At 1 am on December 18th, the decentralized data indexing project The Graph announced the mainnet launch. 10 minutes later, Coinbase Pro announced that it would launch its token GRT, and soon Binance announced two hours (4:30 Hong Kong time) After the token was launched, mainstream exchanges such as Huobi, Kraken, and OKEx have rushed to announce the launch of the project's token. Its popularity can be regarded as one of the most valued projects by exchanges this year.
As of 21 o'clock on the 19th, the price of The Graph token GRT was $0.57, a 19 times increase from the public offering price more than a month ago.
Before that, the details of The Graph project were rarely known to the public. Chain Catcher wrote this article, trying to explore how the main data index track behind his project captures the project value and development prospects.
Author|Loners Liu
Editor/Gong Quanyu
01
Blockchain data market and its value
To understand The Graph, you must first understand the API data index market it targets.
In the blockchain world, data has always played a vital role. For example, the information reflected by the data on a public chain has a lot of reference significance for secondary market investment and the operation of the public chain itself. Although the public chain data is naturally open and complete, the use of data provides Merchants can avoid the investment cost of their own nodes, which also gave birth to leading companies such as Coinmetrics and Chainanalysis.
It is just necessary to analyze currency prices based on exchange data, which has spawned websites such as Coinmetrics, Tokenanalyst, Skew, Coingecko, and Kaiko. However, because most of the exchange data is not publicly available, the current practice of many data providers is to manually or algorithmically mark the source of the address on the exchange chain and monitor the exchange's deposit and withdrawal activities.
DApp data is a newly emerging field in the crypto market. Developers need to track DApp data and rankings to know user preferences, keep an eye on market trends and changes in competing product data, adjust product development strategies in a timely manner, and analyze DApp data indicators in multiple dimensions. Optimize the product experience.
In the past, the pain point was that the state of smart contracts on almost all public chains and the blockchain data generated by DApps often did not provide an easily accessible data interface. It was difficult to convert the data into a readable format. Most of the information was triggered by events. Storage in the form of logs presented by other logical mechanisms (for example: the token balance of a wallet address).
In other words, most project parties and developers need a way to query, obtain, and transform data from basic data sources, and at the same time store the data in a format directly used in the application, but the market lacked similar methods in the past. product service.
According to statistics from Multicoin Capital, although the Ethereum network has less than 1 million transaction records per day, developers query the Ethereum Laas platform Infura more than 10 billion times a day, but the platform does not provide indexing services. Although the official Ethereum clients Geth and Parity can meet some of the requirements, they neither provide powerful search functions, nor can they expand large-scale queries in any way.
Infura chart
More specifically, according to developer Pelith's statement, there were two main ways for developers to obtain data on Ethereum in the past, but each has some shortcomings.
The first is to use web3.js /ethers.js to obtain directly from the Ethereum node. The advantage is 100% decentralized service and direct access to chain data, but there are still 4 disadvantages:
1) The node's response time to the request is longer;
2) In order to obtain some specific information, you must send several requests for calculation. If you use infura, you may accidentally exceed the free quota; if you use a self-hosted node, there is a good chance that it will be mistaken for DDoS;
3) If you only need the data on the current Ethereum, you can use multicall to solve it, but to get the historical data, you can only send dry-run requests one by one;
4) When too many requests are sent, the loading time of the web page is too long or the screen is delayed.
The second method is to set up a server to crawl the data on Ethereum. The advantage is that it can avoid the problems that may be encountered in the first method and obtain an excellent user experience. But the disadvantage is that this is a non-100% decentralized service (Server≠node). At the same time, it requires a lot of hardware resources to set up Archive Node, and it also costs a lot to maintain Server.
In this context, the API-based data index market emerges from time to time. The API encapsulates all data, functions, and services into a black box, and developers can use it only through an interface call according to their needs.
In the business model, the project party often prejudges how many users are behind the machine-called APIs, how much data these users need, and how much they can pay. Based on these data, they can pre-store a fee for API calls or sign a contract. But the disadvantage of this is that the payment path is long and there is no way to directly estimate the order of magnitude of user needs.
02
How The Graph Works
The Graph is a decentralized data indexing protocol used to index and query data from Ethereum, IPFS and other Web3 data sources. Anyone can create and publish index data based on the open API provided by it, providing developers with a A more convenient way to obtain blockchain data.
