# Polkadot Relay Chain Supply-side fees Methodology

## 1. Overview

Supply-side fees for Polkadot Relay Chain measure the rewards distributed to validators for maintaining the security and integrity of the relay chain. These fees represent the portion of transaction costs paid by users that is directed to infrastructure participants rather than the network treasury. This metric includes a predefined share of the base transaction fee and the full value of any transaction tips provided by users to prioritize their extrinsics.

## 2. Data sources

- **Blockchain events**: `TransactionFeePaid` events from Polkadot Relay Chain
- **External data**: End-of-day price feeds for DOT

## 3. Step-by-step calculation

### Component A: Fee and tip extraction

- **Purpose**: Identify and capture the raw fee components from on-chain transactions.
- **Logic**: `TransactionFeePaid` events are parsed from Polkadot Relay Chain to extract transaction fees and priority tips. The base amount and tip value are retrieved from the event data for every extrinsic where transaction fees are applied.
- **Key fields**: `amount` (base transaction fee), `tip` (user-provided priority fee)

### Component B: Supply-side allocation

- **Purpose**: Calculate the specific portion of collected fees allocated to validators.
- **Logic**: A fixed distribution ratio is applied to the base transaction fee, where 20% of the value is allocated to supply-side fees and the remaining 80% is directed to the protocol treasury. Transaction tips are not subject to this split and are allocated in their entirety (100%) to the supply-side. The final supply-side fee value per transaction is calculated as the sum of the validator's share of the base fee and the full tip amount.

### Component C: USD normalization and aggregation

- **Purpose**: Standardize values into a common currency and time interval for reporting.
- **Logic**: Raw amounts are normalized by decimal precision and converted to USD using end-of-day price feeds for the DOT asset. The resulting values are aggregated into daily totals using UTC day boundaries.

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

Portion of fees distributed to service providers or supply-side participants.

Supply-side fees

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

Supply-side fees

Supply-side fees

Chain breakdown