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

Hedera is a decentralized enterprise-grade public network that uses proof-of-stake hashgraph consensus to offer low & fixed fees, 10k TPS, and instant transaction finality. Hedera was founded by Leemon Baird, Mance Harmon, etc. and launched in 2019.

HBAR holders own and govern the protocol. They currently take a cut of the total transaction and query fees paid by users (revenue). Hedera’s investors include BlockTower Capital, Continue Capital, Unanimous Capital, etc.

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Hedera

# Hedera Earnings Methodology

## 1. Overview

Hedera earnings represent the network's net income, calculated as total protocol revenue minus operating expenses. This metric measures the protocol's profitability by subtracting token incentives (staking and node rewards) from net revenue (total fees minus supply-side fees paid to validators). The calculation provides insight into Hedera's financial sustainability and value accrual to the protocol treasury.

## 2. Data sources

The earnings calculation relies on several core Hedera blockchain data sources:
- **Hedera transaction records**: Raw transaction data containing `fee_charged` amounts paid by users in tinybars
- **HBAR transfer records**: Native token transfer events showing movements between accounts, including transfers to node operators and reward accounts
- **Reward account transfers**: Specific transfers to the staking reward account (`0.0.800`) and node reward account (`0.0.801`) representing protocol expenses
- **End-of-day price feeds**: External HBAR/USD price data for converting native token amounts to USD values

## 3. Step-by-step calculation

### Component A: Total fees calculation
- **Purpose**: Calculate total fees collected by the protocol from user transactions
- **Logic**: Extract all Hedera transactions with non-null `fee_charged` values. The `fee_charged` field represents transaction fees in tinybars (Hedera's smallest unit where 1 HBAR = 100,000,000 tinybars). Convert tinybars to HBAR by dividing by 1e8, then aggregate by day using timestamp truncation to daily boundaries. Sum all fees for each day to get total daily fee collection.
- **Key fields**: `fee_charged` (transaction fee in tinybars), `block_timestamp` (transaction timestamp), `transaction_hash` (unique transaction identifier)

### Component B: Supply-side fees calculation
- **Purpose**: Calculate the portion of fees that goes to network validators/node operators rather than the protocol treasury
- **Logic**: Join HBAR transfer records with transaction records to identify fee distributions to node operators. Filter for transfers where the `account_address` matches the `node` field (indicating payment to the transaction's processing node), the `transfer_amount` is positive, and crucially, the transfer amount is less than the original transaction's `fee_charged` (indicating a partial fee distribution rather than the full fee). This identifies the validator reward portion. Convert from tinybars to HBAR and aggregate daily.
- **Key fields**: `transfer_amount` (HBAR amount sent to node), `node` (node operator identifier), `account_address` (recipient address), `fee_charged` (original transaction fee for comparison)

### Component C: Token incentives calculation  
- **Purpose**: Calculate protocol expenses in the form of staking rewards and node operator incentives
- **Logic**: Identify HBAR transfers to two specific reward accounts that represent protocol-funded incentives. Filter transfers to the staking reward account (`0.0.800`) and node reward account (`0.0.801`) where `transfer_amount` is positive (indicating outbound payments from these accounts to recipients). These transfers represent the protocol's operating expenses for maintaining network security and incentivizing participation. Convert from tinybars to HBAR and aggregate daily.
- **Key fields**: `account_address` (must be `0.0.800` or `0.0.801`), `transfer_amount` (reward amount in tinybars)

### Final aggregation
- **Combining components**: Calculate revenue as total fees minus supply-side fees, representing the net amount retained by the protocol treasury. Calculate expenses as the sum of all token incentives paid out. Compute final earnings as revenue minus expenses.
- **Currency conversion**: Convert all native HBAR amounts to USD using end-of-day price feeds, applying the conversion after decimal correction (HBAR amounts are already in proper decimal format after tinybars conversion)
- **Time aggregation**: All components use daily time boundaries with timestamp truncation to day level, ensuring consistent aggregation periods across revenue and expense calculations
- **Final calculation**: Earnings equals (total fees minus supply-side fees) minus token incentives, with all amounts expressed in USD terms

*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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