Episode 04: Today I’m speaking with Juan Manuel Rodriguez Defago, an Indexer, Delegator, and subgraph developer at The Graph. Juan is a very prominent and well-respected presence in The Graph community, where he is often found answering questions in The Graph Discord, or in The Graph Forum, from what seems like every corner of The Graph ecosystem. My conversation with Juan is extensive, ranging from his explanation for how Indexers open and close rewards allocations, the most common questions he’s asked from members of the community, and how The Graph is changing the way developers work and create products in the crypto space.
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So you learn a lot. And that’s probably what I liked the most. The community is also awesome. So I really love the community and I love that everyone is trying to help growing The Graph. That’s my two main things I love about The Graph.
Welcome to the GRTiQ podcast. Today I’m speaking with Juan Manual Rodriguez Defago, a member of the Protofire team, which is an Indexer at The Graph. Juan is a very prominent and well respected presence in The Graph community, relentlessly answering questions in The Graph Discord, and in The Graph forum, from what seems like every corner of The Graph ecosystem. My conversation with Juan is extensive from his explanation for how Indexers open and close rewards allocations. The most common questions he’s asked from members of the community and how The Graph is changed the way developers work and create products in the crypto space. I started the conversation with one by asking if crypto has caught the attention of the people of Argentina Juan’s home.
Sure, yeah. Yeah. A lot of people actually work in crypto here in Argentina, some guys from the OpenZeppelin team. I think it’s there. There’s even some Argentinian fellows in in the Edge & Node. So yeah, a lot of people here work in software development and actually work in crypto. A lot of people are interested in crypto here, especially because like we have a lot of economic issues in our country. Of course, a crypto can’t fix country economy, right. But it can help people like have other choices. So for sure people are really looking into investing in crypto. Being able to use actual financial products without having to rely on banks is probably the number one game changer for us. But yeah, people really, really love crypto here. And it might be a game changer in the future.
So how did you first get involved in crypto?
Well, I actually got involved in crypto last year, beginning of last year, when I started working in Protofire. I actually was just a full stack developer, like anyone else working in Web2 applications and Web2 webpages, my first tasks, we input the fire word to like research a little bit about subgraphs. So I kind of took a shortcut right there. So I went directly into The Graph, working alongside some of the what are known as Edge & Node team. They were called like The Graph team back then. So I kind of like started really fast in crypto, I didn’t know a whole lot about crypto, like knew that Bitcoin and Ethereum were a thing. And they were coins and they had some value and people were trading it. And that’s basically as much as I knew back then. Then I started mostly researching about Ethereum, since my first crypto job was basically an Ethereum job working with The Graphs and like building subgraphs. And so I probably like started directly in Ethereum, in the core of what The Graph is right now.
So what can you tell us about the company Protofire,
Protofire is a company which specializes in web3 development, Solidity, basically anything crypto related, it’s a sub-company from Altoros, basically Altoros is all around software development. So it’s basically like the base company that does everything from Kubernetes web pages and whatnot. And like Protofire is like the sub company, which does the crypto stuff.
So what can you tell us about the work you do as an Indexer at The Graph?
I’m actually not a full time Indexer. There are other Indexers like jeem, or like Bane, or some others that might have a full time in the research-op. My indexer tasks are mostly like keep tabs on everything. How’s my infrastructure going? Do I have any issues in my infrastructure? Do I have new litigations? Am I over delegated? Basically all these questions regarding the health of your industry infrastructure, and basically all the community around it. So mostly, I only check those parameters. And if anything needs fixing, like the infrastructure, or if we received a massive delegation that we need to allocate, I’ll try to check when we can allocate if the gas prices are relatively low. So we could allocate without wasting a lot of money. But some of the main Indexers that have actually a full time job as an Indexer, they probably also use a lot of time testing new stuff, like testing new geth-nodes, the turbo-geth nodes, that many Indexers are testing, since it’s basically a really lightweight node that we could really, really exploit to avoid having to use a lot of disk space for Eth nodes. And they probably do a lot of things that I actually don’t have time to do since I also develop subgraphs, and do a lot of like meetings and stuff. So yeah, I do the basic stuff. And I do have a team at DevOps and also a business tab that we all take care of all the other parts of the Indexer together. But I don’t do all the Indexer tasks, I only do a few of them.
