# APY methodology

## 1. Overview

APY measures the annualized yield accrued by holding a yield-bearing token. On-chain state is standardized into a yield index that captures yield accrual regardless of mechanism — whether the token grows in value against its underlying (e.g. ERC-4626 vaults) or rebases in quantity (e.g. stETH). A 7-day trailing window is used to annualize the growth of this index over time.

## 2. Data sources

- **EVM chain state reads**: `convertToAssets` functions from ERC-4626 contracts, `getReserveNormalizedIncome` functions from Aave contracts, `pricePerShare` functions from ERC-7540 contracts, and NAV feeds from oracle contracts, covering EVM-compatible chains (Ethereum, Arbitrum, Base, Polygon, Optimism, and others).
- **Asset metadata**: Token addresses and decimal precision.
- **External data**: End-of-day price feeds.

## 3. Step-by-step calculation

### Component A: Yield index extraction

- **Purpose**: Retrieve daily cumulative yield indices from on-chain sources.
- **Logic**: Daily yield indices are aggregated from contract state reads across supported chains. These indices represent the current exchange rate or internal value of a yield-bearing token in terms of its underlying asset. On EVM-compatible chains, data is retrieved from standard interfaces including ERC-4626 vaults, lending market reserve indices, and specialized share-price functions. Amounts are normalized by decimal precision.
- **Key fields**: `yield_index_normalized` (cumulative yield index), `token_address` (asset contract), `timestamp` (record time)

### Component B: Trailing yield annualization

- **Purpose**: Compute the annualized growth rate of the yield index.
- **Logic**: A 7-day trailing window is applied by comparing the current yield index to the index recorded seven days prior. The ratio of change between these two points is annualized to produce the APY.
- **Key fields**: `asset_apy` (calculated annualized yield)

### Component C: Cross-chain deduplication and final aggregation

- **Purpose**: Consolidate yield data into a single daily value per asset.
- **Logic**: Data is combined across all supported chains. For assets deployed on multiple networks, a representative APY is selected by identifying the value closest to the cross-chain median for that specific timestamp. This process ensures that deployment-specific spikes or stale data from less active chains are mitigated. The resulting value is mapped to the global asset identifier and recorded as the daily APY.
- **Key fields**: `asset_id` (unique asset identifier), `asset_apy` (final annualized yield)

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

Annualized yield that holding the token accrues relative to its underlying asset.

Asset APY

Lending token

Lenders can earn on Morpho using Morpho Vaults, noncustodial simple to use lending vaults that optimize yields for depositors. Borrowers can borrow any assets directly from Morpho Markets. Developers and businesses can use different parts of Morpho’s permissionless infrastructure to build any custom use case or application.

Morpho is an open, efficient, and resilient platform that allows anyone to earn yield and borrow assets. At the same time, developers or businesses can create markets, curate vaults, and build a range of applications on its flexible, immutable infrastructure.

MORPHO tokenholders own and govern the protocol. They currently do not take a cut of the interest and third-party token incentives earned by lenders (revenue). Morpho's investors include a16z, Coinbase Ventures, Semantic Ventures, etc.

KPK wARS Yield (Ethereum)KPK_wARS_Yield