The Graph Network is an open-sourced software to collect and organize blockchain data from various blockchain-based applications dApps to facilitate faster information retrieval. It is a universal indexing protocol and application programming interface(API) in the web3 world. Organizing the data in the blockchain, it makes easier for users to access the information.
The blockchain search engine was developed by Yaniv Tal, Jannis Pohlman, and Brandom Ramirez in 2017. The Graph is said to be the first decentralized indexing platform with querying software in the blockchain market. After many prototypes and months of exercising, the google of blockchain was released on mainnet in December 2020. Currently, the platform has reached a new milestone successfully of more than one billion queries which have given the price of native token a mindblowing profit in the market.
Since 2019, through token sales, The Graph has already raised $19.5 million. Out of total tokens, 21% of GRT tokens worth 10 billion have been sold to investors which includes Coinbase Ventures, Digital Currency Group, and Multicoin Capital.
How does ‘The Graph’ protocol works?
Developers use Graph Explorer to find any data which is needed in building decentralized applications or dApps. dApps are applications built on blockchain technology and run through smart contracts. This software interacts with the blockchain to save data as transactions that may or may not be relevant to the users.
When any application adds data to the blockchain through a smart contract, the Graph node locates the data in an appropriate ‘Subgraph’. The other developers then pay the platform in the form of a GRT token to make a query. The query is then acknowledged and the graph nodes access the information, mostly done by four players present in the network. They are known as developers, indexers, curators, and delegators who provide the service in exchange for some amount of fees.
Some Ethereum-based dApps such as Curve Finance, Arve, Compound use ‘The Graph’ platform for their smooth running process.
Indexers are the node operators who provide the user with the required information. They must stake GRT tokens to index and query process services for the signaled subgraph. Indexers also earn query fees and indexing rewards once the service is complete. Also, malicious indexers, who serve incorrect data to applications or index incorrectly can lose their staked GRT as punishment.
Based on the subgraph curation signal, the indexers select the subgraph to index. The curators come to play their role by indicating the high-quality subgraphs by staking GRT tokens on that particular subgraph. At this stage, applications set parameters according to which the Indexers process queries for subgraphs and charge the query fee.
Curators are the subgraph developers who assess the high-quality subgraph to be indexed in The Graph. They are very important to the graph ecosystem as they use their best knowledge of Web3.0 to access and signal the subgraph. Curators also put GRT at stake to the subgraphs having desirable information. Generally, the network incentivizes the curators on how fast they can signal the subgraph for processing.
On the other hand, the job of a curator can be risky. Thorough due diligence should be done before you curate on the subgraph and proceed for signaling. In the graph network, anyone can create a subgraph as it is permissionless and can name it whatever they like.
Delegators, are the frontman who delegate the GRT to the indexers for the steady running of the network without any node installation. They contribute to securing the network without running the graph node themselves.
Delegators earn a chunk of the indexer’s query fee and reward. The more indexers put GRT tokens at stake, the more queries they get to process. Eventually, more prices are charged by the indexers and more rewards are allocated for delegators. But with great rewards, comes great risks.
They cannot be punished for their bad behavior. But a delegation tax can be imposed on making poor choices in choosing indexers. For each delegation, the players are charged 0.5% tax. It means a delegator should be enough calculative to understand their return whenever they delegate to an indexer. For instance: if anyone delegates at 1000 GRT, the network automatically burns 5 GRT.
What is GRT Token?
‘GRT’ is the platform’s fungible native token and is very important for the continuous running of the ecosystem. The indexers, curators, and delegators are incentivized with GRT tokens whenever they retrieve the information for the user. In 2020, the graph introduced 10 billion tokens with an increase of 3% per annum in total supply. Moreover, almost 1% of tokens withers every year.
Currently, the GRT is trading at $0.4104 and the total market capitalization is $1.9 billion.