Revolutionizing Web3 Arena With The Graph

13 October 2023

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Web3 arena graphs explained in image

In the early days of the Internet, the emergence of the World Wide Web brought forth a vast amount of information, leading to the birth of search engines like “Google”. Fast forward 20 years, and the Web is undergoing another transformation towards decentralization that is powered by blockchain. The 'Web3' era faces a similar challenge: the need to efficiently access data stored on decentralized platforms. And the Graph protocol emerged as a solution to this information access problem. But what exactly is this protocol, and how did it emerge? Let’s take a look.

The Graph Protocol: An Overview

Indexing is one of the most common techniques that makes finding information easier. It uses references to specific data entries, allowing quick access without the need to search through an entire database. This method isn't new; it dates back to physical books, where indexes marked pages with specific content. The Graph applies this approach in Web3. It's an indexing protocol for querying blockchain networks like Ethereum and IPFS. It uses GraphQL, a flexible query language that allows us to specify exactly what data we want and how we want to filter it.

The protocol enables the creation of open APIs called subgraphs, simplifying access to blockchain data. These subgraphs are like folders that hold related information. A single decentralized application can rely on one or even several subgraphs to get the data it needs. What's even more interesting is that a subgraph can be made up of other subgraphs, creating a comprehensive view of the data that the application requires. It's like having a well-organized library where you can access precisely the books you need- no more, no less.

The Graph Protocol in the Web3 Space

The Graph Protocol, often referred to as "The Graph," was specifically developed to address several key challenges and shortcomings in the Web3 ecosystem, particularly in the context of accessing and querying data from blockchain networks and decentralized applications (dApps). Here are some of the primary reasons why the Graph Protocol was developed:

Easier Data Access
Before the Graph protocol came along, getting information from blockchain networks and decentralized apps was a bit of a hassle. Users had to go through complicated processes, and it took a lot of time. The Graph fixed this by simplifying the process, making it easier for developers to find the data they required.

Up-to-Date Information
Many decentralized apps (dApps) need the latest data from blockchain networks. The Graph was created to give them this real-time access. It allows developers to build apps that use the most current information available.

User-Friendly
The Graph Protocol is designed to be friendly to developers. It uses a special language called GraphQL, which lets developers specify exactly what data they want. This makes it easier to build things and doesn't require a lot of learning to work with blockchain data.

Scalable
As the Web3 world keeps growing, more and more people need efficient ways to find data. The Graph Protocol can handle this growth by spreading the work across lots of different nodes. This keeps things decentralized.

Interoperability
Web3 works with different blockchains and data sources. The Graph Protocol was made to work with all of them. This means developers can get data from different places in one go, making their job easier.

Reliable Data
The Graph Protocol includes things like data proofs, which let users check if the data is correct. This builds trust because users can make sure the information is accurate on their own.

No Censorship
By spreading out how data is found and used across a bunch of places, the Graph Protocol makes it hard for any one group to control it all. This helps keep things fair and resistant to censorship.

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Roles That Uphold The Graph Network

The Graph network involves several key roles that work together to maintain and operate the system. Let’s look at these roles one by one.

Indexers
Indexers are responsible for storing, processing, and serving data queries. They allocate resources to index specific subgraphs, making data available for querying. Indexers are incentivized through rewards for their services.

Curators
Curators play a role in signaling which subgraphs are valuable and should be indexed by utilizing their Web3 knowledge. They can signal their support for specific subgraphs by staking cryptocurrency tokens, and in return, they can earn a portion of the query fees.

Delegators
Delegators are individuals who delegate their stake to indexers to participate in the network's governance and decision-making process. They share the rewards and fees earned by the indexers they delegate to.

Consumers
Consumers are the users of the data indexed by The Graph. They submit data queries through the Graph's APIs to access blockchain data quickly and efficiently for their decentralized applications. Consumers interact with Indexers to request and access data from various subgraphs, compensating Indexers for their services.

Fishermen
Fishermen are responsible for monitoring the network and reporting any incorrect data or malicious behavior. They play a role in ensuring the accuracy and integrity of the data indexed on The Graph.

Arbitrators
Arbitrators act as dispute resolution entities. In cases of disputes or disagreements in the network, they help settle the issues and ensure that the network operates fairly.

The GRT Token: The Backbone of the Graph Protocol

The GRT token, an essential element of the Graph Protocol, plays a pivotal role in incentivizing and maintaining the network's decentralized and efficient operation. As a cryptocurrency token built on blockchain technology, GRT serves multiple purposes within the ecosystem. First and foremost, GRT is used to incentivize Indexers, who dedicate their resources to indexing and making data accessible on the network. These Indexers receive GRT tokens as rewards for their valuable service. Likewise, Curators, who signal the importance of particular subgraphs, use GRT tokens to express their support and influence the indexing priority of those subgraphs.

Consumers, who query the data from the network, pay for these services using GRT tokens. This creates a fair and sustainable model where Consumers compensate Indexers for the resources used to fulfill their data requests. Additionally, GRT tokens are involved in network governance, allowing token holders to participate in decision-making processes and play a role in shaping the future of the protocol. The GRT token also acts as a means of ensuring the integrity of the network. If an Indexer provides incorrect data, a dispute process can be initiated using GRT tokens to incentivize honest actors to resolve the issue.

How Does ‘The Graph’ Actually Works?

Let's explore how the previously discussed participants collaborate to create a trustless and decentralized system. Imagine a new decentralized exchange platform has just launched, and the team wants other applications to easily access its historical data.

To get Indexers to index this new subgraph, a Curator plays a crucial role by indicating that the subgraph is worth indexing. If the new exchange is highly anticipated and promising, an existing Curator is likely to step in and use their GRT tokens to signal the subgraph's value. If this subgraph becomes popular, the Curator can benefit financially from their support. On the other hand, if the new exchange doesn't generate much anticipation, the project's developers can become Curators themselves, using their GRT tokens to encourage Indexers.

Once the Curators make their move, Indexers come into play and begin the process of indexing the subgraph. The time this takes can vary from a few hours to several days, depending on the amount of data to be indexed. When indexing is complete, Consumers can start querying the subgraph. Each query made by Consumers involves a payment in GRT, managed by the query engine. This query engine also acts as a trading engine, deciding which Indexers to engage with. To streamline this process, The Graph employs payment channels between Consumers and Indexers. If an Indexer provides incorrect results, there's a dispute process that can be initiated to resolve the issue. This is how the Graph works.

Closing Thoughts

The Graph Protocol stands at the forefront of shaping the Web3 space, offering a promising foundation for the development and enhanced functionality of decentralized applications. It effectively addresses significant bottlenecks faced by Web3 developers. Notably, this innovative technology has garnered attention from major DeFi players like Uniswap, reflecting its growing utility and potential in the world of dApps. In fact, some have drawn parallels between The Graph and Google, dubbing it the "Google of Blockchains." One thing is sure. The Graph is all set to become a cornerstone of Web3 infrastructure, contributing to the evolution of a more decentralized, robust, and efficient ecosystem.

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