The Graph protocol was built to provide an open API for decentralized apps. It is a proposed solution to problems like creating a decentralized, permissionless, and open entry point for developers and their d(decentralized)Apps on Ethereum. It also eliminates the need for a dApp to create an in-house queryable database service freeing up precious developer work hours, an asset more precious than any dog asset.
There’s an old saying in business originating from the gold rush of North America where it is wiser to sell the shovels than to mine the gold. The idea being prospected land cannot be mined without the shovels. The Graph and its $GRT token provide the maps to the best shovels in Dodge.
The following is not intended for number-go-up, it is for those interested in IQ-go-up.
Back the before time (the internet existed beyond 2006 btw) there was a problem to be solved with information-dense books. Concepts, passages, and general information look-up were time-consuming and inefficient, it was so inefficient that it was sometimes easier to agree on a lie and build from there. There were a few ways of solving this problem: Adding bookmarks or underlining sentences as one read through a book, looking through the contents manually until the desired information was found, or asking the old bloke at the pub who knew things. This option costs at least a pint and is the oldest token program to date, having said that all these solutions required too much effort and time.
Some monks or wise men came up with an elegant solution to these problems. If a book could provide the reader with categorized lists in the book in alphabetic order and accompanied by relevant page numbers, then the reader could look up information quickly when needed without having to rely on the primitive query methods listed earlier. The index was born.
This basic tool is the foundation of the complicated systems that run our lives today. Venturing into databases is beyond the scope of this article but understand that they are essentially comprehensive indexes of huge amounts of data for specialized applications. Just know that ‘apps’, in essence, are spreadsheet indexing software.
The blockchain is a powerful method of data entry and storage. A sufficiently decentralized blockchain provides an immutable and true linear accounting of transactions for any cryptocurrency. This does not disqualify a blockchain from being almost impossible to sort through, in fact, blockchains excel at slowing down the data analyst.
In the dark ages of crypto, the user had to make their own index and querying methods to parse through blockchain data. These days the data is displayed nicely on blockchain explorers. These explorers are indexes created and maintained by dedicated organizations and are referred to as data ingestion services. They are centralized sources of data and are not adequate for crypto purists.
The Graph is the decentralized access to database indexing and querying of blockchains. The maps to the shovel shop.
Subgraphs are the raw material on the network. ‘The subgraph defines which data The Graph will index from a blockchain, and how it will store it.’
Anyone can create a subgraph so there is no inherent scarcity attributed to a subgraph. The scarcity is in the skilled labor and capital necessary to turn a subgraph into something useful. It is important to note that a subgraph can consist of other subgraphs. It depends on the dApp and what kind of data is needed. The Graph Explorer is open, and users may use the GraphQL querying language to create or examine existing subgraphs right now.
The $GRT token (GRT / USDT) is the native currency on The Graph. It is the medium of fee/reward payment and how anything gets done on the protocol. The initial supply of $GRT tokens was 10 billion with an inflationary rate of 3% by way of fees and rewards. This concludes the number-go-up portion of the article.
The Graph protocol is an Adam Smith economic approach to indexing data. The network requires its tasks to be done diligently, accurately, and honestly. This can be done with a service built by the respective dApp but for it to be permissionless and decentralized, each part of the query process is split into roles that each have their checks and balances.
Indexers are the entrepreneurial and skilled labor aspect of the network, these users index subgraphs and provide querying services for a fee. The indexer may freely set the price of their services, but they more specifically set the price to what is competitive as subgraphs are open to any other indexer to capitalize on.
These node operators are rewarded for providing good and honest indexes and queries. They are also punished for providing dishonest or malicious results. The indexer requires a minimum stake of 100,000 GRT to operate a node.
The Indexer gets paid to index but who pays them? Curators are users that signal to indexers which subgraphs should be indexed on the network by using $GRT.
Curators are one of the capital arms of The Graph and are economically incentivized to signal good quality subgraphs and receive a cut of the querying fees earned by the subgraph. Through a bonding curve, Curators are also incentivized to signal subgraphs early on. A Curator purchases shares of a subgraph with $GRT where the price of a share increases when more shares are minted. When a subgraph is sufficiently popular, the Curator may sell their shares. Ok, This REALLY concludes the number-go-up portion of the article.
For the eggheads: See Bancor’s bonding curve formula, it is the basis of The Graph’s curation.
Delegators are another capital appendage of The Graph and operate as they would any other token delegator for a network node. They stake $GRT with an Indexer and earn a cut of the indexer’s service fees and rewards. This is the cheaper alternative to running a node of The Graph as a delegator doesn’t have to personally run a node.
The consumer is simply a user who pays Indexers for their querying services. This can be a dApp, a third-party software, and basically, anyone querying data on the network.
Since this is a crypto product, the network is designed for interaction between untrusted users. Through a conflict resolution system between Fishermen and Arbitrators.
Claims of dishonest behavior may be levied against an indexer by users called Fishermen. These users verify the network’s response to queries is correct. The arbitrator then analyzes the incorrect claim to determine whether the indexer was malicious or not.
Though The Graph was created first for the Ethereum network, this is often the case for developing web3 apps and finding product-market fit, they offered a Hosted Network not accessible on The Graph’s decentralized network.
For every other popular chain, the Hosted Network facilitated subgraphs for those chains. But by Q1 of 2023, The Graph intends to ‘sunset’ the Hosted Service and enable multi-chain service on The Graph decentralized network.
The roadmap is split into five groups whose ambitions are beyond the scope of this article, but some notable milestones are as follows:
Data & APIs focus on improving indexing performance and reliability. The Firehose framework was proposed and is being designed to handle higher throughputs chains and enable parallel processing to name a few features. The roadmap also includes The Graph Client tool to wrap and abstract all operations supported by the API.
SNARK Force is the fraud proofing department working toward using ZK proofs for querying as well as retrofitting The Graph for use of the EIP-4444 standard. This standard allows Ethereum nodes to prune old data from their copy of the blockchain.
Protocol Economics design and improves incentives on the network.
Protocol & Network Operations dedicates itself to the maintenance and optimization of different subsystems on the protocol. They’re working on an Epoch Block Oracle to improve reward payment accuracy across chains; It is common knowledge data between chains can often be inaccurate.
Indexer Experience makes the indexing experience inviting and lucrative through cost modeling and automation.
The roadmap is quite complex and to see the exact details The Graph Protocol has a YouTube channel and runs monthly Dev meetings.
Data Oracles are one of the most important products to build in the Web3 space. As stated before, developer hours are precious in this space. The Graph has identified early that developer experience and open access to data are one of the key issues plaguing the space. Open APIs are the natural direction crypto must take to have a truly decentralized future.
Now we wait for the number to go up.