Liquidity providers deposit funds to the lending pool and receive a portion of the interest (supply-side fees).

TrueFi is a non-custodial lending protocol built on Ethereum offering undercollateralized loans for verified borrowers. TrueFi was founded by Rafael Cosman and launched in 2020.

TRU tokenholders own and govern the protocol. They currently take a cut of the interest and an origination fee (revenue). TrueFi’s investors include a16z, BlockTower Capital, Alameda Research etc.

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TrueFi

# TrueFi Earnings Methodology

## 1. Overview

Earnings represents TrueFi's net profit calculated as total revenue minus total expenses. Revenue comes from lending fees across three protocol versions (v1, v2, v3), while expenses consist of token incentives distributed to users. This metric measures the protocol's financial performance by capturing the difference between income generated from lending operations and costs incurred through reward programs.

## 2. Data sources

The calculation uses the following raw data sources:
- **TrueFi smart contract events**: Parsed events from TrueFi v1, v2, and v3 contracts on Ethereum including `Borrow`, `Settled`, `Liquidated`, `BulletLoanCreated`, `ManagerFeeChanged`, and `PortfolioCreated` events
- **Token transfer records**: Ethereum token transfer events to determine actual loan amounts and validate transactions
- **TRU token distribution events**: Parsed `Distributed` events from the LinearTrueDistributor contract capturing token incentive payments
- **End-of-day token price feeds**: Daily price data for converting token amounts to USD values
- **Token metadata**: Token decimals and symbol information for proper amount formatting

## 3. Step-by-step calculation

### Component A: Revenue calculation

#### V1 lending fees
- **Purpose**: Captures origination fees from TrueFi v1 lending pools
- **Logic**: Extracts fees directly from `Borrow` events on v1 pool contracts. Joins with token transfer events to validate transactions and ensure only legitimate borrows from known v1 market addresses are included. Filters to events before v2 launch date (2021-05-29) to avoid double-counting
- **Key fields**: Uses `fee` field from borrow events, `token_address` from transfers, and `block_timestamp` for daily aggregation

#### V2 interest revenue
- **Purpose**: Calculates protocol's share of interest earned on v2 loans
- **Logic**: Identifies loan principals from `fund_function` calls joined with token transfers to lending contracts. Matches these with loan settlements from `Settled` events to calculate total repayment amounts. Excludes liquidated loans from interest calculation. Computes interest as repayment minus principal, then takes 10% as protocol share
- **Key fields**: Uses `returnedAmount` from settlement events, loan token addresses from funding calls, and validates against liquidation events

#### V3 lending fees  
- **Purpose**: Combines protocol origination fees and manager fees for v3 portfolios
- **Logic**: Processes `BulletLoanCreated` events to capture loan details including principal, duration, and portfolio. Calculates protocol origination fee as 0.5% annually applied over loan duration. Determines manager fee using either initial portfolio rate or updated rates from `ManagerFeeChanged` events. Joins with portfolio creation events to get token addresses and initial fee rates
- **Key fields**: Uses `principalAmount`, `loanDuration`, manager fee rates, and portfolio token addresses for fee calculations

### Component B: Expenses calculation

- **Purpose**: Captures token incentives distributed to protocol users
- **Logic**: Processes `Distributed` events from the LinearTrueDistributor contract on Ethereum. These events represent TRU token rewards paid to users through various incentive programs. Uses hardcoded TRU token address to identify distribution amounts
- **Key fields**: Uses `amount` field from distribution events and TRU token address '0x4c19596f5aaff459fa38b0f7ed92f11ae6543784'

### Final aggregation

- **Combining components**: Revenue is summed across all three protocol versions (v1 fees + v2 interest share + v3 fees). Expenses consist solely of token incentive distributions. Both are aggregated daily by timestamp
- **Currency conversion**: All token amounts are converted to USD using end-of-day price feeds. Token decimals are corrected before conversion to ensure proper scaling
- **Time aggregation**: Events are grouped by day using `timestamp_trunc` function. Missing days are forward-filled with zeros to ensure complete time series
- **Final calculation**: Daily earnings equals daily revenue minus daily expenses, with both components expressed in USD

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

Net profit (also profits, net income, profitability) — revenue remaining after subtracting expenses.

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