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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Infrastructure

Layer3

# Layer3 Expenses Methodology

## 1. Overview

Layer3 expenses represent the daily USD value of reward payouts distributed by Layer3's escrow contracts to users across multiple blockchains. This metric measures the platform's operational costs associated with incentivizing user participation in quests and activities. The calculation identifies legitimate Layer3 escrow contracts through factory registration events, tracks token transfers from these contracts as reward payouts, and converts these payouts to USD to represent the platform's daily expenses.

## 2. Data sources

- **Factory registration events**: Parsed `Factory_EscrowRegistered` events from Layer3 contracts across Arbitrum, Avalanche, Base, BSC, Blast, Celo, Gnosis, Optimism, Polygon, and zkSync Era blockchains
- **Token transfer events**: Token transfer records by timestamp from all supported blockchains, capturing transfers from escrow contracts to users
- **External data**: End-of-day token price feeds for USD conversion and token metadata for decimal normalization
- **Blockchain coverage**: Multi-chain data spanning 10 different blockchain networks where Layer3 operates

## 3. Step-by-step calculation

### Component A: Escrow contract identification
- **Purpose**: Identify legitimate Layer3 escrow contracts across all supported blockchains
- **Logic**: Extract all `Factory_EscrowRegistered` events from Layer3 factory contracts on each blockchain. Parse the `escrowAddress` field from these events to create a registry of verified escrow contract addresses. This ensures only official Layer3 escrow contracts are included in reward payout tracking.
- **Key fields**: `escrowAddress` (the registered escrow contract address), `chain` (blockchain identifier)

### Component B: Reward payout tracking
- **Purpose**: Capture all token transfers representing reward payouts from Layer3 escrow contracts
- **Logic**: Filter token transfer events to include only transfers where the `from_address` matches a verified escrow contract address from the registry. Join transfer data with the escrow contract registry using both chain identifier and contract address to ensure accuracy. Extract transfer details including recipient address, token address, and transfer amount.
- **Key fields**: `from_address` (escrow contract), `to_address` (reward recipient), `token_address`, `value` (transfer amount), `block_timestamp`

### Component C: USD conversion and aggregation
- **Purpose**: Convert token amounts to USD values and aggregate by day and chain
- **Logic**: Group reward payout transfers by day (truncating timestamps to daily boundaries), chain, and token address. Apply decimal correction based on token metadata to ensure proper token amount representation. Convert corrected token amounts to USD using end-of-day price feeds matched by date and token address. Sum all USD values within each day-chain combination.
- **Key fields**: `timestamp` (daily truncated), `chain_id`, `token_address`, `reward_payouts` (USD amount)

### Component D: Cost of revenue mapping
- **Purpose**: Map reward payouts directly to cost of revenue
- **Logic**: Take the USD-denominated reward payouts and treat them as the cost of revenue for Layer3's business model. This reflects that reward distributions represent the primary operational cost for incentivizing platform usage.
- **Key fields**: `cost_of_revenue` (mapped from `reward_payouts`)

### Final aggregation
- **Combining components**: The cost of revenue values are directly used as the expenses metric, representing a 1:1 mapping where all reward payouts constitute Layer3's operational expenses
- **Currency conversion**: All amounts are converted to USD using end-of-day price feeds with proper decimal adjustment for each token type
- **Time aggregation**: Daily aggregation with timestamp truncation to day boundaries, ensuring consistent daily reporting
- **Final calculation**: Expenses equal the total USD value of reward payouts distributed by verified Layer3 escrow contracts each day, with missing days filled with zero values and chain availability filters applied

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

Total project operating and incentive expenses.

Layer3L3

Expenses

Expenses

Competitive landscape

Chain breakdown