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.

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Flow

# Flow Earnings Methodology

## 1. Overview

Flow earnings represents the protocol's net profit, calculated as revenue minus expenses using Flow's unique "Inflation Offset" economic model. This metric measures the protocol's financial performance by determining how much excess value the protocol captures after covering validator reward obligations. The calculation accounts for Flow's dual-chain architecture (Flow and Flow EVM) and its novel approach where revenue comes from fees exceeding staking rewards, while expenses represent minted tokens covering reward shortfalls.

## 2. Data sources

The calculation uses the following raw data sources:
- **Flow Cadence transaction records**: On-chain transaction data including `fee_amount`, `payer`, and timestamp information for all Flow transactions
- **Flow EVM transaction records**: Transaction data including `gas_used`, `gas_price`, and execution details for Flow EVM transactions
- **Flow staking reward events**: Parsed `RewardsPaid` and `DelegatorRewardsPaid` events from Flow's staking contracts containing reward amounts and recipients
- **Flow token price feeds**: End-of-day FLOW token price data from CoinGecko for USD conversion
- **Token metadata**: Flow token contract addresses and decimal information for proper amount calculations

## 3. Step-by-step calculation

### Component A: Flow transaction fee collection
- **Purpose**: Aggregate total fees collected from both Flow and Flow EVM transactions
- **Logic**: For Flow, extract the `fee_amount` field directly from transaction records and aggregate daily totals by summing fees where `fee_amount` is not null. For Flow EVM, calculate gas fees by multiplying `gas_used` by `gas_price` for each transaction, then dividing by 1e18 to convert from wei to FLOW tokens, and aggregate daily totals. Combine both fee streams to get total daily fees collected across Flow's dual-chain architecture
- **Key fields**: `fee_amount` for Flow transactions, `gas_used` and `gas_price` for Flow EVM transactions, `block_timestamp` for daily aggregation

### Component B: Staking reward calculation
- **Purpose**: Calculate total daily staking rewards paid to validators and delegators
- **Logic**: Extract reward amounts from Flow's `RewardsPaid` events for node operators and `DelegatorRewardsPaid` events for delegators. Sum the `amount` field from both event types for each day to get total staking rewards paid. These represent the fixed target payouts to validators that Flow's economic model aims to cover through a combination of fees and newly minted tokens
- **Key fields**: `amount` from both reward event types, `block_timestamp` for daily aggregation

### Component C: Revenue calculation using Flow's economic model
- **Purpose**: Calculate protocol revenue based on Flow's "Inflation Offset" model
- **Logic**: Apply the formula Revenue = MAX(Total Fees - Total Staking Rewards, 0). This captures "excess" fees beyond what validators need, representing deflationary pressure on the Flow token. When fees exceed staking rewards, the excess becomes protocol revenue (effectively burned tokens). When fees are less than staking rewards, revenue is zero since all fees go to validators. For Flow EVM, revenue is set to zero since Flow EVM fees are handled by Flow validators
- **Key fields**: Daily aggregated `total_fees` and `total_staking_rewards` for the MAX calculation

### Component D: Expenses calculation
- **Purpose**: Calculate protocol expenses as token incentives (newly minted tokens)
- **Logic**: Apply the formula Token Incentives = MAX(Total Staking Rewards - Total Fees, 0). This represents newly minted Flow tokens used to cover validator reward shortfalls when fees are insufficient. When staking rewards exceed fees, the difference is minted and becomes protocol expenses. When fees exceed staking rewards, no minting occurs and expenses are zero. For Flow EVM, token incentives are set to zero since Flow handles all validator rewards
- **Key fields**: Daily aggregated `total_staking_rewards` and `total_fees` for the MAX calculation

### Final aggregation
- **Combining components**: Revenue and expenses are calculated separately for Flow and Flow EVM, then combined at the protocol level. Flow contributes both revenue and expenses based on its staking model, while Flow EVM contributes zero for both since its fees flow to Flow validators
- **Currency conversion**: All native FLOW token amounts are converted to USD by multiplying by end-of-day Flow token prices from CoinGecko price feeds
- **Time aggregation**: All calculations use daily boundaries based on `block_timestamp` truncated to day level, ensuring consistent daily aggregation across all components
- **Final calculation**: Earnings = Revenue - Expenses, where both components are already in USD. This represents Flow's net profit after covering validator obligations through its unique inflation offset economic model

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

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

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