Key points
- The Graph is a decentralised protocol designed for efficient indexing and querying of data from public blockchains.
- The protocol’s basic functional unit is the subgraph, created by third-party developers to ingest and index data from specific blockchains.
- The Graph was first launched on Ethereum; its subgraphs now operate across more than 30 decentralised networks.
- Projects that have built and use subgraphs include Aave, Audius, Uniswap, Opyn, ENS, DAOstack, Synthetix, Gnosis, Balancer, Livepeer, Decentraland and others.
Who created The Graph?
Graph Protocol was founded in 2018 in San Francisco by Yaniv Tal, Jannis Pohlmann and Brandon Ramirez. The trio had previously worked together on software start-ups focused on tools for developers.
That same year a non-profit, The Graph Foundation, was registered in the United States to promote the technology, preserve intellectual property and support ecosystem growth.
The project has raised a total of $69.6m across seven rounds. A seed round led by crypto fund Multicoin Capital in January 2019 brought in $2.5m.
In October 2020 a public token sale raised $12m. The largest round came in January 2022 at $50m. Investors in Graph Protocol include Coinbase Ventures, Digital Currency Group, AU21 Capital and Tiger Global Management.
On December 17th 2020, after several months of testnet operation, The Graph Network launched on Ethereum.
After launch, The Graph Foundation focused on ecosystem development and funding external engineering teams. The core protocol developer became Edge&Node, a company founded by The Graph team in 2021.
How does The Graph Network work?
The Graph indexes blockchain data much as Google’s crawlers index web pages. Files, data and metadata are scanned and catalogued so results can be found quickly.
The protocol organises data into subgraphs, which are open API. Any developer can create a subgraph and propose it to The Graph Network community to deliver data (for example, token prices) to decentralised applications.
The Graph Network adheres to strong decentralisation: most protocol processes are distributed among thousands of community participants, whose contributions to network operation are rewarded in GRT tokens.
Beyond independent developer teams that create subgraphs, the protocol has four types of participants:
- indexers — node operators who index the blockchain and process queries in return for rewards. To begin, they must lock at least 100,000 GRT as a bond of node integrity. If a node serves incorrect data, the operator is penalised;
- curators — community members who signal to indexers which subgraphs contain valuable data and should be indexed. A signal is created when a curator deposits their GRT into a specific subgraph. Several curators can back the same subgraph; in that case all receive a portion of query fees in proportion to their stake;
- delegators — participants who can delegate tokens to one or several indexers, receiving a share of query-processing rewards. If a delegator wishes to withdraw GRT, they must wait 28 days for unbonding;
- consumers — end users who retrieve data from subgraphs using GraphQL. They pay for each query in GRT, which is distributed among indexers, curators and delegators.
An indexer can run a Graph Node for any EVM-compatible blockchain. Nodes can also interact with other blockchains via integration with the Firehose tool. Networks already supported include NEAR, Arweave, Solana and Cosmos.
With The Graph, developers build Web3 applications that do not require centralised servers and run entirely on public, decentralised infrastructure.
The Graph tokenomics
The Graph Network uses an ERC-20 utility token, GRT.
GRT played an important role in funding the project. Before mainnet, from 2018 to 2020, 17% of the supply was sold in private and public token sales, raising a total of $7.5m.
At The Graph Network’s launch the initial GRT supply was 10bn. Tokens were allocated as follows:
- team and advisers – 23%;
- community (The Graph Foundation and other purposes) – 35%;
- investors – 34%;
- Edge & Node – 8%.
The vesting schedule spans ten years. As of August 2022, 74% of the total supply, or 7.4bn GRT, had been unlocked. The asset’s inflation is about 3% per year. A set of adjustable mechanisms can also remove and burn a portion of tokens from circulation.
GRT is the key element of the incentive system that underpins The Graph Network. The token is used for:
- funding – The Graph Foundation issues grants in GRT to developers of subgraphs and other tools;
- staking – indexers lock GRT as a bond of good conduct when indexing subgraphs and processing queries;
- signalling – curators deposit GRT into subgraphs to attract indexers’ attention;
- delegation – delegators hand GRT to existing indexers;
- payment – data consumers pay GRT for subgraph queries;
- rewards – indexers, curators and delegates receive a share of query fees.
The token trades on major crypto exchanges such as Binance, Coinbase, KuCoin and OKX. The asset ranks among the top 100 by market capitalisation.
How is The Graph evolving?
In June 2020 an integration with Chainlink was announced. It enabled indexed data from subgraphs to be delivered into smart contracts via Chainlink’s decentralised oracle network.
Early in 2021 The Graph Foundation allocated $5m in grants to more than 50 teams from ten countries to build protocol tools, subgraphs and educational resources.
For security audits across the ecosystem, it engaged OpenZeppelin, Chainsafe, Consensys Diligence and other blockchain-security firms.
In February 2022 Digital Currency Group, Multicoin Capital, Reciprocal Ventures, Cryptos Capital, NGC Ventures and HashKey created a $205m fund to invest in blockchain projects that use The Graph.
That same month The Graph Foundation launched the Graph Advocates programme. Dozens of community ambassadors were selected to produce educational content, run events, offer technical support and ensure access to The Graph’s resources worldwide.
In April 2022 a new governing body was introduced — the decentralised autonomous organisation Graph AdvocatesDAO, which took over oversight and funding of the Graph Advocates programme, as well as the distribution of community grants.
In less than two years from launch, the project had already become an important element of the fast-growing Web3 infrastructure and the DeFi industry.
As of July 2022, The Graph supported data indexing in 31 networks, including Ethereum, NEAR, Arbitrum, Optimism, Polygon, Avalanche, Celo, Fantom, Moonbeam, IPFS and PoA.
By now more than 24,000 developers have deployed over 31,000 subgraphs for applications such as Uniswap, Synthetix, Zora, Known Origin, Gnosis, Balancer, Livepeer, DAOstack, Audius and Decentraland.