# Spark Liquidity Layer Operating expenses Methodology

## 1. Overview

Operating expenses for Spark Liquidity Layer are measured as the total onchain expenses incurred by the protocol, excluding token incentives. These expenses are comprised of realized losses from swap activities and promotional yield boost costs. Realized swap losses are incurred during rebalancing or trading operations on external liquidity venues, including Curve and Uniswap. Yield boost costs are generated from payments made to external venues, such as CoinEx, to enhance yield for users.

## 2. Data sources

- **Reported data**: Daily accounting snapshots of Spark Liquidity Layer performance, covering Ethereum, Base, and Avalanche

## 3. Step-by-step calculation

### Component A: Swap loss extraction

- **Purpose**: Identify and extract realized losses from swap operations
- **Logic**: Daily accounting records are filtered to isolate swap operations. Realized losses are identified where the reported net revenue is negative. These negative revenue values are inverted to represent positive operating expenses.
- **Key fields**: `timestamp` (timing), `protocol_token` (asset and venue identification), `revenue` (financial values)

### Component B: Yield boost cost extraction

- **Purpose**: Identify and extract promotional yield boost costs paid to external venues
- **Logic**: Daily accounting records are filtered to isolate boost cost operations. Boost costs are identified where the reported net revenue is non-zero. These negative net values are inverted to represent positive operating expenses.
- **Key fields**: `timestamp` (timing), `protocol_token` (asset and venue identification), `revenue` (financial values)

### Component C: Chain attribution and aggregation

- **Purpose**: Attribute expenses to the correct blockchain and aggregate daily totals
- **Logic**: Expenses are mapped to specific chains based on the protocol token suffix, where suffixes indicating Base or Avalanche attribute the expense to those respective chains, and all other records default to Ethereum. The extracted swap losses and boost costs are then summed by day, chain, and product. Since the values are already denominated in USD, price conversion is bypassed. Daily values are finalized with zero-filling for days without activity.
- **Key fields**: `chain_id` (blockchain identification), `product_id` (product identification), `operating_expenses` (final expense values)

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

Total operating expenses borne by the protocol, excluding token incentives.

Operating expenses

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

Operating expenses

Operating expenses

Chain breakdown