Validators process transactions and receive fees from users (supply-side fees).

Algorand is a smart contract platform for decentralized applications (a blockchain). Algorand was founded by Silvio Micali and launched in 2018.

ALGO holders own and govern the protocol. They currently take a cut of the transaction fees paid by users (revenue). Algorand's investors include Union Square Ventures, Multicoin Capital, Pillar, etc.

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Algorand

# Algorand Expenses Methodology

## 1. Overview

Expenses measures the total cost Algorand incurs to operate its network and incentivize participation. These are comprised of asset incentives distributed to network participants, such as historical participation rewards, consensus rewards paid to block proposers, and governance rewards distributed by the Algorand Foundation. These expenses are represented as the economic cost of securing the network and driving ecosystem alignment, denominated in the native asset and converted to USD.

## 2. Data sources

- **Blockchain events**: `pay` transactions from governance pool addresses and block-level reward metrics, covering Algorand
- **External data**: End-of-day price feeds for the native asset

## 3. Step-by-step calculation

### Component A: Block-level reward extraction

- **Purpose**: Capture participation and consensus rewards distributed directly through block headers.
- **Logic**: Block data is parsed to extract rewards. Two non-overlapping eras of block rewards are captured: participation rewards via the `rewards_rate` field (active from 2019 to approximately April 2022) and consensus rewards via the `proposer_payout` field (active from 2025 onwards). These values are coalesced to zero and summed for each block to determine the total block-level incentives. Amounts are normalized by decimal precision to convert from micro-ALGO to the native asset.
- **Key fields**: `rewards_rate`, `proposer_payout`, `timestamp`

### Component B: Governance rewards extraction

- **Purpose**: Capture quarterly governance rewards distributed by the Algorand Foundation.
- **Logic**: Payment transactions of type `pay` are filtered from the transactions data. Only transactions sent from a predefined list of 14 explicit governance pool addresses (representing Periods 1 through 14, which wound down in April 2025) are included. To isolate the quarterly distribution events, transactions are restricted to a specific time window surrounding each period's distribution date, spanning from one day before to three days after the distribution date. The payment amounts are aggregated and normalized by decimal precision.
- **Key fields**: `sender`, `pay_receiver`, `amount`, `block_timestamp`

### Component C: Aggregation and USD conversion

- **Purpose**: Combine all incentive types and convert the total value to USD.
- **Logic**: Block-level rewards and governance rewards are combined and aggregated to daily UTC totals. The daily native asset amounts are multiplied by end-of-day price feeds to calculate the final expenses in USD.
- **Key fields**: `timestamp`, `token_incentives`, `price_usd`

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

Total project operating and incentive expenses.

AlgorandALGO

Expenses

Expenses

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