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 Supply-side fees Methodology

## 1. Overview

Supply-side fees is defined as the share of interest and fees generated by Spark that is distributed to liquidity providers and depositors. Interest accrued by depositors on SparkLend, flash loan premiums, and the non-protocol portion of liquidation penalties are captured by this metric. To prevent double-counting, interest earned by the Spark Liquidity Layer on its own SparkLend deposits is netted out. Supply-side fees for Spark Liquidity Layer, Spark Savings, and Spark Curation are currently set to zero.

## 2. Data sources

- **Blockchain events**: `ReserveDataUpdated`, `FlashLoan`, and `LiquidationCall` events from `Pool` contracts, `Mint`, `Burn`, `BalanceTransfer`, and `Initialized` events from `spToken` contracts, `LiquidationProtocolFeeChanged` events from `LendingPoolConfigurator` contracts, `ReserveFactorChanged` and `ReserveInitialized` events from `PoolConfigurator` contracts, and ERC-20 `Transfer` events, covering Ethereum and Gnosis
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: SparkLend depositor interest accrual

- **Purpose**: Calculates the organic interest earned by depositors on SparkLend.
- **Logic**: Scaled principal balances are tracked over time using `Mint` and `Burn` events from `spToken` contracts. The liquidity index is tracked using `ReserveDataUpdated` events from `Pool` contracts. Interest accrued is calculated by multiplying the previous scaled principal balance by the change in the liquidity index, which is normalized by ray precision.
- **Key fields**: `block_timestamp`, `scaled_principal_balance`, `liquidity_index`

### Component B: Spark Liquidity Layer yield netting

- **Purpose**: Subtracts interest earned by Spark's own Spark Liquidity Layer to avoid double-counting.
- **Logic**: Spark Liquidity Layer accounts are identified using a predefined list of contract addresses. The `spToken` balances of these accounts are tracked using `Mint`, `Burn`, and `BalanceTransfer` events from `spToken` contracts. Supplier interest earned by these accounts is calculated using the change in the liquidity index from `ReserveDataUpdated` events. This interest is then subtracted from the total SparkLend depositor interest to prevent double-counting.
- **Key fields**: `block_timestamp`, `account_address`, `scaled_principal_balance`, `liquidity_index`

### Component C: SparkLend flash loan premiums

- **Purpose**: Captures fees paid to depositors from flash loan activity.
- **Logic**: Flash loan transactions are identified using `FlashLoan` events from `Pool` contracts. The premium amount is extracted directly from the event and added to the supply-side fees.
- **Key fields**: `block_timestamp`, `amount`

### Component D: SparkLend liquidation fee allocation

- **Purpose**: Calculates the portion of liquidation penalties distributed to the supply side.
- **Logic**: Liquidation events are identified using `LiquidationCall` events from `Pool` contracts. The corresponding deposit asset transfers from the liquidated user to the treasury are tracked using ERC-20 `Transfer` events. The liquidation protocol fee factor is retrieved from `LiquidationProtocolFeeChanged` events from `LendingPoolConfigurator` contracts. The total liquidation penalty is calculated by dividing the transferred treasury fee by the liquidation protocol fee factor. The supply-side portion of the liquidation fee is then determined by multiplying the total liquidation penalty by one minus the liquidation protocol fee factor.
- **Key fields**: `block_timestamp`, `amount`, `liquidation_factor`

### Component E: Spark Liquidity Layer, Spark Savings, and Spark Curation zero-allocation

- **Purpose**: Accounts for products where supply-side fees are not applicable or set to zero.
- **Logic**: Supply-side fees for Spark Liquidity Layer, Spark Savings, and Spark Curation are hardcoded to zero. This reflects that direct supply-side fees are not distributed to external depositors under the current protocol architecture for these products, or that only curator fees are booked for Spark Curation, resulting in no supply-side fee distribution.
- **Key fields**: `timestamp`, `fees_supply_side`

### Component F: USD conversion and aggregation

- **Purpose**: Normalizes all supply-side fee components to USD and aggregates them.
- **Logic**: All calculated asset amounts are normalized by their decimal precision using asset metadata. The normalized amounts are multiplied by end-of-day asset prices to convert them to USD. The daily values are aggregated across all products and chains using UTC day boundaries.
- **Key fields**: `timestamp`, `chain_id`, `product_id`, `fees_supply_side`

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

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

SparkSPK

Supply-side fees

Supply-side fees

Competitive landscape

Chain breakdown