# Earnings Methodology

## Overview

Earnings measures the net value a project retains after subtracting all expenses from its revenue. This includes cost of revenue, token incentives, and operating expenses, where applicable. Note that earnings reflects onchain profitability, and may understate true costs in instances where the project does not report its operating expenses onchain.

## Data sources

- Smart contract events and program instructions capturing revenue-generating activities and expense distributions
- Onchain transaction records and gas usage data
- Token price feeds for USD conversion
- Asset metadata for decimal precision

## Common calculation approaches

### Protocol revenue and incentive deduction
For decentralized finance applications, earnings are calculated by subtracting token incentives and operating costs from protocol revenue. For example, swap fees and liquidity mining incentives are tracked from PancakeSwap and Uniswap, while borrower interest and asset incentives are analyzed from Aave to determine net onchain profitability.

### Layer 2 gas fee spread calculation
For Layer 2 blockchains, earnings are derived by subtracting Layer 1 settlement costs and other operational expenses from the total gas fees paid by users. For instance, on networks such as Base and Arbitrum One, sequencer revenue is captured from transaction fees, and expenses such as L1 batch submission costs are subtracted to calculate net earnings.

**Note:** The calculation approaches and protocol examples above are representative patterns. Individual protocol implementations may vary.

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

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

Earnings

Illuvium

Players buy/sell in-game NFTs on the IlluviDEX (The Illuvium Exchange). Players were also able to buy a limited number of land plots in June 2022.

Illuvium is a collectible NFT RPG game and auto-battler rolled into one. Illuvium was founded by Kieran & Aaron Warwick and launched in 2020.

ILV tokenholders own & govern the protocol. They currently take a cut of the transaction fees paid on IlluviDEX and kept all the proceeds from the land sale (revenue). Illuvium's investors include Delphi Digital, Yield Guild Games, Bitscale, etc.

IlluviumILV

Earnings

Earnings

Competitive landscape