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

Polygon is a smart contract platform for decentralized applications & interoperability platform for blockchains. Polygon was founded by Jaynti Kanani, Sandeep Nailwal & Anurag Arjun and launched in 2017.

MATIC holders own and govern the protocol. They currently take a cut of the total transaction fees paid by users (revenue). Polygon’s investors include Coinbase Ventures, ZBS Capital, MiH Ventures, etc.

github

twitter

discord

etherscan

website

Blockchains (L1)

Polygon

# Polygon Earnings Methodology

## 1. Overview

Polygon earnings represent the protocol's net profit, calculated as the difference between revenue generated from burned transaction fees and expenses from validator token incentives. This metric measures the protocol's financial performance by subtracting operational costs (validator rewards) from income (fee burning). The calculation uses a straightforward profit formula: Earnings = Revenue - Expenses.

## 2. Data sources

The calculation draws from multiple blockchain data sources:
- **Polygon blockchain data**: Block records containing base fee information and transaction records with gas usage details
- **Ethereum event logs**: Parsed `RootChain_NewHeaderBlock_event` logs from Polygon's validation contract on Ethereum L1, which record validator reward distributions
- **Token price feeds**: End-of-day price data for POL tokens (used for validator rewards) and WPOL tokens (used for fee calculations)
- **Token metadata**: Decimal precision and addressing information for POL and WPOL tokens to ensure accurate calculations

## 3. Step-by-step calculation

### Component A: Revenue calculation
- **Purpose**: Calculate daily revenue from burned base fees on Polygon
- **Logic**: Combine Polygon transaction data with block data to calculate burned fees. For each transaction, multiply the `gas_used` by the block's `base_fee_per_gas` to get the burned fee amount. Base fees represent the portion of transaction fees that are permanently removed from circulation, constituting protocol revenue. Aggregate these burned fees daily and convert to USD using WPOL token prices
- **Key fields**: `gas_used` from transactions, `base_fee_per_gas` from blocks (corrected by dividing by 10^18), daily `timestamp` truncation, WPOL `token_address` for pricing

### Component B: Expenses calculation  
- **Purpose**: Calculate daily expenses from validator token incentives
- **Logic**: Extract validator reward payments from Ethereum event logs. Parse `RootChain_NewHeaderBlock_event` events which contain POL token rewards paid to validators for block production. These rewards represent the protocol's operational expenses for maintaining network security. Aggregate reward amounts daily and convert to USD using POL token prices
- **Key fields**: `reward` amounts from Ethereum events, POL `token_address`, daily `timestamp` aggregation, `block_timestamp` for timing

### Final aggregation
- **Combining components**: Subtract total daily expenses from total daily revenue using the earnings formula (Revenue - Expenses)
- **Currency conversion**: Both revenue and expenses are converted to USD using end-of-day token prices before the final calculation
- **Time aggregation**: All calculations use daily boundaries with timestamp truncation to day level
- **Final calculation**: Net earnings equals the daily burned fee revenue minus the daily validator reward expenses, representing Polygon's daily profit or loss

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

Net profit (also profits, net income, profitability) — revenue remaining after subtracting expenses.

PolygonPOL

Earnings

Earnings

Competitive landscape