# Grove Allocator Cost Of Revenue Methodology

## 1. Overview

Cost of revenue for Grove Allocator is defined as the funding costs recognized on the Maker/Sky debt path specifically for the `ALLOCATOR-BLOOM-A` collateral. These expenses represent the interest accrued and settled during the protocol's interaction with the Sky ecosystem. The metric is recorded upon settlement-accrual events rather than being smoothed across daily intervals, reflecting the discrete nature of the protocol's funding obligations.

## 2. Data sources

- **Blockchain events**: `drip` function calls from `Jug` contracts, `grab` function calls from `Vat` contracts, and ERC-20 `Transfer` events on Ethereum
- **External data**: End-of-day price feeds for USDS and asset metadata

## 3. Step-by-step calculation

### Component A: Stability rate and debt tracking

- **Purpose**: Calculate the gross debt increase based on Sky protocol parameters
- **Logic**: `drip` function calls from `Jug` contracts are parsed to extract the stability rate for the `ALLOCATOR-BLOOM-A` collateral type. Simultaneously, `grab` function calls from `Vat` contracts are monitored to identify changes in the debt balance. The gross debt increase is calculated by multiplying the change in debt by the current stability rate identified at the time of the transaction.
- **Key fields**: `out_rate` (stability rate), `in_dart` (debt change)

### Component B: Settlement interest correction

- **Purpose**: Adjust the gross debt increase by actual settlement payments
- **Logic**: ERC-20 `Transfer` events for USDS are filtered for transactions involving the Grove subproxy address. Inflows to and outflows from the subproxy are aggregated within the same settlement transactions to determine a net payment amount. This net payment is subtracted from the gross debt increase to arrive at the final cost of revenue for the settlement event.
- **Key fields**: `value` (transfer amount), `from_address`, `to_address`

### Component C: USD normalization and aggregation

- **Purpose**: Convert settlement costs into a standardized USD value
- **Logic**: The calculated cost of revenue amounts are normalized by decimal precision. These values are then multiplied by end-of-day price feeds for USDS. Data is aggregated to a daily granularity using UTC day boundaries.
- **Key fields**: `block_timestamp` (timing), `amount` (cost of revenue in USDS)

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

Expenses paid to third parties to deliver core service output.

Cost of revenue

Asset management

Grove borrows via Sky's Allocator Module and deploys capital into curated yield strategies through an ALM (Asset-Liability Management) controller architecture. The protocol generates yield across its positions while management fees are settled off-chain via a Monthly Settlement Cycle between Grove and Sky DAO.

Grove operates as a programmable capital allocator that draws stablecoins from Sky Protocol and deploys them into diversified institutional-grade yield-bearing positions spanning tokenized treasuries, private credit, DeFi lending markets, and curated vaults across multiple chains.

Grove is a DeFi protocol built on Sky (formerly MakerDAO) infrastructure, incubated by Grove Labs and managed by Steakhouse Financial as risk curator.

Grove Allocator

Cost of revenue

Cost of revenue

Chain breakdown