# X Layer Expenses Methodology

## 1. Overview

Expenses measures the total cost a project incurs to operate its business. For X Layer, expenses are represented by the sum of the cost of revenue and token incentives. The cost of revenue is comprised of L1 settlement and data availability fees paid to Ethereum, which are incurred across two distinct architectural eras: the Polygon CDK Validium era and the OP Stack era. Token incentives for X Layer are currently set to zero.

## 2. Data sources

- **Blockchain events**: L1 transaction data from the Ethereum blockchain, covering Ethereum
- **External data**: End-of-day price feeds for the native gas asset (ETH)

## 3. Step-by-step calculation

### Component A: L1 settlement fee extraction

- **Purpose**: Capture the gas and blob fees paid on Ethereum for settling X Layer transactions.
- **Logic**: Transactions on Ethereum are filtered based on the operational era of X Layer. For the Polygon CDK Validium era, transactions sent to the Polygon CDK rollup contract are selected. For the OP Stack era, transactions sent from designated batcher wallets (`0xdfd6c636dcb5a013c2431316c4a0762b84e70a5d` and `0x98245d0adf4595c66f0a9db8e13c44cbff6be459`) are selected. For these transactions, the total L1 settlement fee is calculated by multiplying the gas used by the effective gas price, adding the product of blob gas used and blob gas price, and normalizing the resulting amount by decimal precision.
- **Key fields**: `gas_used`, `gas_price`, `blob_gas_used`, `blob_gas_price`, `from_address`, `to_address`

### Component B: Token incentives tracking

- **Purpose**: Capture any token incentives distributed to users or validators.
- **Logic**: Token incentives for X Layer are set to a constant value of zero, as no native asset incentives are currently distributed by the protocol.
- **Key fields**: None

### Component C: USD conversion and aggregation

- **Purpose**: Convert settlement costs to USD and aggregate to daily expenses.
- **Logic**: The daily L1 settlement fees are multiplied by the end-of-day price of ETH to determine the cost of revenue in USD. Total expenses are calculated as the sum of the USD-denominated cost of revenue and token incentives. Daily values are aggregated using UTC day boundaries, with days containing no activity recorded as zero.
- **Key fields**: `cost_of_revenue`, `token_incentives`, `price_usd`

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

Total project operating and incentive expenses.

Expenses

X Layer

Expenses

Expenses

Chain breakdown