The Graph mainnet recently launched and has gained tremendous attention. It has set out to facilitate an open, decentralized marketplace and magnify the utility of an already incredibly valuable asset — data. The Graph ecosystem is constituted of several players, most notably: Indexers, Curators, Delegators, and Consumers They form an open marketplace around the provision of data and work together in order to efficiently index and serve all of this data for Web3 in a decentralized way. With the launch of mainnet, this is now a reality. Every GRT holder can now contribute to the network via one of the above roles. Since there have been a lot of questions recently around delegating GRT, we are focusing on the relationship between indexers and delegators in the following. Furthermore, one could witness a race to the bottom regarding fees charged by indexers for their services. In this post, we wanted to answer some of the questions delegators have and shed some light on common misconceptions. Furthermore, you can find explanations to the terms used in the Graph Network dApp as well as our community tool, Graphlets.
The Graph is a protocol for organizing blockchain data and making it easily accessible. […] What Google does for search, The Graph does for blockchains. [Source]
Delegating on the Graph is not comparable to delegating on another delegated-Proof-of-Stake network (dPoS) such as Tezos or Cosmos, because the fee and reward structure is different on the Graph. This is due to the fact that Indexers, the entities GRT holders can delegate to, are more than just simple node operators. Indexers provide indexing and query processing services for open APIs, called subgraphs. These services are then used by consumers e.g. to display blockchain data in a UI (e.g. the Uniswap Analytics Dashboard is powered by a subgraph). Indexers have to stake GRT, which provides sybil resistance and security through the alignment of incentives (learn more here). Indexers earn query fees and indexer rewards for their services:
The price of query fees varies and is subject to the cost of indexing the subgraph, query demand, market rate for blockchain data, and the amount of curation signal. Hence, query fees are not comparable to transaction fees that one can earn by being a validator or delegator on another dPoS network.
Not all indexers provide their services for each and every subgraph, so different indexers might work on different subgraphs. However, Indexers seek to provide their services for subgraphs that are frequently used, because that earns them more query fees. Curators signal to Indexers which subgraphs should be indexed (learn more about curators here).
Indexer rewards are newly issued tokens that enter the supply with each epoch. The initial issuance rate is set to 3%. Each subgraph in the network is allocated a share of the total network token output based on the proportional amount of the total curation signal the respective subgraph has. This amount is in turn divided among all indexers participating in that subgraph, proportionally to their share. This helps to bootstrap new subgraphs by attracting indexers to stake on them.
For every transaction on the protocol, a fee is collected and allocated to the rebate pool. These fees are then re-distributed to participants as a function of their proportional stake and proportional fees collected for the network using the Cobbs-Douglas Production Function. This incentivizes indexers to hold GRT roughly in proportion to the amount of useful work they are providing. If they don’t, a portion of GRT rewards from fee rebates is burnt, reducing the indexers' profitability and in turn the profitability of their delegators.
The Rebate Ratio indicates the balance between querries served and rebate fees collected by the indexer. This indicates the indexers’ efficiency also referred to as Stake Efficiency.
Delegating on the Graph
As a GRT holder, you can choose to contribute to the security of the network, by delegating your GRT to an indexer of your choice. Delegators earn a portion of the Indexers query fees and indexer rewards. The more (delegated & own) stake on an indexer, the more potential queries the respective indexer can process. So the amount of queries an indexer can process is subject to its’ own & delegated stake and the price the indexer charges for each query.
To best align incentives of indexers and their delegators, there is a limit of how much delegated stake an Indexer can accept in relation to the indexers’ own stake so that the indexer always has sufficient “skin in the game”. This limit is referred to as the indexers’ max. capacity. The ratio between delegated and own stake is set to 16:1.
While indexers can be slashed (i.e. having a portion of their stake forfeited by the protocol), a delegators’ stake cannot be subject to a slash. Hence, you do not need to fear a loss of funds in case you delegate to a subprime indexer. However, subprime indexers will most likely earn fewer rewards as well as fees and can be subject to being slashed (a loss of the indexers’ own funds). Additionally, delegating & undelegating to an indexer incurs fees that are paid by the delegator. Furthermore, once you undelegated from an indexer, you need to wait 28 days until your funds become liquid again (aka. ‘thawing period’). During this time, you will not earn any rewards! Therefore, we advise you to choose your indexer carefully.
For an in-depth description of the above concepts, please refer to these two blog posts by the Graph team:
In case you want to start delegating right away, here’s our step-by-step delegation guide:
The Graph Staking Guide
Learn how to become a Delegator on The Graph by staking your GRT tokens via the Network Beta dApp.
Here’s an overview of some indexers created by the Graph community. You can get more information about the individual indexers to find the ones that best fit your preferences.
The Network Beta dApp — the main delegation UI for The Graph
The Network Beta dApp is the main delegation UI for every GRT holder looking to become a delegator. In the following, we explain the most important terms you can find within the dApp.
Every indexer can define three metrics that influence the relationship between the respective indexer and his/her delegators:
1. Fee Cut % / Query Fee Cut
The share of query fee rebates that the indexer keeps, e.g. a fee cut of 80% would mean that the indexer keeps 80% of the query fees earned while passing 20% on to the indexers’ delegators. These delegators than earn fees proportional to their stake and the overall, delegated stake of their indexer.
