# SparkLend Active loans Methodology

## 1. Overview

Active loans measures the value of user deposits that are lent out to borrowers. The portion of deposits on which borrowers pay interest is tracked, which correlates with the ability of SparkLend to generate protocol revenue. This metric is calculated specifically for SparkLend, the decentralized lending market within the Sky ecosystem.

## 2. Data sources

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

## 3. Step-by-step calculation

### Component A: Debt token mint and burn tracking

- **Purpose**: Track the changes in variable debt token balances.
- **Logic**: `Mint` and `Burn` events are parsed from `VariableDebtToken` contracts. For each event, the scaled principal amount is calculated. For mints, the scaled principal amount is computed as the difference between the minted amount and the balance increase, divided by the index value normalized by ray precision. For burns, it is computed as the negative sum of the burned amount and the balance increase, divided by the index value normalized by ray precision.
- **Key fields**: `amount`, `balance_increase`, `index_value`

### Component B: Scaled principal balance accumulation

- **Purpose**: Calculate the cumulative scaled principal balance over time.
- **Logic**: The scaled principal amounts from mints and burns are combined and aggregated chronologically. A running cumulative sum of these scaled principal amounts is calculated for each asset market to determine the historical scaled principal balance.
- **Key fields**: `scaled_principal_amount`, `scaled_principal_balance`

### Component C: Active borrows calculation

- **Purpose**: Calculate the active borrow balance by applying interest accrual.
- **Logic**: `ReserveDataUpdated` events from `Pool` contracts are parsed to extract the variable borrow index. The latest scaled principal balance and variable borrow index are filled forward for each block. The active borrow balance is calculated by multiplying the scaled principal balance by the variable borrow index, which is normalized by ray precision.
- **Key fields**: `scaled_principal_balance`, `variable_borrow_index`, `active_borrows`

### Component D: Daily delta and cumulative active loans aggregation

- **Purpose**: Aggregate active loans to a daily grain and convert to USD.
- **Logic**: The active borrow balance is normalized by the decimal precision of the underlying asset using asset metadata. The daily change in active loans is calculated as the difference between the current day's active loans and the previous day's active loans. These daily changes are summed, and a cumulative sum is calculated over time to reconstruct the active loans balance. Missing days are filled forward, and the final active loans balance is multiplied by end-of-day price feeds to convert the values to USD.
- **Key fields**: `active_loans`, `delta_active_loans`

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

Value of loans currently outstanding to borrowers.

Active loans

Lending

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).

SparkLend

Active loans

Active loans

Chain breakdown