# Spark Liquidity Layer Fees Methodology

## 1. Overview

Fees measures the total economic value generated by Spark Liquidity Layer. Gross yield is generated from deployed capital across various external venues, and on-chain interest is earned from deposits allocated to SparkLend. Additionally, positive net gains from asset swaps on Curve and Uniswap are captured as fees. These components are aggregated to represent the total revenue-generating capacity of the asset management protocol.

## 2. Data sources

- **Blockchain events**: `Mint`, `Burn`, and `BalanceTransfer` events from `spToken` contracts, `ReserveDataUpdated` events from `Pool` contracts, and `ReserveFactorChanged` and `ReserveInitialized` events from `PoolConfigurator` contracts, covering Ethereum and Gnosis
- **Reported data**: Daily accounting snapshots of Spark Liquidity Layer actual revenue and swap performance, covering Ethereum, Avalanche, and Base
- **External data**: End-of-day price feeds for deployed and deposited assets

## 3. Step-by-step calculation

### Component A: SparkLend on-chain yield calculation

- **Purpose**: Calculate the on-chain interest earned by Spark Liquidity Layer from its deposits in SparkLend
- **Logic**: Balance changes for Spark Liquidity Layer accounts are tracked by aggregating `Mint`, `Burn`, and `BalanceTransfer` events from `spToken` contracts. These balances are scaled using the liquidity index extracted from `ReserveDataUpdated` events from `Pool` contracts. Supplier interest is calculated by applying the change in the liquidity index to the scaled principal balance held prior to each update. This interest is then grossed up by the reserve factor, which is tracked via `ReserveFactorChanged` and `ReserveInitialized` events from `PoolConfigurator` contracts, to determine the gross interest earned. PYUSD deposits are excluded from this calculation, as they are accounted for via reported data.
- **Key fields**: `scaled_principal_balance`, `liquidity_index`, `reserve_factor`, `interest`

### Component B: Spark Liquidity Layer reported yield on deployed capital

- **Purpose**: Capture the gross yield generated by Spark Liquidity Layer on its deployed capital across external venues
- **Logic**: Daily gross yield values are extracted from off-chain daily accounting reports. To prevent double-counting, any yield generated from SparkLend deposits is excluded, with the exception of PYUSD deposits. Additionally, any yield generated from allocations held on behalf of Sky is excluded.
- **Key fields**: `gross_yield_usd`, `protocol_token`, `is_held_for_sky`

### Component C: Spark Liquidity Layer swap profit and loss tracking

- **Purpose**: Capture positive net gains from swap operations executed by Spark Liquidity Layer
- **Logic**: Realized swap results on Curve and Uniswap are extracted from daily accounting reports. Only positive net daily revenues (gains) are classified as fees, while negative daily revenues (losses) are excluded from this metric.
- **Key fields**: `spark_revenue_usd`, `is_swap_pnl`

### Component D: USD conversion and final aggregation

- **Purpose**: Normalize all fee components to USD and aggregate them
- **Logic**: On-chain interest amounts are normalized by decimal precision and multiplied by end-of-day asset prices. Reported yield and swap gains, which are already denominated in USD, are mapped directly. All components are summed by day and chain to produce the final daily fees metric.
- **Key fields**: `fees`, `price_usd`, `timestamp`

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

Total value users pay to use a protocol (gross fees, user-paid fees).

Fees

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

Fees

Fees

Chain breakdown