# Celo L2 Cost of revenue Methodology

## 1. Overview

Cost of revenue measures the expenses incurred by Celo L2 to settle transactions and post data to the Ethereum mainnet. As a Layer 2 scaling solution, these costs represent the fees paid to Ethereum for data availability and state settlement. These payments are essential for the protocol to inherit the security of the underlying base layer and are converted from Ethereum's native asset to USD for standardized reporting.

## 2. Data sources

- **Blockchain events**: Transaction data from Ethereum, covering settlement activity initiated by the Celo L2 sequencer
- **External data**: End-of-day price feeds for the Ethereum native gas asset

## 3. Step-by-step calculation

### Component A: Settlement transaction identification

- **Purpose**: Identify the specific transactions on Ethereum that constitute Celo L2's operating expenses.
- **Logic**: Ethereum transactions are filtered to isolate activity from the Celo L2 sequencer address. Only transactions directed to the designated Celo L1 (legacy) null address are included in the calculation. This ensures that only data availability and settlement-related expenses are captured for the metric.
- **Key fields**: `block_timestamp`, `from_address`, `to_address`

### Component B: Settlement fee calculation

- **Purpose**: Calculate the total cost of each settlement transaction, including both execution and data availability fees.
- **Logic**: For each identified transaction, the effective gas price is multiplied by the gas used to determine the execution cost. Additionally, the blob gas price is multiplied by the blob gas used to account for data availability costs associated with EIP-4844. These two components are summed to derive the total settlement amount per transaction.
- **Key fields**: `receipt_effective_gas_price`, `receipt_gas_used`, `receipt_blob_gas_price`, `receipt_blob_gas_used`

### Component C: USD conversion and aggregation

- **Purpose**: Normalize settlement expenses to USD and aggregate data to daily intervals.
- **Logic**: Settlement amounts are normalized by decimal precision and multiplied by end-of-day price feeds for the settlement asset. The resulting values are aggregated by day using UTC day boundaries. Any gaps in the daily data are filled with zeros to ensure a continuous time series.
- **Key fields**: `l1_settlement_amount`, `price_usd`, `timestamp`

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

Expenses paid to third parties to deliver core service output.

Cost of revenue

Blockchains (L2)

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

Celo is a smart contract platform for decentralized applications (a blockchain). Celo was founded by Rene Reinsberg and Marek Olszewski and launched in 2020.

CELO holders own and govern the protocol. They currently take a cut of the total transaction fees paid by users (revenue). Celo's investors include a16z, Greenfield, Electric Capital, etc.

Celo L2

Cost of revenue

Cost of revenue

Chain breakdown