Defining The Graph
Yaniv Tal worked with his team to develop an indexing protocol for Ethereum - the result is now known as The Graph, of which Tal is both co-founder and CEO. The Graph is an open-source, decentralized indexing platform for blockchain data. It works by allowing developers to create APIs, known as subgraphs, which can be queried through the GraphQL.
Think of The Graph as a big library for blockchain data and APIs. It is a tool that blockchain developers, and those interested in blockchain data, would find extremely useful. The platform can be used to search for any Ethereum data through simple queries. This addresses the common problem that many other blockchain indexing platforms have.
Even to solve this relatively simple problem, it would take hours, or even days, for a decentralized application (dApp). The Graph solves this today with a hosted service that indexes blockchain data. These indexes, or subgraphs, can then be queried with a standard GraphQL API.
The goal for the project is to have this hosted service evolve into a fully decentralized protocol with the same capabilities, backed by the open-source implementation of Graph Node.
If you’re interested in how Ethereum blockchain data will be indexed and made easier to access in the future, read on about The Graph.
The Graph’s Structure and Functions
The Graph follows a specific flow of actions from a query, through to nodes, smart contracts, and finally the result of the data being indexed. This flow is what makes The Graph unique, and what enables it to perform the functions it has been designed to.
Subgraphs help organize and store data indexed from Ethereum. Subgraph descriptions provide detailed information about relevant smart contracts, key blockchain events, and how to map event data before it is stored in the protocol’s database. These descriptions are called subgraph manifests.
There are 6 different types of network participants on The Graph that make the network run.
The first are Indexers, which are The Graph’s node operators. They are primarily tasked with indexing subgraphs, which earns them rewards as well as query fees. To become an indexer, users must simply stake the native utility token GRT. Competitive prices are set by the Indexers themselves, which helps create a healthy market for their services.
Consumers are the users or web services that pay Indexers for their service.
Curators are responsible for evaluating and signalling on high quality subgraphs, which are then indexed by the network. As the network rewards curators based on the quality of subgraphs they choose, they are financially incentivized to signal and to do so early. Signalling works by depositing GRT tokens.
Delegators help choose the best Indexers by staking GRT, which earns them a certain percentage of Indexer rewards. They are therefore incentivized to pick carefully, as poor choices have an impact on their returns. There is also a 0.5% delegation fee.
Finally, Fishermen and Arbitrators respectively check the validity of data supplied in response to queries, and monitor for malicious Indexers.
Work Flow on The Graph
The Graph has a set data flow that begins with dApps adding data (record of all transactions and events) on Ethereum through smart contracts. A Graph Node, operated by Indexers, assembles and indexes data based on relevancy. Users can access their query results through the GraphQL API, which connects the data to the dApp they are using. They can also use the Graph Explorer to find subgraphs.
The Graph Council
As stated in the intro, The Graph operators have specifically stated that they want The Graph to be decentralized. This arrangement will most likely resemble MakerDAO and Compound. When the time is right, the team plans to create a Decentralized Autonomous Organization (DAO) to allow core stakeholders to participate in key protocol decisions.
Similar to other DAOs, The Graph Council, as governing body for the technical parameters of the protocol, will also be responsible for how The Graph Foundation allocates GRT.
The Graph Council’s basic functions include grant and ecosystem funding allocation decisions, protocol upgrades, protocol parameters, and other emergency decisions.
The Graph Token, or $GRT, is The Graph’s native ERC-20-based token that serves as a medium of exchange and a reward for community participants who act as indexers, curators, and delegators. It has a total supply of 10 billion tokens. The circulating supply increases as rewards are distributed to network participants.
On its launch, GRT rocketed up the market cap leaders list and solidified itself among the top 50 cryptocurrencies.
GRT can also be used to acquire shares in Graph Nodes that run the entire platform. Users can do this by staking GRT in the Graph Node of their choice. In return for staking and helping strengthen the network, they receive $GRT rewards. If indexers are malicious and, for example, alter data in an index, they are punished by having their staked GRT tokens revoked. This is a valuable security measure, which the future DAO will surely later handle.
There is a decidedly bright future in store for The Graph. Regular blog updates reflect the lofty goals set by its roadmap. Arguably the most impactful part could be the formation of a DAO that governs The Graph protocol.
The Graph’s focus has been, and continues to be, strengthening the network that indexes valuable information for developers. In the future, the information indexed by The Graph could be used in hundreds of applications beyond just Ethereum.