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

Phala is a specialized privacy-preserving cloud computing blockchain powered by Polkadot Relay chain.

PHA holders own and govern the protocol. Phala’s investors include IOSG Ventures, Incuba Alpha, Candaq Fintech Group, and others.

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Phala

# Phala Earnings Methodology

## 1. Overview

Phala earnings represents the net profit generated by the Phala blockchain protocol, calculated as total revenue minus total expenses. This metric measures the protocol's financial performance by subtracting operational costs (primarily token incentives paid as block rewards) from revenue generated through transaction fees. The calculation follows the standard accounting principle of Earnings = Revenue - Expenses, providing insight into the protocol's profitability and economic sustainability.

## 2. Data sources

The calculation utilizes several key data sources:
- **Phala blockchain event logs**: Raw event data from Phala blockchain transactions containing structured event information
- **Transaction payment events**: Parsed `TransactionFeePaid` events from the `transactionPayment` pallet capturing fees and tips
- **Stake pool reward events**: Parsed `RewardReceived` events from the `phalaStakePoolv2` pallet tracking block rewards distributed
- **End-of-day price feeds**: PHA token price data from CoinGecko for USD conversion
- **Token metadata**: PHA token decimal precision information for unit conversions

## 3. Step-by-step calculation

### Component A: Event extraction and processing
- **Purpose**: Extract and standardize raw blockchain events for further processing
- **Logic**: Filter Phala blockchain event logs to identify relevant transaction and reward events. Parse event data from JSON structures and organize by event type and pallet source. Apply daily timestamp truncation to establish consistent time boundaries for aggregation. Extract key fields including block numbers, event indices, and structured event data arrays.
- **Key fields**: `timestamp`, `event_pallet`, `event_method`, `event_data`, `block_number`, `extrinsic_id`

### Component B: Fee calculation and aggregation
- **Purpose**: Calculate total transaction fees generated by the protocol
- **Logic**: Filter events for `TransactionFeePaid` events from the `transactionPayment` pallet. Extract transaction fees and tips from the event data JSON arrays at specific array positions. Sum transaction fees and tips together to get total fees per transaction. Convert amounts from native picocoins to PHA tokens by dividing by 10^12. Aggregate fees daily by summing all transaction fees within each day.
- **Key fields**: `transaction_fee`, `transaction_tip`, `extrinsic_id`, converted fee amounts in PHA tokens

### Component C: Token incentive calculation
- **Purpose**: Calculate token rewards distributed as block rewards
- **Logic**: Filter events for `RewardReceived` events from the `phalaStakePoolv2` pallet. Extract reward amounts from event data arrays. Convert amounts from picocoins to PHA tokens by dividing by 10^12. Group rewards by day and sum total incentives distributed. These incentives represent the protocol's primary operational expense.
- **Key fields**: `amount` (reward amounts), daily aggregated `token_incentives`

### Component D: Supply-side fee calculation
- **Purpose**: Determine fees paid to supply-side participants
- **Logic**: For Phala, supply-side fees are set to zero as the protocol does not distribute fees to validators or other supply-side participants. This creates a baseline where all fees collected represent protocol revenue.
- **Key fields**: `fees_supply_side` (always 0 for Phala)

### Component E: Revenue calculation
- **Purpose**: Calculate total protocol revenue from fee generation
- **Logic**: Sum all collected transaction fees and subtract any supply-side fees distributed to participants. Since Phala's supply-side fees are zero, revenue equals total fees collected. Apply daily aggregation and ensure consistent timestamp boundaries across all calculations.
- **Key fields**: `fees`, `fees_supply_side`, calculated `revenue`

### Component F: Expense calculation
- **Purpose**: Calculate total protocol expenses
- **Logic**: Token incentives (block rewards) represent the primary protocol expense. These are the rewards distributed to maintain network security and operations. Sum daily token incentives to get total daily expenses.
- **Key fields**: `token_incentives` as `expenses`

### Final aggregation
- **Combining components**: Revenue and expenses are combined using the standard earnings formula where earnings equals revenue minus expenses. Both components are joined on timestamp and chain identifier to ensure proper alignment.
- **Currency conversion**: All native PHA token amounts are converted to USD using end-of-day CoinGecko price feeds. Conversion occurs after all native token calculations are complete to maintain precision.
- **Time aggregation**: All calculations use daily time boundaries with timestamp truncation to day level. Missing dates are filled with zero values to ensure complete time series data.
- **Final calculation**: The final earnings metric is calculated as the difference between daily revenue and daily expenses, expressed in USD terms: Earnings = (Total Fees - Supply-side Fees) - Token Incentives, where Supply-side Fees = 0 for Phala.

*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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