# Jupiter Lend Fees Methodology

## 1. Overview

Fees measures the total economic value paid by borrowers to utilize the Jupiter Lend protocol. This value is comprised of the compound interest accrued on outstanding loans across all supported asset pools. The interest paid by borrowers serves as the primary mechanism for generating economic value, which is subsequently distributed to liquidity providers and the protocol.

## 2. Data sources

- **Blockchain events**: `Operate`, `UpdateTokenConfig`, `UpdateRateDataV1`, and `UpdateRateDataV2` instructions from the `Liquidity` program on Solana
- **External data**: End-of-day price feeds for the borrowed and supplied assets

## 3. Step-by-step calculation

### Component A: Loan and supply activity extraction

- **Purpose**: Capture the underlying changes in asset balances required to calculate utilization and interest.
- **Logic**: Borrow and supply amounts are extracted from `Operate` instructions within the `Liquidity` program. These amounts are used to maintain a running balance of total borrows and total supply for each asset pool on a per-instruction basis.
- **Key fields**: `borrow_amount`, `supply_amount`, `mint` (token address)

### Component B: Interest rate curve configuration

- **Purpose**: Identify the specific mathematical parameters used to determine interest rates based on pool utilization.
- **Logic**: Configuration parameters are parsed from `UpdateTokenConfig`, `UpdateRateDataV1`, and `UpdateRateDataV2` instructions. These parameters define interest rate curves, including the utilization kinks and the specific interest rates applied at zero utilization, at each kink, and at maximum utilization. Both V1 (single-kink) and V2 (double-kink) rate models are supported.
- **Key fields**: `kink`, `rate_at_utilization_kink`, `rate_at_utilization_max`, `rate_at_utilization_zero`

### Component C: Utilization and interest rate derivation

- **Purpose**: Calculate the applicable interest rate for any given period of borrowing activity.
- **Logic**: Utilization is calculated as the ratio of the total borrowed balance to the total supply balance. For each period between instructions, an interest rate is derived by applying the utilization rate to the active interest rate curve configuration. This involves linear interpolation between the defined rate points (zero, kinks, and max) based on the current utilization level.
- **Key fields**: `utilization_before`, `rate_bps`

### Component D: Compound interest accrual and USD conversion

- **Purpose**: Calculate the final fee amount in USD based on time-weighted interest accrual.
- **Logic**: Compound interest is accrued on the outstanding borrow balance for the time elapsed between program instructions. The calculation uses the derived daily interest rate applied over the time delta. Accrued interest is then normalized by decimal precision and multiplied by end-of-day price feeds to determine the final value in USD.
- **Key fields**: `interest_accrued_this_period`, `days_since_prev`, `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).

Fees

Lending

Jupiter aggregates liquidity from multiple non-custodial exchanges. Integrators set custom fees. Liquidity providers deposits funds into the perpetual exchange. Both receive fees from traders (supply-side fees).

Jupiter is a non-custodial DEX aggregator and exchange for perpetual contracts built on Solana. Jupiter was founded by an pseudonymous founder meow and launched in 2021.

JUP token holders own and govern the protocol. They currently take a cut of the total perpetual and integrator trading fees paid by traders (revenue). Jupiter's investors include White Hilt Capital, etc.
