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.

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Blockchains (L2)

Celo

# Celo Gross profit Methodology

## 1. Overview

Celo L1 (legacy) gross profit measures the net profitability of the Celo L1 (legacy) blockchain by subtracting operational costs from total revenue. This metric accounts for Celo L1 (legacy)'s transition from a Layer 1 blockchain to a Layer 2 solution on March 26, 2025. Before this date, gross profit equals revenue (as there are no L1 settlement costs). After this date, gross profit is calculated as the difference between L2 gas fee revenue and L1 settlement costs paid to Ethereum.

## 2. Data sources

The calculation relies on several key data sources:

- **Celo L1 (legacy) transaction records**: All transactions on the Celo L1 (legacy) blockchain containing gas usage, gas prices, transaction addresses, and fee currency information
- **Celo L1 (legacy) block records**: Block-level data including base fee per gas and block timestamps for the pre-L2 period
- **Ethereum transaction records**: Ethereum transactions from Celo L1 (legacy)'s sequencer address for calculating L1 settlement costs during the L2 period
- **End-of-day token price feeds**: Price data for converting various fee currencies (including Celo L1 (legacy) and other supported tokens) to USD
- **Token metadata**: Information about supported fee currencies and their decimal configurations

## 3. Step-by-step calculation

### Component A: Revenue calculation

- **Purpose**: Calculate total revenue from gas fees across both L1 and L2 operational periods
- **Logic**: The calculation method depends on the operational period. For the pre-March 26, 2025 period (L1 operation), revenue is calculated using base fees by joining transaction data with block data and multiplying `gas_used` by `base_fee_per_gas` from the corresponding block. For the post-March 26, 2025 period (L2 operation), revenue uses gas fees calculated by multiplying `gas_price` by `gas_used` for each transaction, then dividing by 1e18 to correct for decimal places. All transactions are classified by their fee currency, with null fee currencies defaulting to the native Celo L1 (legacy) token address. Revenue is aggregated daily and converted to USD using end-of-day price feeds.
- **Key fields**: `gas_used`, `base_fee_per_gas` (L1 period), `gas_price` (L2 period), `fee_currency`, `block_timestamp`, `token_address`

### Component B: Cost of revenue calculation

- **Purpose**: Calculate L1 settlement costs for the L2 operational period (post-March 26, 2025 only)
- **Logic**: Settlement costs are identified by filtering Ethereum transactions where the sender is Celo L1 (legacy)'s sequencer address and the recipient is Celo L1 (legacy)'s null address. For each settlement transaction, the cost includes both regular gas fees (calculated as `gas_used` multiplied by `gas_price`) and blob gas fees (calculated as `blob_gas_used` multiplied by `blob_gas_price`). The total settlement cost per transaction is the sum of these two components, divided by 10^18 to convert from wei to ETH. These costs are aggregated daily and converted to USD using end-of-day price feeds. No costs are calculated for the pre-L2 period.
- **Key fields**: `gas_used`, `gas_price`, `blob_gas_used`, `blob_gas_price`, `from_address`, `to_address`, `block_timestamp`

### Final aggregation

- **Combining components**: Revenue and cost of revenue are combined using a union operation where revenue amounts are included as positive values and cost of revenue amounts are included as negative values (multiplied by -1). Both components are aligned by timestamp and product classification.
- **Currency conversion**: All amounts are converted to USD using end-of-day price feeds matched to the transaction date and token address, with appropriate decimal corrections applied based on token specifications
- **Time aggregation**: All data is truncated to daily boundaries using the transaction timestamp, with final aggregation performed by summing amounts within each day
- **Final calculation**: Gross profit for each day equals the sum of all positive revenue amounts minus all settlement costs. For the pre-L2 period, this equals pure revenue since settlement costs are zero. For the L2 period, this represents net profitability after accounting for Ethereum settlement expenses. The calculation ensures data consistency by using the minimum of the maximum timestamps from both revenue and cost streams to avoid incomplete daily data.

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

Revenue remaining after subtracting cost of revenue.

CeloCELO

Gross profit

Gross profit

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