Artists can launch their music NFT editions through Sound.xyz and collect edition purchase payments (supply-side fees).

Sound.xyz is an NFT launchpad built for musicians and artists. Sound.xyz was founded by Vignesh Hirudayakanth, David Greenstein & Matt Masurka and launched in 2021.

Sound.xyz team owns and governs the protocol. They currently take a protocol fee of edition purchases (revenue).

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Sound.xyz

# Sound.xyz Expenses Methodology

## 1. Overview

The Sound expenses metric measures the total operational expenses incurred by the Sound protocol, specifically focusing on token incentives distributed to users. This metric answers the business question: "What does Sound protocol spend on user incentives and rewards?" The calculation approach determines that Sound protocol currently operates without token incentive programs, resulting in zero expenses across all time periods while maintaining proper dimensional structure for future incentive programs.

## 2. Data sources

The expenses calculation relies on the following underlying data sources:

- **Blockchain events**: Parsed `Minted` events from Sound protocol minter contracts across Ethereum and Optimism, including MerkleDropMinter, RangeEditionMinter, and legacy Artist edition contracts
- **Marketplace events**: Parsed `Bought` and `Sold` events from Sound Swap marketplace contracts (SAM, SAMV1, SAMV2) on Ethereum and Optimism
- **Transaction data**: Ethereum and Optimism transaction records containing mint amounts, protocol fees, royalty fees, and payment details
- **External data**: End-of-day price feeds for ETH and OP tokens used for USD conversion
- **Contract metadata**: Sound protocol contract addresses and version information for proper event attribution

## 3. Step-by-step calculation

### Component A: Primary sales data collection
- **Purpose**: Gather all primary mint transactions to establish the dimensional foundation for expenses tracking
- **Logic**: Extract mint events from multiple minter contract types across Ethereum and Optimism networks. Include MerkleDropMinter events for permissioned drops, RangeEditionMinter events for fixed-price editions, and legacy Artist/ArtistV1 edition purchases. For artist editions, join with price change events to apply correct pricing for each time period based on when mints occurred relative to price modifications. Capture mint counts, protocol fees, and total amounts paid. Standardize chain names and categorize all transactions under NFT marketplace business line with 'nfts' market sector classification.
- **Key fields**: `block_timestamp` for timing, `amount` for transaction value, `protocol_fee_amount` for fees, `mint_count` for quantity, `nft_address` for edition identification, `account_address` for contract reference

### Component B: Secondary sales data collection  
- **Purpose**: Capture secondary marketplace activity to complete the revenue picture that supports dimensional structure
- **Logic**: Extract buy and sell events from Sound Swap marketplace contracts across supported networks. Process both `Bought` events which include artist fees, platform fees, and total payments, and `Sold` events which capture total payouts to sellers. Handle multiple versions of Sound Swap contracts while maintaining consistent data structure. Classify all secondary transactions with appropriate volume type labeling and business segment categorization.
- **Key fields**: `royalty_fee_amount` from buy events, `protocol_fee_amount` for platform fees, `amount` for total transaction value, `nft_address` for edition identification

### Component C: Fee aggregation and USD conversion
- **Purpose**: Combine primary and secondary transaction data into a unified fee dataset with proper currency normalization
- **Logic**: Union primary sales amounts with secondary market royalty fees to create comprehensive fee dataset. Truncate timestamps to daily granularity for consistent time boundaries. Apply USD conversion using end-of-day token price feeds for ETH and OP tokens. Correct token decimals to ensure proper value representation. Aggregate data by day, chain, product dimensions, and other relevant attributes. Apply the finalize fees macro with zero-fill strategy to ensure complete time series coverage.
- **Key fields**: `timestamp` truncated to day, `fees` in USD after conversion, `chain_id` for network identification, dimensional attributes for aggregation

### Component D: Token incentives calculation
- **Purpose**: Determine the amount of token incentives distributed by Sound protocol
- **Logic**: Use the dimensional structure from the fee aggregation component but set all token incentive values to zero. This reflects Sound protocol's current operating model where no token rewards or incentives are distributed to users. Maintain the same time periods and dimensional breakdown as the fee data to ensure consistency across metrics. Apply the finalize token incentives macro with zero-fill strategy.
- **Key fields**: `token_incentives` set to 0, `timestamp` and `chain_id` for dimensional consistency, `product_id` for protocol identification

### Final aggregation
- **Combining components**: Take token incentives (which are zero) as the direct input for expenses calculation, maintaining all dimensional attributes including timestamp, chain, and product information
- **Currency conversion**: Token incentives are already set to zero, so no currency conversion is required, though the dimensional structure inherits USD-converted fee data structure
- **Time aggregation**: Daily time boundaries are maintained from the underlying fee data aggregation, ensuring consistent time series granularity
- **Final calculation**: Expenses equal token incentives distributed, which results in zero expenses for all time periods. Apply the finalize expenses macro with zero-fill strategy to create complete time series coverage across all chains and time periods where the protocol operated

## Critical characteristics

- **Zero expenses model**: Sound protocol currently operates without token incentive programs, resulting in zero expenses across all metrics
- **Dimensional consistency**: Maintains proper time series structure aligned with revenue metrics to support future incentive program implementation
- **Multi-chain coverage**: Tracks across both Ethereum and Optimism networks where Sound protocol operates
- **Complete time series**: Uses zero-fill strategy to ensure no gaps in time series data for consistent reporting

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

Total project operating and incentive expenses.

Sound.xyz

Expenses

Expenses

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