# SparkLend Total value locked Methodology

## 1. Overview

Total value locked (TVL) for SparkLend is defined as the total USD value of assets deposited into the SparkLend protocol. It is utilized as a primary indicator of the protocol's liquidity, lending capacity, and overall utilization. The metric is calculated as the sum of idle deposits remaining in the lending pools and active loans currently borrowed by users. This methodology is focused specifically on SparkLend, the core decentralized lending market of the Spark protocol.

## 2. Data sources

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

## 3. Step-by-step calculation

### Component A: Idle deposits tracking

- **Purpose**: Calculate the net idle assets remaining in SparkLend pools
- **Logic**: ERC-20 asset transfers to and from SparkLend deposit asset addresses are tracked. Inflows are captured when underlying assets are transferred to the deposit asset address, and outflows are captured when underlying assets are transferred from the deposit asset address. These daily inflows and outflows are aggregated, and a cumulative sum of net flows is calculated over time to determine the total idle deposits for each asset.
- **Key fields**: `block_timestamp`, `token_address`, `amount`, `to_address`, `from_address`

### Component B: Active loans tracking

- **Purpose**: Calculate the outstanding principal and accrued interest of active borrows
- **Logic**: `Mint` and `Burn` events from `VariableDebtToken` contracts are parsed to track changes in borrow balances. The raw mint and burn amounts are adjusted by the balance increase and scaled using the index value at the time of the transaction to calculate the scaled principal balance. Specifically, for mints, the difference between the mint amount and the balance increase is divided by the index value normalized by its precision. For burns, the sum of the burn amount and the balance increase is divided by the index value normalized by its precision and treated as a negative value. These scaled principal amounts are cumulatively summed over time. To determine the active borrow balance, the cumulative scaled principal balance is multiplied by the latest variable borrow index, which is updated via `ReserveDataUpdated` events from `Pool` contracts.
- **Key fields**: `block_timestamp`, `amount`, `balance_increase`, `index_value`, `variable_borrow_index`

### Component C: USD conversion and aggregation

- **Purpose**: Normalize asset balances to USD and aggregate to calculate total TVL
- **Logic**: The daily idle deposits and active loans are combined to establish the total asset balances for each market. These balances are normalized by the decimal precision of each respective asset. The normalized balances are then multiplied by end-of-day asset prices to convert the values to USD. Finally, the USD values are aggregated across all markets and chains to produce the daily Total Value Locked (TVL) for SparkLend, with forward-filling applied to handle any days without activity.
- **Key fields**: `timestamp`, `chain_id`, `product_id`, `token_address`, `tvl`

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

Total value locked (TVL)

Total value locked (TVL) — value deposited into the project's applications.

Total value locked

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

Total value locked

Total value locked

Chain breakdown