Lenders deposit funds into Moonwell and receive interest payments from borrowers (supply-side fees).

Moonwell is a non-custodial lending protocol built on multiple blockchains.

WELL tokenholders own and govern the protocol. They currently take a cut of the total interest + liquidation fees paid by borrowers (revenue).

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Moonwell

# Moonwell Earnings Methodology

## 1. Overview

Moonwell earnings represents the net profit generated by the Moonwell lending protocol, calculated as total revenue minus total expenses. This metric measures the protocol's financial performance by tracking interest income from borrowers, liquidation fees, and performance fees, then subtracting token incentive distributions paid to users. The calculation provides insight into the protocol's operational profitability and sustainability.

## 2. Data sources

The earnings calculation draws from multiple blockchain and external data sources:

- **Blockchain events**: Parsed `AccrueInterest` events from Base and Optimism CToken contracts tracking borrower interest payments, `LiquidateBorrow` events capturing liquidation activities, `ReservesAdded` events for performance fee tracking, and various parameter update events (`NewReserveFactor`, `NewProtocolSeizeShare`, `NewLiquidationIncentive`)
- **Token transfer data**: ERC20 `Transfer` events from Base and Optimism tracking reward token distributions from specific distributor addresses to market participants
- **State data**: Moonwell exchange rates showing CToken to underlying token conversion rates, market configurations linking CToken addresses to underlying tokens
- **External data**: End-of-day token price feeds for USD conversion, token metadata including decimal precision and symbols
- **Configuration data**: Hardcoded reward distributor addresses, fee splitter addresses, and market contract addresses used for data filtering

## 3. Step-by-step calculation

### Component A: Interest accrual revenue
- **Purpose**: Calculates protocol revenue from borrower interest payments using reserve factor splits
- **Logic**: Parses `AccrueInterest` events from Base and Optimism CToken contracts to capture `interestAccumulated` amounts representing total interest earned from borrowers. Joins with reserve factor dimensions to get the protocol's revenue share percentage. Multiplies interest amounts by reserve factors to determine protocol revenue (protocol gets reserve factor portion, suppliers get remainder). Adjusts for token decimal precision and aggregates by day and market
- **Key fields**: `interestAccumulated` from AccrueInterest events, `reserve_factor` from NewReserveFactor events, `token_address_decimals` for decimal adjustment

### Component B: Liquidation fee revenue  
- **Purpose**: Captures protocol revenue from liquidation penalty fees
- **Logic**: Processes `LiquidateBorrow` events to get `seizeTokens` amounts representing collateral seized during liquidations. Joins with liquidation incentive factors and protocol seize parameters to calculate the protocol's share of liquidation penalties. Uses exchange rates to convert seized CToken amounts to underlying token values. Calculates protocol revenue as seized amount × protocol seize mantissa × exchange rate. The remaining liquidation incentive goes to suppliers as fees
- **Key fields**: `seizeTokens` from LiquidateBorrow events, `liquidation_incentive_mantissa`, `protocol_seize_mantissa`, `exchange_rate` for CToken conversion

### Component C: Morpho performance fees
- **Purpose**: Tracks performance fees earned from Moonwell's integration with Morpho vaults
- **Logic**: Monitors `ReservesAdded` events where the `benefactor` address matches known Moonwell fee splitter addresses. These events represent performance fees earned from Morpho vault strategies that are added to Moonwell's reserves. Filters events by matching benefactor addresses against fee splitter dimension data. Adjusts amounts using token decimal precision to get normalized fee amounts
- **Key fields**: `addAmount` from ReservesAdded events, `benefactor` address for fee splitter matching, `token_address_decimals` for normalization

### Component D: Token incentive expenses
- **Purpose**: Calculates expenses from reward token distributions to users
- **Logic**: Tracks ERC20 `Transfer` events from specific reward distributor addresses to market participants. Monitors transfers of WELL and USDC tokens from hardcoded distributor addresses on Base and Optimism chains. These transfers represent incentives paid to users for lending, borrowing, or liquidity provision activities. Aggregates transfer amounts by day and converts to expenses using token decimal adjustments
- **Key fields**: `value` from Transfer events, `from_address` for distributor identification, `token_address` for reward token tracking

### Final aggregation
- **Combining components**: Unions all revenue streams (interest accruals, liquidation fees, Morpho performance fees) into a single revenue dataset, and uses token incentives as the expense dataset
- **Currency conversion**: Applies end-of-day token price feeds to convert all revenue and expense amounts from native tokens to USD values using the `convert_to_usd_and_correct_decimals` macro
- **Time aggregation**: Groups all data by daily timestamps using `timestamp_trunc(block_timestamp, day)` to align revenue and expense calculations
- **Final calculation**: Subtracts total daily expenses from total daily revenue using the `calculate_earnings` macro formula: earnings = revenue - expenses. Applies forward-fill logic to handle gaps in data and ensures consistent daily reporting

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

Net profit (also profits, net income, profitability) — revenue remaining after subtracting expenses.

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