So what do you most enjoy about the work you do?
Well, I’ve always been like a subgraph developer, since I started working with The Graph. And I really liked the workflow and methodologies of creating subgraphs, like it’s been creating subgraph is not super difficult, code-wise, like it’s not super technically challenging. But um, you have to learn a lot of stuff like you, you have to read a lot of code from other developers from all the Solidity code from all the protocols and stuff that you want to support in your subgraphs. So you will learn a lot. And that’s probably what I liked most about the whole software development side of The Graph. And then you could argue like, the community is also awesome. So I really love the community. And unlike I love that everyone is trying to help growing The Graph. That’s my two main things I love about The Graph.
How would you describe the relationship between Indexers and developers?
That’s an interesting one, right now, since the network’s not fully live, let’s say since December, frankly migration is just starting right now, Indexers and developers and really much they don’t really have a relationship, since right now, developers only work with a single node, which would be like the hosted service. The hosted service basically is like a gigantic Indexer, which is hosted by Edge & Node. And basically, we just run our code in their index infrastructure for free. So it’s kind of like hard to think about, like Indexer and developer relationships, since we didn’t have a chance to like relate at first. So yeah, it will be a nice thing to look at in the future.
So you work a lot with subgraphs? How would you describe what a subgraph is?
So subgraphs are basically just like a piece of code that takes some data from the blockchain, process it and saves it in a Postgres database in our relationship database, which is basically normal database that we use since forever. And the idea behind that is that you could serve those process data points in basically using Graph QL as your as your endpoints. So in that way, it’s it makes it a little bit more easier for Web2 developers to integrate Web3, so crypto stuff into already existing applications. And basically, it obstructs the whole part of the Web3 stuff or groups of stuff, which makes development for like, non-crypto developers a lot harder since right now, or at least up until now, you needed to know a lot of stuff that you wouldn’t need to know, if you weren’t developing for like blockchain stuff like decentralized applications, just so that you could consume blockchain data. Like how would you connect to the blockchain, you need to go through an Ethereum node or any other chain node. To get the information you need to process it all manually? Well, basically subgraphs abstract this whole extra step from the equation. So you can focus on building the stuff that need and you only really need subgraphs to basically get the data that you need to base your application on, right? So that will be the best way to describe them.
So Indexers spend their time indexing subgraphs. So what is meant by indexing a subgraph?
Well, as I said, subgraphs are piece of code that translates that data from the blockchain into a common database, right? Indexing is basically running the subgraph code, you, you need to have a whole infrastructure set up, you need the underlying notes for the blockchain that you want to support be it Ethereum or like, I don’t know, Polygon, Binance Smart Chain, or any of the other already supported chains. And you then need to have a graph node. And inside The Graph node is where the snippet of code will be running. And this graph will be requesting data from the chain node. And it will be saving data into our database, you need the whole infrastructure to basically run those subgraph. So yeah, that’s basically what indexing means. It’s running the subgraph code.
So how should we think about the 9000+ subgraphs currently being held at the hosted centralized service, and the much anticipated migration to the decentralized mainnet?
Basically, it’s Edge & Node host, the hosted service, which is basically a gigantic Indexer infrastructure, right? So um, and within that infrastructure, every subgraph that is currently being developed and deployed, is running there. Indexers within The Graph network, are not indexing any of the subgraphs that are actually in the hosted service right now. They will be doing that later when the subgraph migration starts. But right now, we are only using like one of them, which is the pull together one.
Let’s turn our attention to Delegators. How important are Delegators to the work of Indexers?
