Users complete Quests, Races, or other experiences to earn rewards.

Layer3 is a platform that allows anyone to discover web3 through interactive experiences.

L3 tokenholders own and govern the protocol. L3's investors include ParaFi Capital, Greenfield Capital, etc.

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Layer3

# Layer3 Cost of revenue Methodology

## 1. Overview

Cost of revenue for Layer3 represents the total value of reward payouts distributed to users through the protocol's escrow system. This metric captures Layer3's operational costs by tracking all token transfers made from registered Layer3 escrow contracts to users as rewards. The calculation aggregates these reward payouts daily across all supported blockchains and converts them to USD to provide a comprehensive view of Layer3's reward distribution costs.

## 2. Data sources

The calculation relies on several key data sources:

- **Smart contract events**: `Factory_EscrowRegistered` events from Layer3 factory contracts across 10 blockchains (Arbitrum, Avalanche, Base, BSC, Blast, Celo, Gnosis, Optimism, Polygon, and zkSync Era) to identify valid escrow contract addresses
- **Token transfer events**: Parsed `Transfer` events from ERC-20 tokens and native token transfers across all supported blockchains
- **External data**: End-of-day token price feeds for USD conversion and token metadata for decimal precision handling

## 3. Step-by-step calculation

### Component A: Escrow contract identification
- **Purpose**: Identifies all valid Layer3 escrow contract addresses across supported blockchains
- **Logic**: Extracts unique contract addresses from `Factory_EscrowRegistered` events emitted by Layer3 factory contracts. Each event contains an `escrowAddress` field that represents a newly registered escrow contract. The process scans events across all 10 supported blockchains and creates a comprehensive registry of valid escrow contract addresses by chain.
- **Key fields**: `escrowAddress` (the contract address), chain identifier

### Component B: Reward payout transfer capture
- **Purpose**: Captures all token transfers that represent reward payouts from Layer3 escrow contracts
- **Logic**: Filters all token transfer events to identify transfers where the sender (`from_address`) matches a registered Layer3 escrow contract address. This captures outbound transfers from escrow contracts, which represent reward payments to users. The filtering uses an inner join between token transfers and the escrow contract registry to ensure only transfers from valid Layer3 contracts are included.
- **Key fields**: `block_timestamp`, `transaction_hash`, `log_index`, `from_address` (escrow contract), `to_address` (reward recipient), `token_address`, `value` (transfer amount)

### Component C: Daily reward aggregation
- **Purpose**: Aggregates reward payout transfers into daily totals by chain and token
- **Logic**: Groups the filtered transfer events by day (using timestamp truncation to day boundaries), chain, and token address. Sums the transfer amounts to calculate total daily reward payouts for each token on each chain. Sets `product_id` as null since Layer3 doesn't segment rewards by specific products.
- **Key fields**: `timestamp` (daily), `timestamp_grain` ('day'), `chain_id`, `token_address`, `reward_payouts` (aggregated amount)

### Final aggregation
- **Combining components**: The daily aggregated reward payouts are processed through USD conversion
- **Currency conversion**: Token amounts are converted to USD using end-of-day price feeds, with automatic correction for token decimal places through the `convert_to_usd_and_correct_decimals` macro
- **Time aggregation**: Data is aggregated at daily boundaries using timestamp truncation, ensuring consistent daily snapshots
- **Final calculation**: The reward payouts metric is finalized using the `finalize_metric_reward_payouts` macro, which validates the data schema, ensures no gaps in the time series by filling missing dates with zeros, and standardizes the output format. The final model then renames the `reward_payouts` field to `cost_of_revenue` to reflect that these reward distributions represent Layer3's operational costs

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

Expenses paid to third parties to deliver core service output.

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Cost of revenue

Cost of revenue

Competitive landscape

Chain breakdown