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Prime Numbers

# Prime Numbers Supply-side fees Methodology

## 1. Overview

Supply-side fees represent the interest payments made to liquidity providers (lenders) in the PrimeFi Lending lending protocol. This metric measures the portion of total interest revenue that flows to users who supply assets to lending pools, calculated by splitting total interest payments based on configurable reserve factors. The calculation follows the AAVE v2 pattern where fees are identified through aToken treasury mints and then allocated between the protocol (reserve factor portion) and suppliers (remaining portion).

## 2. Data sources

- **XDC blockchain token transfer events**: Parsed `Transfer` events showing aToken mints from null address to treasury
- **PrimeFi Lending lending pool configuration events**: `ReserveFactorChanged` events from `LendingPoolConfigurator` contracts that set fee split ratios
- **PrimeFi Lending market initialization events**: `ReserveInitialized` events that define lending markets and associated token addresses
- **End-of-day token price feeds**: USD pricing data for converting fees to dollar values
- **Token metadata**: Decimal precision information for proper token amount calculations

## 3. Step-by-step calculation

### Component A: Fee transfer identification
- **Purpose**: Identify interest payments captured by the protocol treasury
- **Logic**: Extract token transfer events on XDC where aTokens are minted from the null address to the PrimeFi Lending treasury address. These mints represent the protocol's share of interest payments. Filter transfers to only include aToken addresses that are part of defined PrimeFi Lending lending markets. Each transfer record includes the aToken address, mint amount, timestamp, and transaction details.
- **Key fields**: `token_address` (aToken), `value` (minted amount), `block_timestamp`, `transaction_hash`

### Component B: Market definition and token mapping
- **Purpose**: Map aTokens to their underlying assets and market parameters
- **Logic**: Use market initialization events to create a mapping between aToken addresses, underlying token addresses, and other market tokens (stable debt tokens, variable debt tokens). This mapping connects fee transfers to specific lending markets and enables proper categorization of fees by underlying asset type.
- **Key fields**: `atoken_address`, `underlying_token_address`, `pool_address`, `stoken_address`, `vtoken_address`

### Component C: Reserve factor management
- **Purpose**: Determine the fee split ratio between protocol and suppliers
- **Logic**: Process reserve factor configuration events that set the percentage of interest retained by the protocol versus paid to suppliers. Extract daily reserve factor values from `ReserveFactorChanged` events, converting from basis points (10000 = 100%) to decimal format. For days without specific events, fill forward the most recent factor value. When no factor has been set for a market, default to 10% (0.10) reserve factor.
- **Key fields**: `reserve_factor` (decimal percentage), `token_address`, `timestamp`

### Component D: Interest split calculation
- **Purpose**: Calculate the supplier portion of total interest payments
- **Logic**: For each fee transfer, apply the reserve factor split calculation. The total interest generated is calculated by dividing the treasury mint amount by the reserve factor, representing the gross interest before the protocol takes its share. The supplier fee is then calculated as the total interest minus the protocol's reserve portion: `fees_supply_side = (fee_amount / reserve_factor) × (1 - reserve_factor)`. This formula ensures suppliers receive the intended percentage of total interest generated.
- **Key fields**: `fees_supply_side` (calculated supplier share), `amount` (treasury mint), `reserve_factor`

### Component E: Daily aggregation and decimal correction
- **Purpose**: Aggregate fees by day and normalize token amounts
- **Logic**: Group calculated supply-side fees by day, chain, product, and token address. Sum all fee amounts within each group to get total daily fees per token. Apply decimal correction using token metadata to ensure amounts are properly normalized to standard decimal precision, accounting for different token implementations.
- **Key fields**: `timestamp` (daily), `chain_id`, `product_id`, `token_address`, `fees_supply_side`

### Final aggregation
- **Combining components**: Daily fee amounts are aggregated across all tokens and markets within the PrimeFi Lending protocol
- **Currency conversion**: Special token address mapping is applied where psXDC token addresses are mapped to WXDC for price lookup purposes, ensuring accurate USD conversion. Fees are converted to USD using end-of-day token price feeds
- **Time aggregation**: Daily boundary logic groups fees by calendar day, with all transactions within a day contributing to that day's total
- **Final calculation**: The metric represents the total USD value of interest payments made to liquidity providers each day, calculated as the sum of all supply-side fee amounts converted to USD across all lending markets in the PrimeFi Lending protocol

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

Portion of fees distributed to service providers or supply-side participants.

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