Simple example: mint & balanceOf

AToken::balanceOf returns:

super.balanceOf(userAddress) * POOL.getReserveNormalisedIncome(_underlyingAsset)

AToken employs a unit increase model

• deposit 1 DAI -> user receives 1 aDAI

• interest is accumulated over time

• user's aDAI balance increases, reflecting incrementing interest

  • 1 aDAI -> 1.5 aDAI

• user redeems aTokens 1:1 with underlying

  • can redeem 1.5 DAI

On deposit/supply:

User's deposit is recorded as "scaledBalance":

$scaledBalance = \frac{amountDeposited}{currentLiquidityIndex}$

scaledBalance is the actual value stored on-chain, within _userState[userAddress].balance.

All deposits are scaled against the liqudity index and stored as scaled values via _userState[userAddress].balance

Example

mint

The user is minted aTokens according to the scaledBalance, not the deposit value.

• however, balanceOf is calculated by scaling up the scaledBalance against the incrementing liquidity index.

• this is why, from the end-user's perspective it looks like they have minted aToken 1:1 to their deposits, and

• their aToken balance continually increments over time - because the liquidity index increments

AToken balance

aTokenBalance = scaledBalance * currLiquidityIndex

• LiquidityIndex only increments

• An account's aTokenBalance can never go down, unless a withdrawal occurs

Simplified illustration:

super.balanceOf(userAddress) * POOL.getReserveNormalisedIncome(_underlyingAsset)

_userState[userAddress].balance * reserve.LiquidityIndex

scaledBalance * currLiquidityIndex

Links

• https://medium.com/coinmonks/how-aave-hacked-the-erc-20-token-in-the-most-beautiful-way-3e04fb4410fb

• https://mirror.xyz/freesuton.eth/EagGvVQZtLhsnnsTTwhHA6VwekMbImMmvniSWAm6SNg