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 Fees Methodology

## 1. Overview

Fees measures the total value paid by users to interact with the Hydration ecosystem. This includes network transaction fees on the Hydration Substrate chain, trading fees generated by Hydration DEX, interest and liquidation penalties from Hydration Lending, and stability fees from the HOLLAR stablecoin. These fees represent the total economic value generated by the protocol's suite of decentralized finance applications.

## 2. Data sources

- **Blockchain events**: `TransactionFeePaid` events from Hydration Substrate; `Swapped`, `Swapped2`, and `Swapped3` events from the `broadcast` pallet; `LiquidationCall` and `MintedToTreasury` events from `LendingPool` contracts; `Mint` and `Burn` events from `VToken` contracts; `ReserveDataUpdated` and `ReserveFactorChanged` events from `LendingPoolConfigurator` and `LendingPool` contracts; and ERC-20 `Transfer` events, covering Hydration Substrate and Hydration EVM
- **External data**: End-of-day price feeds for various assets and metadata for asset decimal precision

## 3. Step-by-step calculation

### Component A: Hydration Substrate network fees

- **Purpose**: Capture the cost of processing transactions on the Hydration Substrate chain
- **Logic**: `TransactionFeePaid` events are parsed from the Hydration Substrate chain. The total fee per transaction is calculated by summing the base fee amount and any tip provided by the user. These values are extracted from the event data and normalized by the native asset decimal precision.
- **Key fields**: `amount`, `tip`

### Component B: Hydration DEX trading fees

- **Purpose**: Capture the fees paid by traders for executing asset swaps on the Hydration DEX
- **Logic**: Swap events, including `Swapped`, `Swapped2`, and `Swapped3`, are parsed from the `broadcast` pallet. Fee amounts are extracted for both assets involved in the trade. These amounts are normalized using asset metadata and aggregated to determine the total fee value per swap operation.
- **Key fields**: `fees_assets_amount_1`, `fees_assets_amount_2`

### Component C: Hydration Lending interest and liquidations

- **Purpose**: Capture economic value from lending activities, including interest paid by borrowers and penalties from liquidations
- **Logic**: For interest, cumulative treasury accruals from chain state and `MintedToTreasury` events from `LendingPool` contracts are aggregated to determine the protocol's share of interest. Total fees are then back-calculated by dividing the protocol share by the `reserve_factor`. For liquidations, `LiquidationCall` events from `LendingPool` contracts are identified and matched with `Transfer` events (representing collateral transfers to the treasury). Total liquidation fees are derived using the `liquidation_factor` corresponding to the liquidated asset.
- **Key fields**: `in_amountMinted`, `in_balanceIncrease`, `reserve_factor`, `liquidation_factor`

### Component D: HOLLAR stability and interest fees

- **Purpose**: Capture the cost of maintaining HOLLAR debt positions and stability module usage
- **Logic**: Stability module fees are determined by tracking ERC-20 `Transfer` events to and from the HOLLAR stability module address. For debt interest, `Mint` and `Burn` events from HOLLAR `VToken` contracts are used to track the cumulative debt balance. This balance is multiplied by the percentage change in the `variableBorrowIndex` (extracted from `ReserveDataUpdated` events from `LendingPool` contracts) to calculate accrued interest over time.
- **Key fields**: `value`, `variable_borrow_index`, `cumulative_balance`

### Component E: Aggregation and USD conversion

- **Purpose**: Standardize fee values across all products and chains into a single USD metric
- **Logic**: All fee components are aggregated by day, chain, and product. Asset amounts are normalized by their respective decimal precision and multiplied by end-of-day price feeds. In specific cases where price feeds are not available on the native chain, asset prices are sourced from external metadata providers. Final values are summed to provide the total daily Fees metric.

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

Total value users pay to use a protocol (gross fees, user-paid fees).

HydrationHDX

Fees

Fees

Competitive landscape

Chain breakdown