LayerZero uses a decentralized network of Validator Nodes to facilitate secure and fast communication between different blockchains.

LayerZero allows users to send and receive messages between different blockchains, and to bridge tokens between different blockchains.

LayerZero is a cross-chain interoperability protocol that enables secure and fast communication between different blockchains.

twitter

etherscan

website

Interoperability

LayerZero

# LayerZero Cost of revenue Methodology

## 1. Overview

The direct costs associated with generating protocol revenue are measured by the cost of revenue metric for LayerZero. This metric is explicitly set to zero, reflecting LayerZero's business model where fee collections from Data Verification Networks (DVN), executors, and protocol usage are treated as pure revenue without associated direct costs that need to be subtracted.

## 2. Data sources

- **Blockchain events**: `DVNFeePaid` and `ExecutorFeePaid` events from `SendUln301` and `SendUln302` contracts, and `send` function calls from `EndpointV1` contracts, covering Ethereum, Arbitrum, Base, Polygon, and 27 other chains
- **External data**: End-of-day asset price feeds and asset metadata including decimal precision specifications across 31 chains

## 3. Step-by-step calculation

### Component A: Fee structure reference

- **Purpose**: The dimensional framework for cost reporting is established while maintaining consistency with revenue calculations.
- **Logic**: The complete LayerZero fee collection system is referenced, including DVN fees (calculated by summing all fee amounts within the fee array), executor fees (single fee amounts), and estimated LayerZero V1 protocol fees (calculated by subtracting airdrop amounts from transaction values based on adapter parameters). All fee types are aggregated by daily timestamp, chain identifier, product identifier, fee type, and asset address. Raw fee amounts are converted to decimal format by dividing by asset-specific decimal precision.
- **Key fields**: `timestamp` (daily truncation), `chain_id` (blockchain identifier), `product_id` (LayerZero version), `token_address` (fee denomination), `fees` (decimal-adjusted amounts)

### Component B: Cost assignment

- **Purpose**: LayerZero's zero-cost business model is applied to all revenue-generating activities.
- **Logic**: The dimensional structure from the fee reference is taken, and zero is explicitly assigned to the cost of revenue field for every record. Results are grouped by timestamp, timestamp grain, chain identifier, product identifier, and asset address to maintain proper aggregation structure.
- **Key fields**: `cost_of_revenue` (hardcoded to 0), dimensional attributes inherited from fee structure

### Component C: Final aggregation and zero-cost assignment

- **Purpose**: The final cost of revenue is aggregated and set to zero across all dimensions.
- **Logic**: The fee structure is used purely for dimensional consistency while all cost values are overridden to zero. Asset address associations are maintained for potential future cost calculations, but zero values are applied regardless of asset type or price. Daily boundary logic is applied with timestamp truncation to the day level, ensuring consistent reporting periods. The final cost of revenue is set to zero for all time periods, chains, and products, reflecting LayerZero's business model where protocol fee collections are treated as pure revenue without direct associated costs.

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

Expenses paid to third parties to deliver core service output.

LayerZeroZRO

Cost of revenue

Cost of revenue

Competitive landscape

Chain breakdown