Collators aggregate parachain transactions block candidates and producing state transition proofs for validators based on those blocks.

Pendulum is a decentralized blockchain for cross-border payments and traditional finance infrastructure powered by Polkadot Relay chain.

PEN holders own and govern the protocol. Pendulum is a subsidiary of SatoshiPay. SatoshiPay's investors include Blue Star Capital, KR1 plc, Stellar Development Foundation, etc.

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Pendulum

# Pendulum Earnings Methodology

## 1. Overview

The Pendulum earnings metric measures the protocol's net profitability by calculating revenue minus expenses on a daily basis. Revenue is generated from transaction fees paid by users, while expenses represent staking rewards distributed to validators. This metric provides insight into the protocol's economic sustainability and profitability after accounting for validator incentive costs.

## 2. Data sources

The calculation relies on the following data sources:
- **Pendulum blockchain events**: Raw event logs from the Pendulum blockchain containing `TransactionFeePaid` events that capture transaction fees and tips
- **Pendulum staking events**: Blockchain events from the collator staking system containing `Rewarded` events that track validator reward distributions
- **External price data**: End-of-day token price feeds from CoinGecko for the Pendulum Chain token (pendulum-chain) used for USD conversion

## 3. Step-by-step calculation

### Component A: Transaction fee extraction
- **Purpose**: Extracts and processes transaction fee data from blockchain events
- **Logic**: Filters Pendulum blockchain events for `TransactionFeePaid` method events, then parses the event data JSON array to extract fee amount from position 1 and tip amount from position 2. Converts both amounts from native Pendulum decimals (1e12) to standard decimal format
- **Key fields**: `amount` (base transaction fee), `tip` (additional user tip), `block_timestamp`, `extrinsic_hash`

### Component B: Daily fee aggregation and USD conversion  
- **Purpose**: Aggregates fees by day and converts to USD values
- **Logic**: Groups transaction fee data by day using timestamp truncation, sums the total fees (amount plus tip) for each day, then applies USD conversion using end-of-day price feeds from CoinGecko for the Pendulum Chain token
- **Key fields**: `timestamp` (daily), `fees` (daily fee total in USD), `chain_id` (pendulum), `product_id` (Pendulum Substrate)

### Component C: Revenue calculation
- **Purpose**: Renames fees to revenue for semantic consistency
- **Logic**: Takes the aggregated daily fees and renames the `fees` field to `revenue` to align with earnings calculation terminology
- **Key fields**: `revenue` (USD value of daily transaction fees)

### Component D: Staking reward extraction
- **Purpose**: Extracts validator staking rewards from blockchain events
- **Logic**: Filters Pendulum blockchain events for collator staking pallet events with `Rewarded` method, parses the reward amount from position 1 of the event data JSON array, and converts from 1e18 decimals to standard format
- **Key fields**: `amount` (staking reward amount), `block_timestamp`, `extrinsic_id`

### Component E: Daily reward aggregation and USD conversion
- **Purpose**: Aggregates staking rewards by day and converts to USD
- **Logic**: Groups staking reward data by day using timestamp truncation, sums total rewards distributed each day, then applies USD conversion using end-of-day CoinGecko price feeds for the Pendulum Chain token
- **Key fields**: `timestamp` (daily), `token_incentives` (daily reward total in USD)

### Component F: Expenses calculation
- **Purpose**: Treats staking rewards as protocol expenses
- **Logic**: Takes the aggregated daily staking rewards and renames `token_incentives` to `expenses`, representing the cost of validator incentives paid by the protocol
- **Key fields**: `expenses` (USD value of daily staking rewards)

### Final aggregation
- **Combining components**: Revenue and expenses are combined using the calculate_earnings macro which performs a subtraction operation (revenue minus expenses) for each day
- **Currency conversion**: All amounts are converted to USD using end-of-day CoinGecko price feeds for the Pendulum Chain token before the final calculation
- **Time aggregation**: Data is aggregated at daily boundaries using timestamp truncation to day granularity
- **Final calculation**: Daily earnings equals daily transaction fee revenue minus daily staking reward expenses, with zero-filling applied for dates with missing data and chain availability filtering applied to ensure data completeness

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

Net profit (also profits, net income, profitability) — revenue remaining after subtracting expenses.

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