Network participants process transactions and receive fees from users (supply-side fees).

Polkadot is a security & interoperability platform for blockchains and applications. Polkadot was founded by Gavin Wood and launched in 2020.

DOT holders own and govern the protocol. They currently take a cut of the total transaction fees paid by users (revenue). Polkadot’s investors include Polychain, IOSG Ventures, Hashkey, etc.

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Polkadot

# Polkadot Earnings Methodology

## 1. Overview

Polkadot earnings are measured as the net value retained by the protocol after all expenses are subtracted from revenue. On-chain profitability is reflected by capturing fees collected across the Polkadot Relay Chain and system parachains, and subtracting token incentives paid to validators and contributors. The calculation is performed using the formula: Earnings = Revenue - Expenses.

## 2. Data sources

- **Blockchain events**: `TransactionFeePaid` events from the Polkadot Relay Chain, Polkadot AssetHub, Polkadot BridgeHub, Polkadot Collectives, Polkadot People, and Polkadot Coretime; `AssetTxFeePaid` events from Polkadot AssetHub; `Purchased` and `Renewed` events from the `broker` pallet on Polkadot Coretime; staking `Rewarded` and `Reward` events from the Polkadot Relay Chain and Polkadot AssetHub; and `Claimed` events from the `childBounties` pallet on the Polkadot Relay Chain, covering Polkadot Relay Chain, Polkadot AssetHub, Polkadot BridgeHub, Polkadot Collectives, and 2 other chains
- **External data**: End-of-day price feeds for DOT and non-DOT assets, and asset metadata for Polkadot AssetHub fee assets

## 3. Step-by-step calculation

### Component A: Fee collection across Polkadot ecosystem

- **Purpose**: Capture all transaction fees paid across Polkadot Relay Chain and system parachains
- **Logic**: Transaction fees are extracted from `TransactionFeePaid` events on the Polkadot Relay Chain and all system parachains (Polkadot AssetHub, Polkadot BridgeHub, Polkadot Collectives, Polkadot People, and Polkadot Coretime). Fee `amount` and `tip` values are contained within each event in raw units. For Polkadot AssetHub, `AssetTxFeePaid` events are also extracted for fees paid in non-DOT assets. For Polkadot Coretime, coretime sales are captured from `Purchased` and `Renewed` events emitted by the `broker` pallet, with the tip value set to zero. Raw amounts are normalized by decimal precision for DOT-denominated fees. For non-DOT Polkadot AssetHub fees, amounts are normalized by decimal precision from the fee asset mapping.
- **Key fields**: `block_timestamp` for daily aggregation, `amount` for base fees, `tip` for additional validator payments, `token_id` for multi-asset fee identification, `chain` for source chain tracking

### Component B: Revenue calculation with fee distribution

- **Purpose**: Calculate protocol revenue after accounting for validator fee sharing
- **Logic**: Total fees (amount plus tip) are summed across all chains. Polkadot's fee distribution model is applied, where Polkadot Relay Chain base fees are split 80% to the protocol treasury and 20% to validators, and 100% of tips are rewarded to validators, while system parachain fees are 100% retained by the protocol treasury. Supply-side fees (representing the 20% validator portion of Polkadot Relay Chain base fees plus 100% of tips) are subtracted from total fees to calculate net protocol revenue.
- **Key fields**: `fees` as total collected amounts, `fees_supply_side` as validator portion, calculated revenue as the difference

### Component C: Token incentive expenses

- **Purpose**: Calculate all token-based expenses paid by the protocol
- **Logic**: Staking rewards are extracted from `Rewarded` and `Reward` events on the Polkadot Relay Chain, with different event schemas handled before and after block 19550701 and date 2021-09-07. Post-migration (2025-11-03), staking rewards are also extracted from `Rewarded` events on Polkadot AssetHub. System parachain incentives are captured from `Claimed` events emitted by the `childBounties` pallet on the Polkadot Relay Chain where the bounty ID is set to 32. Raw reward amounts are normalized by decimal precision. All incentive payments are summed by day.
- **Key fields**: `amount` from reward events, `block_timestamp` for daily grouping, `event_pallet` and `event_method` for event filtering

### Component D: Currency conversion

- **Purpose**: Convert all native asset amounts to USD for standardized reporting
- **Logic**: Fee and incentive data are joined with end-of-day price feeds. DOT prices from Polkadot price feeds are used for all DOT-denominated amounts. For Polkadot AssetHub non-DOT fees, HydraDX price feeds are matched by asset address and chain. Price conversion is applied by multiplying asset amounts by USD prices. Missing price data is handled gracefully.
- **Key fields**: `price_usd` from price feeds, `timestamp` for daily price matching, `chain` and `token_address` for asset identification

### Component E: Final aggregation

- **Purpose**: Combine revenue and expenses to calculate net earnings
- **Logic**: Earnings are calculated using the formula: Earnings = Revenue - Expenses. Revenue is calculated as the sum of all USD-converted fees minus supply-side fees. Expenses are calculated as the sum of all USD-converted token incentives. Data is truncated to daily boundaries and aggregated by day across all chains and products. For each day, revenue is summed across all Polkadot ecosystem chains, and total token incentive expenses are subtracted, resulting in daily earnings in USD. Zero-filling is applied for days with no activity to ensure a continuous time series.
- **Key fields**: `revenue`, `expenses`, `earnings`

*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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