2. Rewards Cut % / Indexing Reward Cut
The share of total indexer rewards that the indexer keeps, e.g. a reward cut of 80% would mean that the indexer keeps 80% of its’ indexer rewards while passing 20% on to the delegators. These delegators then earn rewards proportional to their stake and the overall, delegated stake of their indexer.
3. Parameters Cooldown
This refers to the amount of time that needs to pass before an Indexer can change its’ query fee or its’ indexing reward cut. Once the parameter cooldown period is concluded, the indexer is free to change his/her cuts at any time.
What could happen in case this is set to 0 and you are delegating to a low fee indexer, is that the indexer could suddenly increase its’ indexing reward and/or query fee reward cut and you would either be stuck with this fee or have to change to another indexer, which would incur a withdrawal tax and trigger the thawing period.
When you undelegate your GRT from an Indexer, your tokens remain locked and illiquid for a period of 28 days during which they are not earning any rewards nor fees.
The subgraphs that the Indexer is staking on and providing his/her services for. For the time being (12|2020), you will only find “Pooltogether” here, since all other subgraphs are gradually migrating over from the hosted service in the course of the next few months.
The time that needs to pass until the indexer can change his/her Fee Cut % and/or Rewards Cut %.
The Indexers’ own, deposited stake, which might be subject to a slash in case of malicious behavior by the indexer.
GRT the indexer received from his/her delegators. This cannot be subject to a slash.
The total amount of query fees the indexer has earned for his/her services on the subgraphs the indexer stakes on. The Fee Cut % applies to this value.
The total amount of indexer rewards earned by the indexer. The Rewards Cut % applies to this value.
Graphlets — analyze The Graph mainnet data
Graphlets is a tool we built to help all stakeholders of the Graph — Indexers, Curators, Delegators, and Consumers — to analyze and visualize all relevant data from the Graph mainnet in real-time. In the course of the next few months, we will constantly add new features as mainnet evolves and more subgraphs move over from the hosted service. Since this is the Delegators’ cheat sheet, we are focusing on data that is relevant for delegators. You can find this data in the “Delegation” tab.
The Indexers’ public address
The return on investment based on delegated funds since running the indexer within Mainnet. (in %)
The maximum amount of GRT the indexer can receive from delegators.
The ratio of allocated GRT compared to total available funds (stake owned + delegated) within an indexer. (< 100%: underallocated, > 100%: overallocated)
The share of query fee rewards that the indexer keeps for him/herself. The rest is passed on to the indexers’ delegators.
The share of total indexer rewards that the indexer keeps him/herself. The rest is passed on to the indexers’ delegators.
Days since the Indexer joined The Graph Mainnet.
Common misconceptions & questions
In the following, we listed answers to some of the most common questions and misconceptions.
Do delegators have to claim their indexer reward or query fee cuts?
No, every delegators’ Query Fee Cut and Indexing Reward Cut is automatically redelegated with the delegator’s address. Therefore, delegators on the Graph automatically leverage a compound effect on their delegated GRT.
When do delegators receive their indexer reward and query fee cuts?
This depends on each indexer and when they do their allocations, with the maximum being 28 days. Query Fee and Indexing Reward Cuts accrue at the delegator’s address and are automatically redelegated to the indexer.
How much can I earn when delegating my GRT to an Indexer?
Currently, most of the subgraphs still run on the hosted, centralized service and will move over to mainnet in the course of the next few months. Therefore, the revenue the indexers make in query fees is very limited.
In general, you can use these two formulas to calculate your earnings:
(Your amount of GRT delegated to Indexer / Total amount of GRT delegated to that Indexer) x (Total Indexer Rewards of that Indexer / (100% — Rewards Cut %)
(Your amount of GRT delegated to Indexer / Total amount of GRT delegated to that Indexer) x (Total Query Fees of that Indexer / (100% — Fee Cut %)
Here’s a calculator created by the Graph community:
Graph Daily Rewards Calculator
Sheet1 Total Supply:,10,000,000,000,GRT,Save a local copy, then: Yearly Inflation:,3%,DO NOT CHANGE Daily…
Why do the indexer reward and query fee cuts differ so much between the indexers?
Besides the economic requirement of owning at least 100000 GRT, you have to run and maintain an Ethereum archival node in order to run an Indexer operation, which alone amounts to around $1000/month. Furthermore, Indexers need to provide professional infrastructure — either bare metal hardware (which we use) or cloud instances, resulting in additional costs. So simply spinning up a docker container won’t do here. The biggest cost factor is however trained and professional human resources that a) know how to securely operate infrastructure and b) know the ins and outs of The Graph complex economics. The latter becoming increasingly important as more subgraphs move over from the hosted service. Indexers then need to carefully choose which subgraphs they allocate how much GRT in order to most efficiently serve the networks’ querries, which ultimately affects the profitability of the indexer and his/her delegators.
Additionally, there is a maximum ratio of 1:16 between an Indexers’ own GRT and the GRT delegated to him/her. Delegations exceeding this ratio, negatively affect the rewards generated by the indexer.
We are charging the cuts as recommended by the Graph developers. There are no plans to change our indexer reward and query fee cuts for now, but we are monitoring the market closely and are constantly evaluating our strategy. In case we are going to change anything regarding our cuts, we will let our delegators know ahead of time.