# Polkadot Relay Chain Revenue Methodology

## 1. Overview

Revenue measures the portion of transaction fees retained by the Polkadot Relay Chain treasury. On the Polkadot Relay Chain, a protocol-level fee-sharing mechanism is utilized where 80% of the base transaction fee is allocated to the network treasury, while the remaining 20% and 100% of any tips are distributed to validators as supply-side fees. This metric represents the treasury's share of these fees, which are used to fund ecosystem development, bounties, and network operations.

## 2. Data sources

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

## 3. Step-by-step calculation

### Component A: Transaction fee extraction

- **Purpose**: Capture the raw transaction fees paid by users on the Polkadot Relay Chain.
- **Logic**: `TransactionFeePaid` events are parsed from Polkadot Relay Chain event logs. The data is decomposed to identify the base fee `amount` and the `tip` provided by the sender. These components are extracted from the event data array to allow for the application of the network's fee-sharing logic.
- **Key fields**: `event_data` (containing fee components), `block_timestamp` (timing).

### Component B: Treasury revenue allocation

- **Purpose**: Calculate the specific portion of fees retained by the protocol treasury.
- **Logic**: A revenue share of 80% is applied to the base transaction fee `amount`. Tips are excluded from the revenue calculation as they are fully distributed to validators. The final revenue value for each transaction is determined by multiplying the base fee by the revenue cut.
- **Key fields**: `revenue_cut` (set to 0.8).

### Component C: Normalization and USD conversion

- **Purpose**: Normalize fee amounts to standard units and convert them to USD.
- **Logic**: Raw fee amounts are normalized by decimal precision using a factor of 10 decimals for the native DOT asset. The daily aggregate of treasury revenue is then multiplied by the end-of-day DOT price sourced from price feeds. Calculations are performed at daily granularity using UTC day boundaries.

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

fees * take_rate (illustrative — revenue is observed directly per project, not derived from take_rate)

Fee revenue retained after supply-side payouts. Before cost of revenue (e.g. L2 DA fees) and before operating expenses.

Revenue

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

Revenue

Revenue

Chain breakdown