# Hydration Lending Revenue Methodology

## 1. Overview

Revenue measures the share of interest income and liquidation penalties retained by the Hydration Lending protocol. For Hydration Lending, this includes interest accrued by the treasury from lending markets and stability fees generated by the HOLLAR stablecoin. These earnings represent the protocol's take rate before the distribution of incentives or the coverage of operating expenses.

## 2. Data sources

- **Blockchain events**: `MintedToTreasury` and `LiquidationCall` events from `LendingPool` contracts, `ReserveFactorChanged`, `LiquidationProtocolFeeChanged`, and `ReserveInitialized` events from `LendingPoolConfigurator` contracts, `Mint` and `Burn` events from `VToken` contracts, and ERC-20 token transfers, covering Hydration Substrate
- **External data**: End-of-day price feeds for various assets and metadata for asset decimal normalization

## 3. Step-by-step calculation

### Component A: Lending interest accrual

- **Purpose**: Captures protocol revenue derived from interest paid by borrowers in the lending markets.
- **Logic**: Cumulative protocol interest is determined by summing treasury mints, identified via `MintedToTreasury` events from `LendingPool` contracts, and treasury accrual values extracted from state snapshots. Daily revenue is calculated as the change in this cumulative balance between consecutive days. The protocol's share is further validated against reserve factors identified in `ReserveFactorChanged` events from `LendingPoolConfigurator` contracts.
- **Key fields**: `amountMinted`, `reserve_factor`, `block_timestamp`

### Component B: Liquidation protocol fees

- **Purpose**: Measures the protocol's portion of penalties collected during collateral liquidations.
- **Logic**: Liquidations are identified through `LiquidationCall` events from `LendingPool` contracts. The specific revenue portion is captured by parsing ERC-20 `Transfer` events where the recipient is the designated protocol treasury address and the sender is the liquidated user account. These transfers are filtered to include only collateral assets relevant to the liquidation transaction.
- **Key fields**: `liquidator`, `user`, `collateralAsset`, `amount`

### Component C: HOLLAR stablecoin revenue

- **Purpose**: Captures revenue generated by the HOLLAR stablecoin through stability module fees and interest accruals.
- **Logic**: For the stability module, revenue is calculated by aggregating HOLLAR transfers to the stability module address, with a fixed 80% allocation designated as protocol revenue. For interest accruals, the variable borrow index is tracked via `Mint` and `Burn` events from `VToken` contracts. The daily revenue is derived by applying the percentage change in the borrow index to the cumulative debt balance.
- **Key fields**: `liquidity_index`, `variable_borrow_index`, `value`, `balance_increase`

### Component D: Normalization and USD conversion

- **Purpose**: Converts all revenue components into a unified USD-denominated metric.
- **Logic**: Raw asset amounts are normalized by decimal precision. These values are multiplied by end-of-day price feeds corresponding to the specific asset identified in the event data. Data is aggregated at a daily granularity following UTC boundaries.
- **Key fields**: `price_usd`, `decimals`, `timestamp`

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

fees * take_rate (illustrative — revenue is observed directly per project, not derived from take_rate)

Fee revenue retained after supply-side payouts. Before cost of revenue (e.g. L2 DA fees) and before operating expenses.

Revenue

Lending

Collators aggregate parachain transactions block candidates and producing state transition proofs for validators based on those blocks.

Hydration is a Polkadot parachain specialized in trading, lending, and stablecoin issuance.

HDX holders own and govern the protocol. Hydration’s investors include KR1 plc, Hypersphere, etc.

Hydration Lending

Revenue

Revenue

Chain breakdown