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 Token incentives Methodology

## 1. Overview

The Liquity token incentives metric measures the total USD value of LQTY tokens distributed as rewards by the Liquity protocol on a daily basis. This metric captures the protocol's spending on token-based incentives across three key areas: Uniswap liquidity provider rewards, stability pool depositor rewards, and frontend operator rewards. The calculation aggregates reward distribution events from the Liquity protocol smart contracts and converts the LQTY token amounts to USD values using end-of-day price feeds.

## 2. Data sources

- **Ethereum event logs**: Parsed reward distribution events from Liquity protocol smart contracts, specifically `RewardPaid` events from the Unipool contract and `LQTYPaidToDepositor` and `LQTYPaidToFrontEnd` events from the StabilityPool contract
- **Token metadata**: LQTY token information for decimal correction and address validation  
- **End-of-day price feeds**: Daily LQTY token price data for USD conversion
- **Protocol configuration**: Business classification mappings for categorizing different reward types

## 3. Step-by-step calculation

### Component A: Uniswap liquidity provider rewards
- **Purpose**: Captures LQTY rewards distributed to Uniswap liquidity providers
- **Logic**: Extracts `RewardPaid` events from the Liquity Unipool contract on Ethereum. These events are emitted when LQTY rewards are paid to users who provide liquidity to Uniswap pools. The reward amount is captured from the `reward` parameter of the event. Each event includes the block timestamp, transaction hash, and log index for precise tracking.
- **Key fields**: Block timestamp for daily aggregation, `reward` amount representing LQTY tokens distributed, transaction hash and log index for deduplication

### Component B: Stability pool depositor rewards  
- **Purpose**: Captures LQTY rewards distributed to users who deposit LUSD in the stability pool
- **Logic**: Extracts `LQTYPaidToDepositor` events from the Liquity StabilityPool contract on Ethereum. These events are emitted when LQTY rewards are distributed to users who deposit LUSD tokens in the protocol's stability pool to backstop the system. The reward amount is captured from the `_LQTY` parameter of the event.
- **Key fields**: Block timestamp for daily aggregation, `_LQTY` amount representing LQTY tokens distributed to depositors, event identification fields for tracking

### Component C: Frontend operator rewards
- **Purpose**: Captures LQTY rewards distributed to frontend operators who facilitate user interactions
- **Logic**: Extracts `LQTYPaidToFrontEnd` events from the Liquity StabilityPool contract on Ethereum. These events are emitted when LQTY rewards are distributed to frontend operators who provide user interfaces for interacting with the Liquity protocol. The reward amount is captured from the `_LQTY` parameter of the event.
- **Key fields**: Block timestamp for daily aggregation, `_LQTY` amount representing LQTY tokens distributed to frontend operators, transaction details for verification

### Final aggregation
- **Combining components**: All three reward streams are combined using a union operation, with each reward type labeled with its specific account name (Uniswap LP rewards, Stability Provider rewards, or Frontend Operator rewards). All rewards use the same LQTY token address and are classified under the Interest business line within the stablecoin issuers market sector.
- **Currency conversion**: Raw LQTY token amounts are converted to USD using end-of-day price feeds, with decimal correction applied based on the LQTY token's 18-decimal precision. The conversion uses the price at the end of each day to ensure consistent valuation across all reward distributions.
- **Time aggregation**: Event timestamps are truncated to daily boundaries, with all rewards within a calendar day aggregated together. This creates a daily time series of total token incentive spending.
- **Final calculation**: The final metric value represents the total USD value of LQTY tokens distributed as incentives on each day, combining all three reward categories. Missing days are filled with zero values to maintain a complete time series, and results are filtered based on chain availability settings to ensure data consistency.

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

Value of native tokens distributed as incentives.

LiquityLQTY

Token incentives

Token incentives

Competitive landscape

Chain breakdown