# Jupiter Lend Supply-side fees Methodology

## 1. Overview

Supply-side fees measures the share of interest paid by borrowers that is distributed to liquidity providers on Jupiter Lend. The metric represents the total yield earned by lenders for providing capital to the protocol's lending pools. All interest is calculated based on dynamic interest rate curves that adjust according to pool utilization, with a portion of the gross interest retained by the protocol and the remainder allocated to the supply side.

## 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 assets supported by the lending pools

## 3. Step-by-step calculation

### Component A: Borrow and supply balance tracking

- **Purpose**: Maintain a running record of active loans and total liquidity supplied for each asset pool.
- **Logic**: `Operate` instructions from the `Liquidity` program are parsed to extract changes in borrow and supply amounts. These values are aggregated chronologically to calculate the current active loan balance and total supply balance for every supported asset. Utilization rates are determined by the ratio of active loans to total supply.

### Component B: Interest rate determination

- **Purpose**: Calculate the applicable interest rate based on pool utilization and governance-set parameters.
- **Logic**: Interest rate parameters are extracted from `UpdateRateDataV1` and `UpdateRateDataV2` instructions from the `Liquidity` program. For each asset, the interest rate is calculated using a kinked interest rate model, where the rate is determined via linear interpolation between utilization points (e.g., rate at zero utilization, rate at various kinks, and rate at maximum utilization).

### Component C: Accrued interest calculation

- **Purpose**: Compute the total interest generated by borrowers between protocol operations.
- **Logic**: Compound interest is calculated for the period between consecutive instructions. The time delta is identified by the difference between block timestamps, and interest is accrued on the active loan balance using the utilization-based rate identified in Component B.

### Component D: Supply-side fee allocation

- **Purpose**: Isolate the portion of interest that is distributed to lenders versus the protocol treasury.
- **Logic**: Protocol fee rates are parsed from `UpdateTokenConfig` instructions from the `Liquidity` program. Supply-side fees are calculated by multiplying the total interest accrued by the reciprocal of the protocol fee: `supply_side_fees = interest_accrued * (1 - protocol_fee_rate)`.

### Component E: USD conversion and aggregation

- **Purpose**: Normalize fee values into a common currency for reporting.
- **Logic**: Asset-specific amounts are normalized by their respective decimal precision. The resulting values are multiplied by end-of-day price feeds to determine the USD value. Data is aggregated to a daily frequency using UTC day boundaries.

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

Portion of fees distributed to service providers or supply-side participants.

Supply-side 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.
