# Morpho Optimizers Fees Methodology

## 1. Overview

Fees are defined as the total economic value paid by users to interact with Morpho Optimizers. Interest paid by borrowers, interest accrued by suppliers, and third-party marketplace incentives earned by the protocol are captured by this metric. The efficiency of underlying lending pools, such as Aave and Compound, is enhanced by Morpho Optimizers through matching suppliers and borrowers peer-to-peer (P2P) when possible, or falling back to the underlying pools when unmatched. These fees are tracked to assess the overall economic activity and value capture of the Morpho Optimizers product.

## 2. Data sources

- **Blockchain events**: `ReserveDataUpdated` events from `LendingPool` contracts; `Mint`, `Burn`, and `BalanceTransfer` events from `AToken` contracts; `DistributedBorrowerComp` and `DistributedSupplierComp` events from Compound `Comptroller` contracts; `IndexesUpdated` and `P2PTotalsUpdated` events from `AaveV3Morpho` contracts; `P2PIndexesUpdated` events from `AaveInterestRatesManager` and `InterestRatesManager` contracts; `P2PAmountsUpdated`, `Supplied`, and `SupplierPositionUpdated` events from `EntryPositionsManager` and `PositionsManager` contracts; and `Withdrawn` events from `ExitPositionsManager` and `PositionsManager` contracts, covering Ethereum
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Aave V3 Optimizer interest accrual

- **Purpose**: To calculate interest accrued on deposits in the Aave V3 Optimizer.
- **Logic**: Deposit and withdrawal activity is tracked using `Mint`, `Burn`, and `BalanceTransfer` events from `AToken` contracts to calculate the scaled principal balance of the Morpho contract over time. Reserve updates are tracked using `ReserveDataUpdated` events from `LendingPool` contracts to obtain the liquidity index. The interest accrued is calculated by multiplying the previous scaled principal balance by the change in the liquidity index between updates.
- **Key fields**: `amount`, `balance_increase`, `index_value`, `block_timestamp`

### Component B: Peer-to-Peer (P2P) interest calculation

- **Purpose**: To calculate interest generated from peer-to-peer matched positions across Aave V2, Aave V3, and Compound Optimizers.
- **Logic**: Outstanding P2P supply balances are tracked using `P2PTotalsUpdated` events from `AaveV3Morpho` contracts and `P2PAmountsUpdated` events from `EntryPositionsManager` and `PositionsManager` contracts. Index updates are tracked using `IndexesUpdated` events from `AaveV3Morpho` contracts and `P2PIndexesUpdated` events from `AaveInterestRatesManager` and `InterestRatesManager` contracts to calculate daily changes in the P2P borrow index. Daily interest is calculated by multiplying the outstanding P2P supply balances by the daily change in the P2P borrow index.
- **Key fields**: `amount`, `p2p_borrow_index`, `block_timestamp`

### Component C: Pool-based interest calculation

- **Purpose**: To calculate interest generated from unmatched positions that fall back to the underlying lending pools (Aave V2 and Compound).
- **Logic**: Outstanding pool supply balances are tracked using `Supplied`, `Withdrawn`, and `SupplierPositionUpdated` events from `EntryPositionsManager`, `ExitPositionsManager`, and `PositionsManager` contracts. Daily changes in the pool supply index are calculated from `IndexesUpdated` and `P2PIndexesUpdated` events. Daily interest is calculated by multiplying the outstanding pool supply balances by the daily change in the pool supply index.
- **Key fields**: `amount`, `pool_supply_index`, `block_timestamp`

### Component D: Compound incentive rewards

- **Purpose**: To capture third-party COMP rewards distributed to the Compound Optimizer.
- **Logic**: COMP reward distributions are tracked using `DistributedBorrowerComp` and `DistributedSupplierComp` events from Compound `Comptroller` contracts. These rewards are aggregated as incentive fees earned by the protocol.
- **Key fields**: `amount`, `block_timestamp`

### Component E: Normalization and USD conversion

- **Purpose**: To normalize fee amounts and convert them to USD.
- **Logic**: All calculated interest and incentive amounts are normalized by their respective asset decimal precisions. The normalized amounts are multiplied by end-of-day asset prices to convert them to USD. The values are aggregated daily using UTC day boundaries.
- **Key fields**: `fees`, `price_usd`, `timestamp`

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

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

Fees

Lending

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.

Morpho Optimizers

Fees

Fees

Chain breakdown