Compared with other similar projects, one of the main features of The Graph is trying to solve the problems mentioned in the first part through its token GRT. In The Graph's view, in order to better promote the flow and exchange of data, it is necessary to create a reasonable pricing model and profit distribution method, and this set of methods must be programmable, real-time, automated, and scalable.
Imagine that a user has built a set of APIs that can be used to query which new high-volume APIs have recently been launched on Uniswap, or can compare which lending agreement has a higher yield API, the user only needs to pay a certain amount Tokens can directly use such services. At the same time, the existence of tokens can also encourage data providers to provide more complete and rich data.
Currently, The Graph network mainly includes four types of ecological roles. The first is the consumer, who pays the query fee; the second is the indexer, who runs the node to earn query fees and node rewards; the third is the curator, who saves GRT to indicate which subgraphs are worth indexing; the fourth is the principal, who pledges the currency to the node Earn income.
The operating mechanism of The Graph can be simply understood as three processes. First, The Graph will listen to events triggered by transactions executed on Ethereum; Second, when The Graph receives an event that needs to update the subgraph, it will grab the data on the chain according to the definition in the subgraph and process it. The information is then stored in the database; third, the front end can then use GraphQL to obtain information from The Graph.
Furthermore, The Graph token GRT has two main uses in the operation of the protocol. The first is the pledge of the indexer, which pledges Graph tokens so that it can be discovered by the query market, and at the same time provides economic security during the execution of the work; the second is the curator signal, the curator pledges Graph tokens to the curatorial market In, predict which subgraphs are valuable to the network, and they are rewarded for correct prediction.
Users can pay ETH or DAI for inquiries. But the final settlement will be GRT to ensure that a common account unit is used throughout the agreement.
The Graph operating mechanism diagram
It’s worth mentioning that the curator’s deposit in GRT to initiate a signal on a specific subgraph is based on the setting of the bonding curve (similar to the price elasticity curve of the Bancor formula), which will encourage the curator to find the most popular Welcome to Subgraph or high-quality data sources, because if you can deposit it earlier, you can get more GRT bonus shares.
This may be one of the reasons for the increase in GRT prices. According to analysis, after the project’s mainnet goes live, the indexer will start pricing, and the principal can pledge to the indexer. In order to pledge more GRT in the early stage, the large investors can obtain higher returns for high-quality projects.
Of course, The Graph also encourages independent and rational participants to store and index a subset of a large number of data sets. At the same time, it must ensure that these query providers return valid responses (not return incorrect results). If an incorrect result is returned, the indexer If you return an incorrect response, you will be severely punished. Assuming that the indexer is lying, the blockchain will reduce the GRT pledged by the indexer and reward those who report malicious behavior, so that "token holders need to be responsible for the services they provide . "
However, although The Graph aims at a market with particularly large demand, these needs have also been explored and solved by multiple blockchain analysis platforms, such as Dune analytics, dfuse and other platforms.
Dune analytics is an Ethereum data analysis platform. The main feature is that the community users independently build relevant data charts, not the platform side. The platform records all the unprocessed blockchain data into a SQL database, allowing community users to use SQL to create visual charts describing activities on the Ethereum blockchain, such as the number of new users in the project, liquidity mining data Wait.
Compared with The Graph, the main feature of this type of platform is stronger visualization, but The Graph, as the only data analysis and indexing platform for issuing tokens, has also formed a comparative advantage in community building and influence.
The Graph’s Asian Business Strategy Officer, lris, also talked publicly about the similarities and differences with other projects. “The vast majority of existing competitors are centralized solutions, which means that they operate their own servers, which brings security and The risk of stopping operations will also incur costs such as renting servers, which will increase the cost of applications."
However, Pelith also reported to the chain catcher that the cost of learning for developers to use The Graph data index is high. "Developers must have a certain degree of understanding of the contract they want to index, and they need to figure out what information is required when a specific event occurs. Updates and how this information is calculated, for example in situations where the balanceOf of aToken on AAVE will continue to change.”
Nowadays, the popularity of The Graph in the community continues to rise, and its position as the leader of the data indexing track is basically established. Even the argument that The Graph may become the next Chainlink-level project is widely spread, but as the mainnet has just launched Whether the actual value of the project can support the current high valuation still depends on the actual performance of The Graph in the future.
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