Encyclopedia DeFi · Entry 152
Lending interest indexes: accruing balances without daily transfers
In this article
At a glance
Key facts
| Fact | Detail | Source |
|---|---|---|
| Supply | Aave’s cited implementation exposes normalized income through a liquidity index. | [1] |
| Debt | Variable debt uses a separate cumulative borrowing index. | [1] |
| Formula | The cited MathUtils uses linear interest and an approximation for compounded interest. | [2] |
Multiply a scaled balance by its index
Ignoring fixed-point scale and rounding, a scaled balance of 100 at an index of 1.02 corresponds to 102 underlying units. If the index later becomes 1.03, the balance reads as 103.
The actual contracts use large integer scale factors and specified rounding. The decimal example explains the relationship without reproducing every implementation detail.
Accrual does not require a payment transaction per holder
A balance query can incorporate the latest index even though no ordinary transfer event paid interest to that holder each second. State updates and normalized calculations handle the accumulated amount.
An explorer’s transfer list is therefore not always sufficient to reconstruct an interest-bearing token’s current balance.
Use the formula for the deployed version
This example cites aave-v3-core v1.19.3, an explicitly versioned implementation. It is not a claim that every present deployment uses identical math.
For a calculation at a block, record the reserve index, last update time, relevant rate and version. A dashboard APR alone may not reproduce the exact integer balance.
Direct answers
Questions people ask
Does interest appear only when someone sends me new tokens?
Not necessarily. An indexed token can calculate a growing balance from its stored scaled amount and a cumulative index, without a separate ordinary transfer for each accrual interval.
Inspect the evidence
The answer and key facts have stable claim links. These records retain the scope and qualification when reused.
A lending interest index accumulates a rate over time so a protocol can derive current balances from stored scaled balances. Supply and debt can use different indexes and formulas. The result depends on the implementation, elapsed time and rate changes; it is not a promise of a fixed annual return.
Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T18:15:18.493Z.
Link to this claimSupply: Aave’s cited implementation exposes normalized income through a liquidity index.
Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T18:15:18.493Z.
Link to this claimDebt: Variable debt uses a separate cumulative borrowing index.
Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T18:15:18.493Z.
Link to this claimFormula: The cited MathUtils uses linear interest and an approximation for compounded interest.
Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T18:15:18.493Z.
Link to this claimRevision history
- — First publication after primary-source research and independent automated verification.
Source register
Sources and references
Retrieval dates and locators are recorded individually.- Aave V3 ReserveLogicAave
Cumulative supply and borrow indexes update accounting over time.
Locator: getNormalizedIncome; getNormalizedDebt; updateState · Version / scope: aave-v3-core v1.19.3 · Retrieved: 2026-10-02T17:03:44.467ZOpen source - Aave V3 MathUtilsAave
Protocol-specific simple and approximated compounded interest calculations.
Locator: calculateLinearInterest; calculateCompoundedInterest · Version / scope: aave-v3-core v1.19.3 · Retrieved: 2026-10-02T17:03:44.337ZOpen source - TokenizationAave
Supply receipt and nontransferable debt accounting using interest indexes.
Locator: aToken; VariableDebtToken · Version / scope: Aave V3 documentation · Retrieved: 2026-10-02T17:03:44.686ZOpen source
Research and drafting use AI assistance. A separate automated review checks claims against primary sources; no external expert or named human review is implied. Publication, substantive editing, source retrieval and verification are recorded separately. This version was independently checked by an automated reviewer on 2 October 2026.
Editorial method and correctionsDegrees of Satoshi editorial project. “Lending interest indexes: accruing balances without daily transfers.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/money-market-interest-indexes/