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.

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Hydration

# Hydration Earnings Methodology

## 1. Overview

Earnings measures the net value retained by Hydration after subtracting all expenses from its total revenue. Revenue is generated from transaction fees on Hydration Substrate, trading fees on Hydration DEX, interest and liquidations on Hydration Lending, and stability fees from HOLLAR. Expenses are comprised of token incentives paid to collators. Earnings provides a view of the project's onchain profitability by accounting for the cost of securing the network and incentivizing liquidity.

## 2. Data sources

- **Blockchain events**: `TransactionFeePaid` and `CollatorRewarded` events from Hydration Substrate; `Swapped`, `Swapped2`, and `Swapped3` events from Hydration DEX; `LiquidationCall`, `MintedToTreasury`, and `ReserveDataUpdated` events from `LendingPool` contracts; `Mint` and `Burn` events from `VToken` contracts; and ERC-20 token transfers, covering Hydration Substrate and Hydration EVM
- **External data**: End-of-day price feeds for native and supported assets

## 3. Step-by-step calculation

### Component A: Revenue from Hydration Substrate and Hydration DEX

- **Purpose**: Calculate the protocol's share of transaction and trading fees.
- **Logic**: For Hydration Substrate, `TransactionFeePaid` events are parsed and 100% of the fee amounts are attributed to revenue. For Hydration DEX, fees are extracted from swap events including `Swapped`, `Swapped2`, and `Swapped3`. Only fees directed to specific project-controlled treasury addresses are included in the revenue calculation. All collected amounts are normalized by decimal precision and converted to USD using end-of-day price feeds.

### Component B: Revenue from Hydration Lending and HOLLAR

- **Purpose**: Calculate revenue from lending activities and stablecoin stability fees.
- **Logic**: For Hydration Lending, revenue is derived from interest accruals and liquidation protocol fees. Interest is calculated by tracking `MintedToTreasury` events and changes in treasury accrual states, then applying the project's reserve factor. Liquidation revenue is captured by identifying `LiquidationCall` events and tracking corresponding token transfers to the treasury. For HOLLAR, interest is calculated based on changes in the variable borrow index applied to cumulative balances tracked via `Mint` and `Burn` events from `VToken` contracts. Additionally, 80% of token transfers to the HOLLAR stability module are classified as revenue.

### Component C: Operating expenses (Token Incentives)
- **Purpose**: Identify the cost of network security and protocol incentives.
- **Logic**: `CollatorRewarded` events are parsed from the `collatorRewards` pallet on Hydration Substrate. These rewards are classified as token incentives and represent the primary operating expense for the project. The incentive amounts are normalized by decimal precision and converted to USD.

### Component D: Final aggregation and earnings calculation

- **Purpose**: Combine all components to determine net earnings.
- **Logic**: Total revenue is calculated as the sum of revenue from Hydration Substrate, Hydration DEX, Hydration Lending, and HOLLAR. Total expenses are calculated as the sum of token incentives. Earnings are then calculated as `total_revenue - total_expenses`. All values are aggregated daily with UTC day boundaries.

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

Net profit (also profits, net income, profitability) — revenue remaining after subtracting expenses.

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Earnings

Earnings

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