# Spark Liquidity Layer Capital deployed Methodology

## 1. Overview

Capital deployed is measured as the total value of assets actively allocated into yield-generating investments by Spark Liquidity Layer. This metric is utilized to evaluate the efficiency of the protocol's asset management and its capacity to generate revenue from deployed capital. Sourced from both Sky and user deposits, capital is routed into various external venues, including SparkLend, Aave V3, Morpho, and Uniswap V4. Assets that remain idle, such as buffers in the Spark Savings V2 vaults, or are held in the protocol's native SPK asset, are excluded from this measurement.

## 2. Data sources

- **Blockchain events**: ERC-20 token transfers, `Mint`, `Burn`, and `BalanceTransfer` events from `AToken` and `spToken` contracts, and `ReserveDataUpdated` events from `LendingPool` and `Pool` contracts, covering Ethereum, Arbitrum, Base, Optimism, and 11 other chains
- **External data**: End-of-day price feeds for assets, asset metadata, and reported balance sheet data for off-chain positions

## 3. Step-by-step calculation

### Component A: On-chain balance tracking

- **Purpose**: Raw asset balances held by Spark Liquidity Layer accounts are tracked.
- **Logic**: ERC-20 token transfers to and from Spark Liquidity Layer accounts (such as the ALM Proxy, Morpho D3M, and PSM3 contracts) are aggregated to calculate daily running balances. Native SPK assets are excluded from these balances.
- **Key fields**: `block_timestamp`, `amount`, `token_address`

### Component B: SparkLend and Aave V3 deposit tracking

- **Purpose**: Active deposits in SparkLend and Aave V3 are calculated.
- **Logic**: `Mint`, `Burn`, and `BalanceTransfer` events from `AToken` and `spToken` contracts are parsed to track scaled principal balances. These principal balances are multiplied by the liquidity index (normalized by decimal precision), which is updated via `ReserveDataUpdated` events from `LendingPool` and `Pool` contracts, to determine the actual active deposit balances.
- **Key fields**: `amount`, `index_value`, `balance_increase`

### Component C: Ethena cooldown and reported positions integration

- **Purpose**: Off-chain reported positions and Ethena cooldown balances are incorporated.
- **Logic**: Ethena cooldown balances are extracted from state tables. Off-chain reported positions (such as loans to Anchorage and Uniswap V4 liquidity) are integrated using reported balance sheet data. Idle buffers, such as those in the Spark Savings V2 vaults, are explicitly excluded from the deployed capital calculation.
- **Key fields**: `amount`, `total_assets_usds_equivalent_balance`

### Component D: SparkLend idle capital adjustment

- **Purpose**: The undeployed (unborrowed) portion of SparkLend deposits is deducted.
- **Logic**: For partially deployed markets (specifically USDS and DAI on Ethereum), the market utilization rate is calculated as total market borrows divided by total market deposits. The undeployed portion of SparkLend deposits is calculated as `active_deposits * (1 - utilization)`. This idle capital is subtracted from the total capital deployed.
- **Key fields**: `active_deposits`, `active_borrows`, `utilization`

### Component E: Reported allocations adjustment

- **Purpose**: Capital deployed is adjusted for venues where positions are counted as only partially deployed.
- **Logic**: For specific reported allocations (such as Aave, Curve, and Morpho vaults), the on-chain balances are replaced with Spark's reported allocated balances. The daily change in these allocated balances is calculated and integrated into the net capital deployed.
- **Key fields**: `allocated_assets_balance`, `total_assets_usds_equivalent_balance`

### Component F: USD conversion and forward-filling

- **Purpose**: Capital deployed values are normalized to USD and daily continuity is ensured.
- **Logic**: Daily changes in capital deployed from all components are summed. The cumulative capital deployed is calculated by a running sum over time. Missing days are forward-filled to ensure daily continuity. Non-USD denominated assets are converted to USD using end-of-day price feeds, while USD-pegged assets are kept at their nominal value.
- **Key fields**: `capital_deployed`, `price_usd`

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

Value of capital allocated into investments by an asset manager.

Capital deployed

Asset management

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).

Spark Liquidity Layer

Capital deployed

Capital deployed

Chain breakdown