a premium in the form of a discount on collateral during liquidation events.

## 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 and asset metadata

## 3. Step-by-step calculation

### Component A: Lender interest and quota fee accrual

- **Purpose**: Calculates the interest and quota fees accrued to liquidity providers.
- **Logic**: Daily interest accruals are calculated using pool borrow rates and total borrowed amounts. For each pool, the supply-side interest is determined by multiplying the total borrowed asset balance by the change in the base interest index between consecutive reads. Quota fees are calculated by annualizing the quota revenue over the days elapsed since the previous read. On chains with pruned historical state where daily index reads are unavailable, interest is estimated from realized repayment profits using the credit manager's interest fee configuration.
- **Key fields**: `total_borrowed`, `base_interest_index`, `quota_revenue`

### Component B: Curator treasury share allocation

- **Purpose**: Calculates the portion of markup and liquidation fees distributed to market curators.
- **Logic**: Interest markup and quota markup are calculated at the credit manager level based on active borrow balances and fee interest rates. These markups are aggregated with protocol liquidation fees to determine the total treasury income per pool. The curator's share is then calculated by applying the supply-side allocation percentage, which is defined as the remaining share after deducting the protocol's treasury share. For V3.0 pools, the protocol share is typically 100% (0% to curators) unless the treasury is curator-owned, while a default 50% share is allocated to curators for V3.1 pools unless an alternative split is specified on-chain.
- **Key fields**: `credit_manager_borrowed`, `fee_interest_bps`, `protocol_share`

### Component C: Liquidator premium calculation

- **Purpose**: Calculates the discount on collateral earned by liquidators during liquidations.
- **Logic**: Liquidation events are parsed to determine the debt covered and the collateral seized. For full liquidations, the total debt (principal, accrued interest, and accrued fees) is read from the block preceding the liquidation, and the liquidator premium is calculated based on the total funds paid and the applicable liquidation discount tier. For partial liquidations, the premium is derived from the repaid debt and the applied discount rate. Liquidations without a valid prior-block debt read are excluded from the premium calculation.
- **Key fields**: `debt`, `accrued_interest`, `accrued_fees`, `repaid_debt`, `fee`

### Component D: USD conversion and aggregation

- **Purpose**: Normalizes all supply-side fee components to USD and aggregates them.
- **Logic**: The calculated supply-side interest, quota fees, curator treasury shares, and liquidator premiums are normalized by the decimal precision of their respective underlying assets. These normalized values are then multiplied by end-of-day asset prices to convert them to USD. The final supply-side fees metric is aggregated daily by chain and product ID.
- **Key fields**: `fees_supply_side`, `price_usd`

*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 V3

Supply-side fees

Supply-side fees

Chain breakdown