Arbitrum One batches users' transactions and submits them to Ethereum, paying a share of the transaction fees to Ethereum validators (expense).

Arbitrum One is an L2 smart contract platform for decentralized applications on Ethereum. Arbitrum was founded by Offchain Labs and launched in 2021.

ARB tokenholders own and govern the protocol. They currently run the only sequencer and take a cut of the total transaction fees paid by users (revenue). Arbitrum’s investors include Polychain, Alameda Research, Coinbase Ventures, etc.

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Arbitrum One

# Arbitrum One Earnings Methodology

## 1. Overview

Earnings is calculated as the net value retained by Arbitrum One after all expenses are subtracted from revenue. Revenue is generated from Layer 2 (L2) transaction gas fees, Timeboost auction fees, and licensing fees from the Arbitrum Expansion Program. Expenses are comprised of Layer 1 (L1) settlement fees paid to Ethereum for batch posting and state validation, while token incentives are set to zero. On-chain profitability is represented by this metric, which compares user-paid fees against the cost of securing and settling transactions on the base layer.

## 2. Data sources

- **Blockchain events**: Transactions on Arbitrum and Ethereum, `AuctionResolved` events from `ExpressLaneAuction` contracts on Arbitrum, and native asset flows on Robinhood Chain, covering Ethereum, Arbitrum, and Robinhood Chain
- **External data**: End-of-day price feeds for native gas assets

## 3. Step-by-step calculation

### Component A: L2 gas fee extraction

- **Purpose**: Capture transaction fees paid by users on Arbitrum One
- **Logic**: Transactions on Arbitrum are parsed to extract gas used and effective gas price. L2 gas fees are calculated by multiplying gas used by the effective gas price, and the resulting amounts are normalized by decimal precision.
- **Key fields**: `gas_used`, `gas_price`

### Component B: Timeboost fee extraction

- **Purpose**: Capture revenue generated from Timeboost transaction ordering auctions
- **Logic**: `AuctionResolved` events from `ExpressLaneAuction` contracts on Arbitrum are parsed. The auction price is extracted from the event parameters and normalized by decimal precision to determine the timeboost fee.
- **Key fields**: `timeboost_fee`

### Component C: Arbitrum Expansion Program license fee calculation

- **Purpose**: Capture licensing revenue from participating chains in the Arbitrum Expansion Program
- **Logic**: Native asset flows on Robinhood Chain are filtered for specific reward distributor accounts. Net fee inflows are calculated by subtracting refund outflows from fee inflows. The license fee is determined by applying a configured fee rate to the net inflow.
- **Key fields**: `fee_inflow`, `aep_fee`

### Component D: L1 settlement cost calculation

- **Purpose**: Calculate the cost of settling Arbitrum transactions on Ethereum
- **Logic**: Transactions sent by Arbitrum sequencer addresses on Ethereum are identified. L1 settlement costs are calculated by summing the execution gas cost (gas used multiplied by gas price) and the blob gas cost (blob gas used multiplied by blob gas price), with the total normalized by decimal precision.
- **Key fields**: `gas_used`, `gas_price`, `blob_gas_used`, `blob_gas_price`

### Component E: Revenue and expenses aggregation

- **Purpose**: Aggregate total revenue and total expenses
- **Logic**: Total revenue is calculated as the sum of L2 gas fees, Timeboost fees, and Arbitrum Expansion Program license fees. Total expenses are calculated as the sum of L1 settlement costs and token incentives, which are set to zero.

### Component F: USD conversion and earnings calculation

- **Purpose**: Convert all values to USD and calculate net earnings
- **Logic**: Daily aggregated revenue and expense components are multiplied by end-of-day asset prices to convert them to USD. Earnings are calculated by subtracting total expenses in USD from total revenue in USD. Daily granularity is maintained with UTC day boundaries.

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

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

Arbitrum OneARB

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