# Near Protocol Expenses Methodology

## 1. Overview

Expenses measures the total cost Near Protocol incurs to operate and secure its network. For Near Protocol, this metric specifically tracks the value of token incentives distributed to validators as rewards for maintaining the blockchain's security and consensus. These expenses represent the primary operational cost of the network, as they incentivize infrastructure providers to allocate capital and compute resources to the protocol.

## 2. Data sources

- **Blockchain events**: Account change records for validator updates on Near Protocol
- **External data**: End-of-day price feeds for the NEAR asset

## 3. Step-by-step calculation

### Component A: Validator reward extraction

- **Purpose**: Identify and quantify the native assets distributed to network validators as rewards
- **Logic**: Validator addresses are identified from account change records where the update reason is specified as a validator account update. For these specific accounts, staked balances are tracked chronologically across block heights. A reward is recognized whenever a staked balance increases during a validator account update. The reward amount is calculated as the difference between the current staked balance and the previous staked balance for that validator.
- **Key fields**: `affected_account_id` (validator address), `affected_account_staked_balance` (staked balance), `update_reason` (event classification)

### Component B: Normalization and USD conversion

- **Purpose**: Convert native reward amounts into a standardized USD valuation
- **Logic**: Raw reward amounts are normalized by the asset's decimal precision. These normalized values are then multiplied by the end-of-day price of the NEAR asset to determine the USD value of the incentives at the time of distribution.
- **Key fields**: `daily_reward_amount` (aggregated native rewards), `price` (USD price)

### Component C: Final aggregation

- **Purpose**: Consolidate validator rewards into a total expenses metric
- **Logic**: All reward values are summed by day to arrive at the total token incentives. This total is then mapped to the expenses metric for Near Protocol. The data is aggregated with daily granularity using UTC day boundaries, and a zero-fill strategy is applied to ensure a continuous time series.
- **Key fields**: `timestamp` (daily grain), `token_incentives` (calculated reward value)

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

Total project operating and incentive expenses.

Expenses

Blockchains (L1)

Validators process transactions and receive validator rewards (supply-side fees).

NEAR Protocol is a smart contract platform for decentralized applications (a blockchain). NEAR Protocol was founded by Alexander Skidanov & Ilya Polosukhin and launched in 2017.

NEAR holders own and govern the protocol. They currently take (burn) all of the total transaction fees paid by users (revenue). NEAR Protocol's investors include a16z, Pantera Capital, Libertus, etc.