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 Expenses Methodology

## 1. Overview

Polygon expenses measures the daily cost of operating the Polygon network, specifically capturing token incentives paid to validators as operational expenses. The metric tracks validator rewards distributed through Ethereum's RootChain contract when new Polygon blocks are validated, converting these POL token rewards to USD values to provide a standardized expense measurement.

## 2. Data sources

- **Ethereum blockchain events**: Parsed `NewHeaderBlock` events from Polygon's RootChain contract deployed on Ethereum, which contain validator reward information
- **Token metadata**: POL token specifications including decimal precision and contract address information
- **External price data**: End-of-day POL token price feeds for USD conversion

## 3. Step-by-step calculation

### Component A: Polygon validator rewards extraction
- **Purpose**: Captures raw validator reward data from Polygon's Ethereum-based validation system
- **Logic**: Extracts reward events from Ethereum blockchain where Polygon validators receive POL token incentives through the RootChain contract's `NewHeaderBlock` events. Each event represents a validator reward distribution when new Polygon block headers are submitted to Ethereum. The system identifies distinct reward events using transaction hash, log index, and block timestamp to ensure no duplicates. The POL token contract address (`0x7d1afa7b718fb893db30a3abc0cfc608aacfebb0`) is hardcoded to standardize token identification across all reward events.
- **Key fields**: Block timestamp for timing, transaction hash and log index for uniqueness, `reward` amount in raw POL tokens, and chain identification as 'ethereum'

### Component B: Token incentives processing and conversion
- **Purpose**: Converts raw POL token rewards into standardized USD-denominated daily metrics
- **Logic**: Takes the extracted validator rewards and applies decimal correction using POL token metadata to convert raw token amounts into proper decimal representations. Applies end-of-day POL price feeds to convert token amounts to USD values. Aggregates all rewards by day using timestamp truncation to create daily totals. Assigns rewards to the 'blockchains_l1' market sector and 'blockchain' business segment to categorize the expense type. Handles any gaps in daily data by filling missing days with zero values to maintain consistent time series data.
- **Key fields**: Daily aggregated `token_incentives` amounts in USD, timestamp grain set to 'day', chain identification, and market sector classification

### Final aggregation
- **Combining components**: The final expenses metric directly uses the processed token incentives values without additional aggregation, as validator rewards represent the primary operational expense for Polygon
- **Currency conversion**: POL token amounts are converted to USD using end-of-day price feeds, with decimal precision corrections applied based on POL token metadata
- **Time aggregation**: All reward events within each calendar day are summed to create daily expense totals, with timestamp boundaries set at midnight UTC
- **Final calculation**: The daily expenses value equals the sum of all POL validator rewards (converted to USD) distributed on that day, representing Polygon's operational costs for network validation and security

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

Total project operating and incentive expenses.

PolygonPOL

Expenses

Expenses

Competitive landscape

Chain breakdown