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).

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Gearbox

# Gearbox Fees Methodology

## 1. Overview

Fees measures the total economic value paid by users to utilize Gearbox V1 and Gearbox V3. Included in this metric are interest paid by borrowers on credit accounts, quota fees for asset allocations, protocol markups, liquidation fees, and liquidator premiums. These fees are split between supply-side participants (lenders, liquidators, and market curators) and the protocol treasury. This metric is utilized to evaluate the total economic activity and revenue-generating capacity of the Gearbox leverage protocol.

## 2. Data sources

- **Blockchain events**: `Repay` and `RemoveLiquidity` events from `Pool` contracts, `Repay` events from `PoolV3` contracts, `RepayCreditAccount`, `LiquidateCreditAccount`, `CloseCreditAccount`, and `OpenCreditAccount` events from `CreditManager` contracts, `CloseCreditAccount`, `LiquidateCreditAccount`, and `OpenCreditAccount` events from `CreditFacade` contracts, `LiquidateCreditAccount` and `PartiallyLiquidateCreditAccount` events from `CreditFacadeV3` contracts, and ERC-20 token transfers, covering Ethereum, Monad, and Plasma
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Gearbox V1 interest and revenue tracking

- **Purpose**: To calculate lender interest and protocol revenue for Gearbox V1.
- **Logic**: Lender interest is accrued daily using total borrowed amounts, borrow APY, and the time elapsed between state reads. Protocol revenue is captured from diesel assets minted to the treasury on repayment (valued 1:1 with the pool's underlying asset) or withdrawal fees from V1 pools, excluding treasury withdrawals. V2 credit accounts are routed through V1 pools and are included in these calculations.
- **Key fields**: `total_borrowed`, `borrow_apy_ray`, `amount`, `token_address`

### Component B: Gearbox V3 interest and quota fee accrual

- **Purpose**: To accrue daily interest, quota fees, and protocol markups for Gearbox V3.
- **Logic**: Lender interest is calculated based on the change in the base interest index multiplied by total borrowed amounts. Quota fees are calculated from annualized quota revenue accrued over the days since the previous read. Protocol markup is calculated at the credit manager level by applying the interest fee rate (in basis points) to the base interest index change and quota fees, which is then aggregated by pool.
- **Key fields**: `base_interest_index`, `quota_revenue`, `total_borrowed`, `credit_manager_borrowed`, `fee_interest_bps`

### Component C: Liquidation fees and liquidator premiums

- **Purpose**: To calculate protocol liquidation fees and liquidator premiums across Gearbox V1 and Gearbox V3.
- **Logic**: For Gearbox V1, liquidator premiums are calculated from the funds paid during liquidation (repayment, profit, and remaining funds) and the collateral discount rate (95% for V1, 96% for V2). For Gearbox V3, protocol liquidation fees (paid to the pool's treasury) and liquidator premiums are calculated. For full liquidations, the protocol fee is determined as the treasury profit exceeding accrued fees, and the liquidator premium is calculated using the funds paid and the charged discount rate. For partial liquidations, the premium is calculated from the repaid debt, protocol fee, and applied discount rate.
- **Key fields**: `remaining_funds`, `debt_to_cover`, `profit`, `loss`, `protocol_fee`, `liquidator_premium`

### Component D: Realized accruals for pruned state chains

- **Purpose**: To estimate interest and markup on chains with pruned historical state reads, such as Monad.
- **Logic**: On chains where historical state reads cannot be accessed before a certain point, interest and markup are estimated from realized repayment profits. Lender interest is derived by dividing the repayment profit by the interest fee rate, while markup is captured directly from the repayment profit.
- **Key fields**: `profit`, `fee_interest_bps`, `markup`

### Component E: USD conversion and aggregation

- **Purpose**: To normalize all fee components to USD and aggregate them.
- **Logic**: All fee components (interest, quota fees, markup, liquidation fees, liquidator premiums, and V1 revenue) are aggregated by day, chain, product, and asset. Amounts are normalized by decimal precision and converted to USD using end-of-day asset prices. Daily granularity is maintained with UTC day boundaries.
- **Key fields**: `fees`, `decimals`, `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).

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Fees

Fees

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