Overcollateralized borrowers deposit funds into Sky and receive DAI stablecoin.

Sky is a non-custodial stablecoin protocol built on Ethereum. Sky (previously MakerDAO) was founded by Rune Christensen and launched in 2015.

SKY tokenholders own and govern the protocol. They currently take all of the total interest and PSM fees paid by borrowers (revenue). Sky’s investors include a16z, Polychain, IOSG Ventures, etc.

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Sky | Fees and revenues breakdown

# Sky Average fees per user (AFPU) Methodology

## 1. Overview

Average fees per user (AFPU) measures the average daily fees generated per active user on the Sky Protocol. It is calculated by dividing total daily fees by the number of active users (daily). Insights into the revenue efficiency per user are provided by this metric, which helps assess the protocol's ability to monetize its user base through various fee mechanisms including stability fees, liquidation penalties, and trading fees.

## 2. Data sources

- **Blockchain events**: `frob`, `grab`, `fold`, `move`, and `suck` function calls from `Vat` contracts, `drip` function calls from `Jug` contracts, `Bark` events from `Dog` contracts, `Bite` events from `Cat` contracts, `Fees` events from `D3MHub` contracts, `Toss` events from JAR contracts, and ERC-20 `Transfer` events for USDS, covering Ethereum
- **External data**: End-of-day price feeds for assets
- **Fees**: Derived from the Fees metric
- **Active users (daily)**: Derived from the Active users (daily) metric

## 3. Step-by-step calculation

### Component A: Stability fee calculation

- **Purpose**: Calculate interest accrued on outstanding vault debt through rate updates
- **Logic**: Rate changes per collateral type are tracked from stability rate updates. For each rate update, the cumulative debt outstanding before the update is calculated. The rate differential (new rate minus old rate) is applied to the pre-update debt balance to determine interest accrued. Core lending revenue is captured as stability fees are paid by borrowers on their outstanding DAI/USDS debt positions.
- **Key fields**: `rate` (stability rate per collateral), `dart` (debt change amount), `ilk` (collateral type identifier)

### Component B: Liquidation fee calculation

- **Purpose**: Calculate net liquidation penalties retained by the protocol
- **Logic**: Seized liquidations (collateral value captured by the system) are combined with settled liquidations (debt amounts sent to auction). Seized liquidations are identified as DAI/USDS flows to the balance sheet address from vault liquidations, while system accounts, treasury operations, and configuration changes are excluded. Debt amounts pushed to auction through liquidation events are represented as settled liquidations. The seized value is netted against settled debt to determine liquidation penalties retained.
- **Key fields**: `amount` (DAI/USDS flow amounts), destination and source addresses, auction debt amounts from liquidation events

### Component C: PSM trading fee calculation

- **Purpose**: Capture fees from stablecoin conversions through Peg Stability Modules
- **Logic**: PSM collateral interactions are identified through vault modifications where the collateral type name contains 'PSM-'. DAI/USDS flows from PSM accounts to the balance sheet are tracked during these transactions to capture trading fees collected on stablecoin conversions.
- **Key fields**: `collateral_id` (PSM collateral identifiers), `amount` (fee amounts)

### Component D: D3M and RWA interest calculation

- **Purpose**: Include specialized interest revenue from Direct Deposit Modules and Real World Assets
- **Logic**: D3M interest is captured from fee events in the `D3MHub` contract tracking interest earned on deposits to external protocols like Aave. RWA interest is identified from manual `Toss` events that distribute Real World Asset yields. Additional yield sources beyond traditional vault stability fees are represented by these components.
- **Key fields**: `amount` (interest amounts), `collateral_id` (D3M/RWA collateral types)

### Component E: Sky Stars settlement interest

- **Purpose**: Calculate interest from manual Sky Stars settlement cycles
- **Logic**: Manual debt modifications are tracked through `grab` function calls for specific Sky Stars collateral types (ALLOCATOR-SPARK-A, ALLOCATOR-BLOOM-A, and ALLOCATOR-OBEX-A). These modifications are combined with rate updates from `drip` function calls to calculate interest accrued during settlement periods. Net revenue retained by the protocol is determined by reconciling ERC-20 USDS transfers involving allocator subproxy addresses. An adjustment is also applied to account for Spark's share of interest accrued prior to the settlement cycle.
- **Key fields**: `dart` (debt increase), `rate` (current stability rate), `collateral_id` (Sky Stars collateral identifiers)

### Component F: daily active user identification

- **Purpose**: Count unique users interacting with the protocol daily
- **Logic**: Users are identified from vault modification transactions and categorized based on debt and collateral changes. Debt increases (`dart` > 0) are attributed to borrowers, debt decreases (`dart` < 0) to repayers, collateral additions (`dink` > 0) to depositors, and collateral removals (`dink` < 0) to withdrawers. PSM traders who interact with PSM collaterals are also included. Transaction sender addresses are used as user identifiers. PSM collaterals are excluded from lending user categories but included for trading users.
- **Key fields**: `dart` (debt change), `dink` (collateral change), `from_address` (user address)

### Final aggregation

- **Purpose**: Combine components to calculate the final AFPU metric
- **Logic**: All fee components (stability fees, liquidation fees, PSM fees, D3M interest, RWA interest, and Sky Stars settlement interest) are summed daily. Native token amounts are normalized by decimal precision and converted to USD using end-of-day price feeds. DAI is used for valuations before December 1, 2024, and USDS is used thereafter. Total daily fee revenue is divided by the count of distinct active users (daily) to produce the final AFPU value. Missing days are filled with zero values to maintain a complete time series.

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

SkySKY

Average fees per user (AFPU)

Average fees per user (AFPU)

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