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 Fees Methodology

## 1. Overview

Liquity fees represents the total daily fee revenue generated by the Liquity protocol from both borrowing and redemption operations. This metric captures fees paid by users when borrowing LUSD stablecoin against ETH collateral and when redeeming LUSD back to ETH. The calculation combines two distinct fee streams denominated in different tokens (LUSD and ETH) and converts them to USD for unified reporting.

## 2. Data sources

- **Ethereum smart contract events**: Parsed event logs from Liquity v1 protocol contracts on Ethereum mainnet
  - `LUSDBorrowingFeePaid` events from the BorrowerOperations contract
  - `Redemption` events from the TroveManager contract
- **End-of-day price feeds**: Token price data for USD conversion of LUSD and WETH amounts
- **Token metadata**: Decimal specifications for LUSD (`0x5f98805a4e8be255a32880fdec7f6728c6568ba0`) and WETH (`0xc02aaa39b223fe8d0a0e5c4f27ead9083c756cc2`) tokens

## 3. Step-by-step calculation

### Component A: Borrowing fees extraction
- **Purpose**: Captures fees paid by users when borrowing LUSD stablecoin against ETH collateral
- **Logic**: Extracts data from `LUSDBorrowingFeePaid` events emitted by the BorrowerOperations contract. Each event contains a `_LUSDFee` parameter representing the fee amount paid in LUSD tokens. The component applies deduplication using `block_timestamp`, `transaction_hash`, and `log_index` to ensure each fee payment is counted once. All records are classified under the 'Interest' business line and 'stablecoin_issuers' market sector.
- **Key fields**: `_LUSDFee` field converted to `amount`, hardcoded LUSD token address for classification, 'Borrowing fees' account name

### Component B: Redemption fees extraction  
- **Purpose**: Captures fees paid by users when redeeming LUSD tokens back to ETH
- **Logic**: Extracts data from `Redemption` events emitted by the TroveManager contract. Each event contains an `_ETHFee` parameter representing the fee amount paid in ETH. Similar deduplication logic is applied using transaction identifiers. Records are classified with the same business categorization as borrowing fees but use the WETH token address and 'Redemption fees' account name.
- **Key fields**: `_ETHFee` field converted to `amount`, hardcoded WETH token address for classification, 'Redemption fees' account name

### Final aggregation
- **Combining components**: The two fee components are combined using a union operation, creating a unified dataset with consistent schema including timestamp, chain identifier, market classifications, token addresses, and fee amounts
- **Currency conversion**: All fee amounts are converted to USD using end-of-day price feeds matched to the respective token addresses (LUSD and WETH). Decimal corrections are applied based on each token's decimal specification to ensure proper unit conversion
- **Time aggregation**: Timestamps are truncated to daily boundaries using day-level granularity. All fees within the same day are aggregated together regardless of their original token denomination
- **Final calculation**: The final metric value represents the sum of all borrowing and redemption fees converted to USD for each day. Gap filling with zero values ensures continuous daily time series coverage, and chain availability filtering ensures only supported blockchain data is included

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

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

LiquityLQTY

Fees

Fees

Competitive landscape

Chain breakdown