Overcollateralized borrowers deposit funds into Liquity and receive LUSD stablecoin.

Liquity is a non-custodial stablecoin protocol built on Ethereum. Liquity was founded by Robert Lauko & Rick Pardoe and launched in 2020.

LQTY tokenholders own & govern the protocol. They currently take all of the total borrow & redemption fees paid by borrowers (revenue). Liquity’s investors include Lemniscap, Polychain, Alameda Research, etc.

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Liquity

# Liquity Expenses Methodology

## 1. Overview

The Liquity expenses metric measures the daily USD value of LQTY token incentives distributed by the Liquity protocol. This metric tracks the protocol's operational costs in the form of token rewards paid to various participants including liquidity providers, stability pool depositors, and frontend operators. The calculation aggregates three types of LQTY token distribution events from Liquity v1 Ethereum smart contracts, converts the token amounts to USD using end-of-day price feeds, and presents them as daily expenses.

## 2. Data sources

- **Liquity v1 smart contract events**: Three specific types of LQTY token distribution events from Ethereum:
  - `Unipool_RewardPaid` events from the Uniswap LP rewards contract
  - `StabilityPool_LQTYPaidToDepositor` events from the Stability Pool contract  
  - `StabilityPool_LQTYPaidToFrontEnd` events from the Stability Pool contract
- **End-of-day price feeds**: LQTY token prices for USD conversion
- **Token metadata**: LQTY token decimal configuration for amount normalization

## 3. Step-by-step calculation

### Component A: Token incentive event extraction
- **Purpose**: Extract and classify all LQTY token distribution events from Liquity v1 contracts
- **Logic**: The system identifies three specific event types from Liquity v1 Ethereum contracts, each representing a different type of token incentive. For Uniswap LP rewards, it captures `Unipool_RewardPaid` events and extracts the `reward` parameter. For stability pool depositor rewards, it captures `StabilityPool_LQTYPaidToDepositor` events and extracts the `_LQTY` parameter. For frontend operator rewards, it captures `StabilityPool_LQTYPaidToFrontEnd` events and extracts the `_LQTY` parameter. Each event is classified into the appropriate account category and tagged with consistent business metadata including business line as Interest, market sector as stablecoin_issuers, and business segment as stablecoin_issuer.
- **Key fields**: Event timestamp (`block_timestamp`), transaction hash (`transaction_hash`), log index (`log_index`), token address (hardcoded as `0x6dea81c8171d0ba574754ef6f8b412f2ed88c54d` for LQTY), account classification (`account_name`), and raw token amount (`amount`)

### Component B: USD conversion and daily aggregation
- **Purpose**: Convert raw LQTY token amounts to USD and aggregate by day
- **Logic**: Raw token amounts are first corrected for LQTY token decimals to convert from wei-equivalent units to actual token amounts. The decimal-corrected amounts are then converted to USD using end-of-day LQTY token price feeds. Event timestamps are truncated to day boundaries to enable daily aggregation. The conversion process handles both decimal normalization and price multiplication to produce USD values for each token distribution event.
- **Key fields**: Daily timestamp (`timestamp`), chain identifier (`chain_id`), business classification fields, and USD-converted token incentive amount (`token_incentives`)

### Final aggregation
- **Combining components**: All three event types are combined into a single dataset representing total daily LQTY token distributions
- **Currency conversion**: Raw token amounts are converted to USD using end-of-day LQTY token prices after decimal normalization
- **Time aggregation**: Events are grouped by daily boundaries using timestamp truncation
- **Final calculation**: The token incentives amount is simply renamed to expenses, as token incentives represent the protocol's operational costs. The metric applies a fill-zeros strategy to ensure continuous daily data coverage, forward-filling any gaps in the time series with zero values where no token distributions occurred.

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

Total project operating and incentive expenses.

LiquityLQTY

Expenses

Expenses

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Chain breakdown