# Flow Token incentives Methodology

## 1. Overview

Token incentives measures the value of newly minted Flow assets issued to validator nodes and delegators as compensation for securing the network. Flow utilizes an "inflation offset" economic model where protocol fees are first applied toward a target staking reward amount, and new asset issuance (token incentives) only occurs to cover the remaining balance. This metric represents the cost of network security that is not covered by transaction fees, analogous to stock-based compensation in traditional finance.

## 2. Data sources

- **Blockchain events**: `RewardsPaid`, `DelegatorRewardsPaid`, and `NewWeeklyPayout` events from `FlowIDTableStaking` contracts, plus native transaction data covering Flow and Flow EVM
- **External data**: End-of-day price feeds for the Flow asset

## 3. Step-by-step calculation

### Component A: Staking reward tracking for Flow

- **Purpose**: Aggregates the total target compensation for network participants.
- **Logic**: Gross rewards are extracted from `RewardsPaid`, `DelegatorRewardsPaid`, and `NewWeeklyPayout` events from `FlowIDTableStaking` contracts on Flow. These components are summed to determine the total staking rewards required for each epoch.
- **Key fields**: `reward_amount` and `newPayout` quantities.

### Component B: Fee aggregation for Flow and Flow EVM

- **Purpose**: Identifies the total transaction fee revenue available to offset inflation.
- **Logic**: Transaction fees are aggregated across both Flow and Flow EVM. For Flow, fee amounts are extracted directly from transaction records. For Flow EVM, fees are calculated by multiplying gas used by the gas price for every transaction. All fees are aggregated to a daily grain.
- **Key fields**: `fee_amount`, `receipt_gas_used`, and `gas_price`.

### Component C: Inflation offset and incentive calculation

- **Purpose**: Determines the portion of rewards funded via new token issuance.
- **Logic**: Token incentives are calculated by subtracting the total fees collected from the total staking rewards. A floor of zero is applied; if fees exceed the target rewards, token incentives are set to zero, indicating that no new tokens were minted to subsidize security. This logic is applied to Flow, while token incentives for Flow EVM are set to zero as all staking-related issuance is handled on the Flow Cadence environment.
- **Key fields**: `total_staking_rewards` and `fees`.

### Component D: USD conversion and aggregation

- **Purpose**: Normalizes native asset values to USD for standardized reporting.
- **Logic**: Daily token incentive quantities are multiplied by end-of-day price feeds for the Flow asset. Amounts are normalized by decimal precision. Data is aggregated by date using UTC day boundaries.

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

Value of native tokens distributed as incentives.

Token incentives

Blockchains (L1)

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

Flow is a smart contract platform for decentralized applications (a blockchain). Flow was founded by Roham Gharegozlou, Dieter Shirley and Mikhael Naayem and launched in 2019.

FLOW holders own and govern the protocol. They currently don’t take a cut of the total transaction fees paid by users (revenue). Flow’s investors include a16z, Coatue, Coinfund, Fabric Ventures, etc.

Flow

Token incentives

Token incentives

Chain breakdown