The Graph is an indexing protocol that allows blockchain applications like Ethereum and IPFS to collect, process, and retrieve data verifiably. The open-source protocol makes it easier for developers to build and publish open APIs called subgraphs. GRT is the name and ticker symbol of its native token.
The Graph collects, analyzes, and sorts blockchain data using Graph nodes. Graph nodes are responsible for constantly scanning blocks and smart contracts on the blockchain. When applications add new data to the blockchain, Graph nodes categorize the information into their respective subgraphs. End users can then search for relevant data within subgraphs.
By enabling decentralized finance (DeFi) applications to communicate with each other quickly and securely, The Graph solves problems such as chain reorganization and query fulfillment capacity. Some of the most popular decentralized applications (DApps) leveraging the indexing mechanism of The Graph are AAVE, Curve DAO, and Uniswap.
How does GRT work?
What sets The Graph apart is how it involves GRT tokens at each stage of the indexing process. The Graph relies on four separate network participants: indexers, curators, delegators, and consumers. These four network actors are vital to running the open-source protocol and are as follows.
Indexers act as the node operators of The Graph. Indexers can stake GRT on the platform and run a Graph Node. Their primary function is to provide indexing services to signaled subgraphs. This process rewards indexers with GRT tokens, who can also set their own fees for providing indexing services. Indexers compete with other indexers to ensure a quality service.
Curators are responsible for ensuring the quality of the services provided by indexers:
They assess which subgraphs offer accurate data.
Curators use their GRT tokens to signal which subgraphs are worth indexing.
Curators receive rewards directly proportional to the popularity of signaled subgraphs.
Delegators assist in securing the network by delegating their GRT tokens to indexers. This helps Graph nodes to fulfill their indexing services. In return, delegators receive GRT tokens rewards from indexers in proportion to their delegation.
Consumers are the end-users of The Graph protocol. They can be individuals submitting queries to retrieve information or developers and blockchain DApps like Uniswap that require services from The Graph. Consumers are required to pay GRT tokens to submit questions and pull blockchain data, helping to stabilize the price of GRT.
Apart from its extensive usage on the Ethereum network, The Graph is also planning to explore the Web3 ecosystem. If the platform becomes blockchain agnostic, The Graph can enable a Google-like search for all distributed ledgers in the ecosystem.
GRT price and tokenomics
GRT has a total supply of 10 billion, and 3% will be issued as indexing rewards every year. Therefore, the circulating supply of GRT tokens is roughly 6.9 billion, representing 69% of the total supply. Tokens are burnt through various mechanisms to maintain deflationary effects and facilitate a GRT price appreciation. One such method includes depositing tax for curators and delegators.
The Graph conducted two separate funding rounds in 2020. The first round was completed in June and was aimed at private investors. This round raised $7.5 million for the ongoing development of The Graph. The second round was a public initial coin offering (ICO) that raised an additional $12 million.
The community and early backers of the project received almost 50% allocation of the overall distribution. 23% was distributed to the team and advisors, while the remaining was distributed between Edge & Node (the initial team of Graph) and strategic investors.
GRT tokens also feature a constant emission schedule, which dictates that new tokens will be issued and added to the circulating supply via indexing rewards. Indexing rewards are paid to network participants who agree to lock up their GRT tokens to power The Graph and ensure that subgraphs are accurately indexed. Indexing rewards are also paid to delegators depending on how many GRT tokens they've staked to a selected indexer.
About the founders
The Graph was founded by Yaniv Tal, Brandon Ramirez, and Jannis Pohlman, who served as project, research, and tech leads. Tal, Ramirez, and Pohlmann come from various engineering backgrounds but have a history of working together for over five years. Their previous project, Datomic, successfully designed a custom framework for an immutable database. The Graph's initial vision of creating immutable APIs and data access tools using the QueryQL programming language was born from this project. The mainnet launch of The Graph's services was realized when the platform was deployed on the Ethereum network on Dec 17, 2020.
Today, The Graph team comprises experienced members from prestigious backgrounds in the cryptocurrency industry, such as The Ethereum Foundation, OpenZeppelin, and Decentraland. In the spirit of decentralization, over 20,000 developers have contributed to expanding the network of subgraphs within The Graph's platform. The last funding round for The Graph occurred in the second quarter of 2020. The company raised $5 million from several strategic investors, including Framework, ParaFi Capital, Digital Currency Group, CoinIX, Tally Group, and Coinbase Ventures. The year before, Multicoin Capital and DTC Capital led the seed round, raising $2.5 million.