The Graph
Every app, programs, or newsletter require some kind of information to work.
To get the relevant information without too much work, one needs it to be organized.
On the internet, it is easy: you can just google the information or get the information automatically from a website.
Now, if you need information from a blockchain (like Ethereum) or platform (like Uniswap) it's harder.
Retrieving this kind of information requires a lot of work.
Let's say you need the healthcare record for a customer and that this information is stored in a blockchain.
The information will be stored in blocks, you don't know which, and you don't know in how many.
You could start searching the blockchain, spending a lot of time and resources, or you could process and aggregate it, basically creating your own (limited) search engine.
Whatever you do to retrieve this basic data, you would have to process every single transfer ever emitted on the chain.
This would require a lot of time and resources.
Is there an easier way?
The Graph, in simple terms
The Graph is an indexing protocol.
Indexing protocols are built to tackle the above problem, in essence, to make it easier to retrieve data from blockchains.
They are built to index (organize) blockchain data.
On their website, they state:
-What Google does for the web, The Graph does for blockchains
Let's say you want to find all transactions of $1,000 or more on Uniswap between 2023 and 2024. Without the Graph, you'd have to manually look through literally millions of transactions.
But, with the Graph, you simply request (query) the relevant data from a database (subgraph), kind of like a Google search, or asking ChatGPT.
Let's get more specific:
Let's pretend you're building a decentralized exchange and want the historical data, like transactions, volume, and number of active users, to be publicly accessible.
To use the Graph system, you'd need to build what they call a subgraph to extract, sort, and store the relevant data.
A subgraph is like a specialized library for blockchain data.
Subgraphs organize blockchain data, just like Google organizes websites.
In practice, a subgraph can enable features like dApp search bars or filter features on charts.
Uniswap's whitepaper described how its explorer used several subgraphs:
Uniswap uses multiple subgraphs for indexing and organizing data from the Uniswap smart contracts. These subgraphs are hosted on The Graph hosted service and can be used to query Uniswap data. Each version of Uniswap has its own dedicated subgraph, and governance contracts have a dedicated subgraph as well.
So in the end, the subgraph enables easy access to organized (indexed) information.
The Graph Ecosystem
The Graph network ecosystem consists of four roles:
Indexers
Curators
Delegators
Consumers
So, what did these roles mean in practice?
As described above, subgraphs (specialized libraries) are necessary for querying (requesting) data from blockchains.
But importantly, building a subgraph is only the first step.
The information in the subgraph is not sorted (indexed) by itself.
Indexers are people who sort (index) the information in subgraphs and process queries.
Basically, Indexers are the librarians in the specialized library, making sure books are placed on the correct shelves and fetching books that you, the consumer, ask for.
But how do Indexers choose which subgraphs to index? ( i.e. which library to work in)
Curators address this problem.
They signal which subgraphs should be indexed by indexers.
They signal by staking GRT. The more they stake and the earlier they do it, the more they might earn (or lose).
If a subgraph receives a large amount of staked GRT from curators, indexers are more likely to choose it.
Just like librarians are more likely to want to work in a library with large investors (for job safety), indexers are more likely to index subgraphs with large amounts of staked GRT.
Now, over to the rest of the roles in the network that need to be mentioned: delegators and consumers.
Unlike curators who stake GRT on subgraphs, delegators stake their GRT on indexers who operate nodes to secure and scale the network, instead of running their own nodes.
In return, they receive a portion of the indexer's query fees.
Why would an indexer want to be "staked" by a delegator?
Because the more GRT delegated to an indexer, the more potential queries they can process, and the more fees they can earn.
Lastly, consumers are just the end-users that query subgraphs, often developers building stuff like Uniswap's "Explorer Dashboard" that I showed you earlier.
They pay the fees in GRT that goes to indexers, curators and delegators.
Adoption of The Graph
One way to measure the development of The Graph is by the number of queries.
That is, the demand for data organised by The Graph.
From Q2 2023 to Q2 2024, the reported number of queries increased by 7.5x.
This indicates that there is an increasing need for data provided by the subgraphs in the network.
The network recently introduced a free query plan of 100,000 queries per month which made it easier for early developers to use the network.
This offer is likely one of the drivers behind the recent growth.
Another way to determine the development of The Graph Network is to track the number of subgraphs.
The number tells us how many projects are using The Graph to make their data available.
From the network's beginnings in 2021 to Q2 2024, the total number of active subgraphs increased steadily before a sharp jump.
After a steady increase from Q2 2021 to Q1 2024, the number rose sharply in Q2 2024.
It increased by 3,7x in just one quarter compared to the norm of 1,25x per quarter from Q4 2021 to Q1 2024.
This sharp increase has to do with the expansion of the number of blockchains and the growing adoption of web3.
In the early days of The Graph, subgraphs were hosted on a centralized server.
As the decentralized network developed, the plan was to upgrade all subgraphs there.
This plan, the Sunbeam project, concluded in June 2024 and was one of the reasons for the great spike in subgraphs on the decentralized network.
Price Prediction of GRT
Over 90% of the total supply of GRT tokens is already in circulation, so there's no need to first look at market cap growth and then GRT price (since the inflation is so low).
A historical comparison of GRT's price and network adoption showed a high correlation in the period I reviewed.
Taking the exponential trendline of the GRT price from Q4 2022 to Q2 2024, we get the following equation:
0.0666e^0.32x
Extrapolating it five more quarters produced a $1.50 GRT scenario for Q3 2025, which I treated as the possible peak of that four-year cycle.
The assumptions this analysis builds on are:
The number of subgraphs continues to grow exponentially
The ratio between the GRT price and the number of subgraphs stays constant.
These were meaningful assumptions, and I did not expect them to hold exactly.
The ratio will likely decrease as the number of subgraphs grows, and the growth may slow down.
On the other hand, more dApps being built and adopted could increase demand for subgraphs.
The ratio between GRT's price and the number of subgraphs could also have increased during speculative periods, although that effect was difficult to model.