What is The Graph? (GRT)
The Beginner’s Guide
The Graph is an open-sourced software used to collect, process and store data from various blockchain applications to facilitate information retrieval.
Originally launched on the Ethereum blockchain, The Graph’s mission is to help developers use relevant data to increase the efficiency of their decentralized application (dapp).
The Graph analyzes and gathers blockchain data before storing it into various indices, called Subgraphs, allowing any application to send a query to its protocol and receive an immediate response.
Queries are posed by dapps through GraphQL, a widely used language originally created by Facebook to gather data for a user's news feed.
The Graph users who provide services to the network, called indexers and delegators, help to process the data and pass them on to end-users and applications.
The Graph’s native cryptocurrency, GRT, is used to ensure the integrity of the data secured within its network. Any user, whether they are indexers, curators or delegators, must stake GRT to perform their roles, and, in return, earn fees from the network.
The Graph is being used by popular Ethereum dapps like Aave, Curve and Uniswap. Users wishing to stay connected on the current development of The Graph can bookmark their official blog for up-to-date details.
Who created The Graph?
The Graph was founded in 2018 by Yaniv Tal, Jannis Pohlmann and Brandon Ramirez, who previously worked together on several startups that focused on creating developer tools.
The Graph raised a total of $19.5 million in token sales since 2019, including $10 million from its October 2020 public sale. During this time, roughly 21% of the initial token supply of 10 billion GRT has been sold to investors including Coinbase Ventures, Digital Currency Group and Multicoin Capital.
How does The Graph work?
The Graph’s first step for aggregating data happens through the Graph Nodes, who continuously scan network blocks and smart contracts for information.
When an application adds data to the blockchain through smart contracts, the Graph Node adds the data from these new blocks to its appropriate Subgraphs.
Once the Graph Node extracts information, there are three types of users who contribute to organizing data in its protocol.
- Curators – Subgraph developers who assess which subgraphs are of high quality and need to be indexed by The Graph. Of note, Curators attach GRT to the subgraphs they believe in.
- Indexers – Node operators tasked with providing indexing and querying services for the signaled subgraphs, and must stake GRT in order to provide these services.
- Delegators – Delegate GRT to indexers in order to contribute to running the network without installing a node.
All users earn a portion of the network fees for their work, dependent on their role.
This data can then be easily accessed by applications seeking information that will help them run their software through the use of queries.
For example, Decentraland accesses The Graph's information to find land, accessories and collectibles across applications and brings them into their marketplace, allowing users to purchase them from a central location.
Why does GRT have value?
The GRT cryptocurrency derives its value from its ability to ensure the successful execution of smart contracts that depend on the The Graph protocol.
Most notably, GRT is the only cryptocurrency used for key network operations. For example, consumers who submit queries to indexers must pay a query fee, denominated in GRT.
Curators earn query fees for the subgraphs they signal, indexers earn a portion of the query fees and rewards from the protocol, and delegators earn part of the indexer fees for lending their GRT.
Anyone who owns and stakes GRT tokens can participate in decisions affecting the software, voting on proposals for the rules that govern the platform’s use. Delegators assign their voting rights to someone else to vote on their behalf.
Investors should note that, while The Graph introduced 10 billion GRT in 2020, the total supply is set to increase on average around 3% annually, with an estimated 1% of tokens to be removed from circulation each year.
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Why use GRT?
The Graph may be of interest to developers seeking to create blockchain-based applications that need to access and vet blockchain data.
Investors may want to add GRT to their portfolio should they believe that decentralized applications will continuously require a vast amount of blockchain data to operate.
Finally, should The Graph prove to solve key problems for dapp users, it could become an essential tool in linking all applications built on the blockchain.