What is The Graph (GRT)?
You’re used to browsing the web using Chrome or Brave, and searching for info with Google or DuckDuckGo. But how do you search a blockchain?
All this information that is used by apps to help make them run smoothly is sometimes called “the tech stack,” and everyday users never really think about it. We just want apps to work well and quickly. The Graph and its “subgraphs” help make this happen.
Read on to find out what is The Graph, and why it could be an important building block in the future of the blockchain multiverse.
How Does The Graph Work?
A big plus of blockchain is its transparency--in principle, anyone with an online computer can take a look at a blockchain and check, for example, which accounts own which crypto asset. But it’s not all that easy to search, particularly across more than one blockchain. An enormous amount of data needs to be organized, indexed, and accessed.
In short, The Graphm and its various “subgraphs” make it easy for apps to search data on blockchains.
As an example, the Decentralized Exchange Uniswap runs its own subgraph, which pulls out info that it displays on its Analytics page. If Coingecko wants to display price information about Uniswap, it can do so by accessing Uniswap’s subgraph. Decentraland combs The Graph for info about virtual land, collectibles, and accessories that have been created in various apps, in order to bring them all to their own centralized marketplace, so their users can acquire and put them to use.
In another example, let’s say that you want to know how many Kenny Schachter NFTs are owned by a specific Ethereum account. Or when a particular NFT dropped? By asking via GraphQL, these questions can be answered quickly--questions that a standard Google search would not necessarily turn up, because the answer isn’t in the form of text on a public website, but is buried inside a blockchain.
This means that The Graph, its approach, and its GraphQL app (we’ll turn to that next) are at work doing much of the heavy lifting of “tech stacks,” behind the curtain in many popular blockchain-based systems.
How Does GraphQL Work?
The Graph runs its mainnet on Ethereum and sets about trying to make searching blockchain data within networks like Ethereum, Polkadot, Solana, and Filecoin easier. Data is gathered through Graph Nodes, which are constantly scanning both network blocks and smart contracts stored on them to hoover up information. This info is clustered into open APIs (Application Programming Interfaces)--apps that facilitate interacting with software.
The Graph’s APIs, or subgraphs, are open source, so anyone with sufficient knowledge can build and publish them. Developers dig this, because the array of subgraphs can be woven together into a worldwide graph, containing (in theory) all the public information available on the planet, and this data can be queried using an app called GraphQL.
DeFi (decentralized finance) apps are provided with data through this system.
GraphQL (the name is an homage to SQL, or Structured Query Language) was developed internally by Facebook in 2012 but was publicly released in 2015. The Graph was established later, by three colleagues: Yaniv Tal, Brandon Ramirez and Jannis Pohlmann. They added the component of GRT, The Graph’s native token, which is relatively new, having dropped in December 2020.
How Does GRT Work?
GRT is essentially a prize to provide incentives to participants in The Graph ecosystem, to maintain it and help it grow.
Programmers can stake GRT in exchange for permission to process queries through subgraphs. They choose which subgraphs they’d like indexed and, in exchange for doing the work, they can earn rewards in the form of an annual percentage yield (APY) on the amount of GRT they staked. A secondary role is performed by “curators” who validate the quality of the various subgraphs on the network and earn GRT for doing so.
So, you have “curators,” who are subgraph developers, assessing which subgraphs are providing the best information and should be indexed by The Graph. They can attach GRT to the subgraphs that they feel are doing the best work.
Next, you have “indexers,” who operate the nodes and must provide both querying and indexing services for the subgraphs chosen by the curators. They stake GRT in order to offer this service.
Finally, there are “delegators,” who do not need any technical expertise. They simply contribute to the functioning of The Graph’s ecosystem by delegating GRT to indexers, helping it all run without actually running a node themselves.
All three categories of The Graph participants earn a proportional network fee for the role they play. While GRT is meant to serve as income for indexers and curators, the public, as delegators, can participate by staking GRT. Anyone can contribute and earn some more GRT by delegating some GRT to an indexer, who then stakes it--and you receive a relative portion of the rewards they earn through their efforts in querying and indexing.
Why is The Graph Important?
The Graph was developed by Facebook, and part of the influence and importance of GraphQL is due to its early predominance. Many of the developers who later built projects like Decentraland, Bancor, Curve, and Aragon were already users of GraphQL and so integrated its structural benefits into the new dApps that they created.
The Graph powers many DeFi apps and a lot of the Web3 ecosystem. It’s a popular “plumbing” behind the walls, so to speak. With a reported 50% growth month to month in 2020, The Graph is growing rapidly, fielding over 7 billion queries in September alone!
Looking forwards, the team has introduced Edge & Node, a new software company founded by the core protocol team (and which was running for some time in stealth mode) with the goal of helping The Graph maintain its core protocol and develop new apps and tools.
The folks at The Graph take their responsibilities very seriously. In August 2021, they announced a “Big Bug Bounty,” a reward of $2.5 million to be paid to bug hunters--ethical hackers and developers--who find vulnerabilities in The Graph’s protocol, so they can plug any holes. At the time it was the “biggest active bug bounty program in the world.”
Digital entomologists, start your engines!
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This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.