# Polkadot Relay Chain Expenses Methodology

## 1. Overview

Expenses measures the total cost incurred by the Polkadot Relay Chain to maintain its network security and operations, primarily through token incentives. For the Polkadot Relay Chain, these expenses consist of DOT tokens distributed as staking rewards to validators and nominators, as well as incentives distributed via child bounties. This metric serves as a proxy for the protocol's issuance-based operating costs and is converted to USD to enable standardized financial analysis.

## 2. Data sources

- **Blockchain events**: `Rewarded` and `Reward` events from the `staking` pallet, and `Claimed` events from the `childBounties` pallet on Polkadot
- **External data**: End-of-day price feeds for the DOT asset

## 3. Step-by-step calculation

### Component A: Staking reward extraction

- **Purpose**: Capture the value of DOT issued to network participants for securing the relay chain.
- **Logic**: Staking rewards are extracted from the `staking` pallet on the Polkadot Relay Chain. For historical data prior to specific protocol upgrades, rewards are identified via `Reward` events. For contemporary data, `Rewarded` events are parsed. The logic accounts for schema changes in event data structures by dynamically targeting the relevant indices within the event data array based on block height.
- **Key fields**: `event_data` (containing reward amounts), `block_number` (for schema versioning)

### Component B: Child bounty incentive tracking

- **Purpose**: Capture operating expenses related to specific network tasks and community-driven initiatives.
- **Logic**: Incentives are identified by parsing `Claimed` events from the `childBounties` pallet. Only events specifically associated with the relevant treasury-funded bounty programs are included. Amounts are extracted from the event parameters to represent the finalized payment of the incentive.
- **Key fields**: `event_data` (containing claim amounts and identifiers)

### Component C: Normalization and USD conversion

- **Purpose**: Transform native asset quantities into a standardized currency for financial reporting.
- **Logic**: All extracted amounts are normalized by the decimal precision of the DOT asset. These values are then multiplied by the end-of-day price feeds for DOT. The resulting USD values are aggregated by day using UTC boundaries to produce the final daily expenses metric.
- **Key fields**: `amount` (native units), `price_usd` (valuation)

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

Total project operating and incentive expenses.

Expenses

Blockchains (L1)

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.

Polkadot Relay Chain

Expenses

Expenses

Chain breakdown