Starknet is a Validity-Rollup (ZK-Rollup) Layer 2 network that operates on top of Ethereum, enabling dApps to massively scale without compromising on security. It achieves this by bundling transactions into an off-chain computed STARK proof. This proof is then submitted to Ethereum as a single transaction, resulting in significantly higher throughput, faster processing times, and much lower costs, all while retaining the robust security of the Ethereum settlement layer.

Starknet aims to be governed by a decentralized, community-driven process centered around STRK token holders. While StarkWare originally developed the technology, the network is transitioning to a completely decentralized model where the broader community makes decisions regarding protocol upgrades, development, and the future of the network.

Starknet is a Layer 2 that uses STARK technology to validate off-chain transactions, enabling unlimited scale while preserving Ethereum's security and decentralization.

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# Starknet Earnings Methodology

## 1. Overview

Earnings represents Starknet's net financial performance, calculated as the difference between revenue generated from transaction fees and total expenses incurred from operations. This metric answers the fundamental question of whether Starknet operates at a profit or loss on a daily basis. The calculation follows standard financial accounting principles: Earnings = Revenue - Expenses, where revenue comes from user-paid transaction fees and expenses include both Layer 1 settlement costs and token-based incentive distributions.

## 2. Data sources

The calculation relies on multiple blockchain data sources and external feeds:
- **Starknet transaction records**: All transactions executed on the Starknet network containing fee information and transaction metadata
- **Ethereum transaction records**: Transaction data for settlements posted to Ethereum mainnet, specifically targeting Starknet's core contract and verification systems
- **Parsed Starknet event logs**: `Claim_ClaimServed_event` logs from the STRK token airdrop contract and `Staking_RewardsSuppliedToDelegationPool_event` logs from the staking reward distribution system
- **End-of-day token price feeds**: USD price data for ETH and STRK tokens used for currency conversion
- **Token metadata**: Decimal precision information for proper token amount normalization

## 3. Step-by-step calculation

### Component A: Revenue from transaction fees
- **Purpose**: Calculate daily revenue from user-paid transaction fees on Starknet
- **Logic**: Extract all Starknet transactions and aggregate the `actual_fee_amount` field by day. Handle two fee payment methods: transactions paying in WEI (ETH) using token address `0xc02aaa39b223fe8d0a0e5c4f27ead9083c756cc2` and transactions paying in FRI (STRK) using token address `0xca14007eff0db1f8135f4c25b34de49ab0d42766`. Apply 18-decimal normalization by dividing raw `actual_fee` values by 10^18. Convert daily aggregated fees to USD using end-of-day token prices.
- **Key fields**: `block_timestamp` for daily aggregation, `actual_fee_unit` to determine payment token, `actual_fee_amount` for fee values, `token_address` for price lookup

### Component B: Cost of revenue from L1 settlement
- **Purpose**: Calculate daily costs for settling Starknet state transitions on Ethereum Layer 1
- **Logic**: Identify Ethereum transactions sent to two specific addresses: Starknet core contract (`0xc662c410c0ecf747543f5ba90660f6abebd9c8c4`) and SHARP verifier contract (`0x47312450b3ac8b5b8e247a6bb6d523e7605bdb60`). For each transaction, calculate total gas costs as the sum of regular gas fees (`gas_used * gas_price`) and blob gas fees (`blob_gas_used * blob_gas_price`). Convert the combined gas costs from Wei to ETH by dividing by 10^18. Aggregate daily settlement costs and convert to USD using end-of-day ETH prices.
- **Key fields**: `to_address` for contract filtering, `receipt_gas_used`, `receipt_effective_gas_price`, `receipt_blob_gas_used`, `receipt_blob_gas_price` for fee calculation

### Component C: Token incentives expense
- **Purpose**: Calculate daily token distribution costs from airdrops and staking rewards
- **Logic**: Extract STRK token distributions from two event types. From `Claim_ClaimServed_event` logs, capture airdrop claims with the `amount` field representing tokens claimed and `recipient` identifying the claiming address. From `Staking_RewardsSuppliedToDelegationPool_event` logs, capture staking rewards with `amount` representing rewards distributed and `pool_address` as the receiving delegation pool. Apply proper decimal correction for STRK tokens and convert daily aggregated distributions to USD using end-of-day STRK prices.
- **Key fields**: `amount` for token quantities, `recipient` and `pool_address` for distribution tracking, `incentive_type` to distinguish airdrop vs staking rewards

### Component D: Total expenses calculation
- **Purpose**: Combine all Starknet operational expenses
- **Logic**: Sum the daily USD values from cost of revenue (L1 settlement fees) and token incentives (STRK distributions). This represents the total daily cost of operating the Starknet network.
- **Key fields**: Aggregated `cost_of_revenue` and `token_incentives` amounts in USD

### Final aggregation
- **Combining components**: Subtract total daily expenses from total daily revenue to calculate net earnings
- **Currency conversion**: All components are converted to USD using end-of-day price feeds before the final calculation
- **Time aggregation**: All data is aggregated to daily boundaries using timestamp truncation to the day level
- **Final calculation**: Daily earnings = Daily revenue from fees - (Daily L1 settlement costs + Daily token incentive distributions)

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

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

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