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

Spark is a non-custodial lending protocol built on Ethereum. Spark’s development team Phoenix Labs was founded in early 2023.

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

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Lending

Spark

SparkLend | Data breakdown

# Spark Active loans Methodology

## 1. Overview

Active loans measures the value of user deposits that are lent out to borrowers on SparkLend. The outstanding debt on which borrowers are required to pay interest is tracked, which is correlated with the ability of SparkLend to generate protocol revenue. By analyzing this metric, capital utilization and borrowing demand within the protocol are evaluated.

## 2. Data sources

- **Blockchain events**: `Mint` and `Burn` events from `VariableDebtToken` contracts, `ReserveDataUpdated` events from `Pool` contracts, and `ReserveFactorChanged` and `ReserveInitialized` events from `PoolConfigurator` contracts, covering Ethereum and Gnosis
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: SparkLend variable debt tracking

- **Purpose**: Track the scaled principal balance of variable debt assets
- **Logic**: `Mint` and `Burn` events from `VariableDebtToken` contracts are parsed to extract the minted or burned amounts, balance increases, and index values. For each event, a scaled principal amount is calculated. For mints, the difference between the minted amount and the balance increase is divided by the index value, which is normalized by its scale factor. For burns, the sum of the burned amount and the balance increase is divided by the index value, and the resulting value is negated. These scaled principal amounts are cumulatively summed over time to determine the running scaled principal balance for each `VariableDebtToken` contract.
- **Key fields**: `amount`, `balance_increase`, `index_value`

### Component B: SparkLend reserve state and index tracking

- **Purpose**: Track the variable borrow index and reserve factors for each lending market
- **Logic**: `ReserveDataUpdated` events from `Pool` contracts and `ReserveFactorChanged` and `ReserveInitialized` events from `PoolConfigurator` contracts are parsed to track the variable borrow index, liquidity index, and reserve factor for each market. These parameters are combined with the scaled principal balances into a unified timeline. The values are filled forward to establish a continuous state history for each lending market.
- **Key fields**: `variable_borrow_index`, `liquidity_index`, `reserve_factor`

### Component C: SparkLend active borrows calculation

- **Purpose**: Calculate the active borrow balance in native asset units
- **Logic**: The active borrow balance for each market is calculated by multiplying the scaled principal balance by the variable borrow index. The variable borrow index is normalized by the index decimal precision during this calculation.
- **Key fields**: `scaled_principal_balance`, `variable_borrow_index`

### Component D: USD conversion and aggregation

- **Purpose**: Normalize asset amounts and convert them to USD
- **Logic**: The active borrow balances are normalized by the decimal precision of the underlying asset using asset metadata. Daily changes in active loans are calculated as the difference between consecutive days. These daily deltas are aggregated by asset, chain, and product, and then cumulatively summed to reconstruct the daily active loans balance. Missing days are filled forward to ensure continuity. Finally, the active loan balances are multiplied by end-of-day asset prices to convert the values to USD.
- **Key fields**: `active_loans`, `price_usd`

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

Value of loans currently outstanding to borrowers.

SparkSPK

Active loans

Active loans

Competitive landscape

Chain breakdown