Well, it’s an awesome question, especially like right now, with all the drama around GIP-0002 and stuff. Delegator are quite valuable. They allow us to use more than our base stake towards allegations in different subgraphs that basically allows us to be more, let’s say successful, as Indexers use that stake, be able to take a bigger share of the market of the rewards market on the query fees. So this allows us to do a better job as an Indexer. Like, participate in more queries and be able to like serve more queries, since if we have more stake, the works are allocated towards the subgraphs, we can actually receive queries for that specific subgraphs, which allows us to basically do our job, right? So I’d say like, it’s a symbiotic relationship between Indexers and Delegators. We basically use their GRT and pay them basically or allow them to participate in the upside of the Indexer and charge them a little bit. You still can make money with that. GRT. So yeah, it’s a really symbiotic relationship that we could all profit from the Indexer business,
You bring up GIP-0002, I’d be interested to hear your thoughts about it.
Well, GIP-0002 two was controversial, to say the least. Um, what was controversial about it was the exact implementation that was tested and audited, did include the following period, or Indexers. So it allows Indexers to withdraw rewards without waiting for these 28 days of the following period. So that exact implementation was ready to be released, and it was voted. And it came out pretty great. A lot of positive votes towards the GIP-0002 Improvement Proposal. But the issue was that, since it allowed Indexers to withdraw rewards without any thawing period, people would raise concerns as to whether the change would unfairly benefit the Indexers. I also had the same concerns. And it wasn’t the best solution. But the other like ideas on how to improve the GIP-0002 proposal would either need to add the thawing period to GIP-0002, which most likely was the easiest solution, or at the same feature as the Indexers were getting with GIP-0002 for Delegators. Right. So I think the same feature for Delegators was also being researched at the moment, but it wasn’t exactly easy to implement. Because how the delegated stake works in the in the contracts, they are basically pulled together. So you really can’t separate everyone and calculate how much everyone needs to withdraw. And it was super easy to implement. It needed a lot of changes. So even though it was being researched at the time, it wasn’t even nearly ready to be released as a proposal even. So that basically left us with only one solution right to add the thawing period to GIP-0002, so everyone would be pleased and the concerns that were raised would be like a beast. Let’s say I don’t know if there’s a better word for it. But that’s exactly what was tried with the GIP-0004, which was a really short lived Improvement Proposal. Basically, the whole idea was to just add the same 28 day thawing period to the new feature that GIP-0002 was adding. But the thing is, it led to really nasty side effects. Basically, the way that thawing period was supplied to the alligators, and Indexers when they unstaked, which was the initial idea for the blank period, wasn’t really working well, with GIP-0002, because allocations were being closed much more frequently than people were unstaking or and delegating. And you need to average, the amount of time that the different periods have to go, because every time you basically close an allocation, this GIP-0004 will try to prolong the thawing period, because you are adding more money to the GIP that was going to be released. And the side effect that he had was that you might be able to withdraw stuff with a thawing period but defined period for Indexers on this specific case, might increase a lot, up to 56 days, I think it was twice as long as the intended going period, because of how frequently you’re going to try to withdraw. And of course, that isn’t what we wanted. I don’t think anyone wants 56 day thawing period for Indexers. And it wasn’t going to level the playing field for everyone. So basically, the implementation needed a lot of work. So it would work as we expected. And even if the implementation for GIP-0004 right? Adding the thawing period to GIP-0002 would have worked as is. It will also mean that Indexers would have to wait two to three months for the whole governance process to be able to release GIP-0004, right? Because the governance process requires implementation, auditing, testing voting council meeting, so and even if we have all of those things really, really quickly auditing but really like the bottleneck here, because even of how the whole market right now is going up, like crazy and all the projects are being released every day. Audits really hard to book right now. So it was really quite difficult to have a clear timeline and a really neat estimate time of release. So yeah, it would mean that Indexers had to keep going for months, without any way to pay for stuff, which wasn’t really ideal, unless we even saw some Indexers had to stop indexing, because they probably couldn’t afford paying everything out of their own pockets. So yeah, it was a really difficult moment in the community. Because there was a lot of drama people thought Indexers wanted to take over the governance process or whatever. And it was, it really wasn’t like that. It was just like, there was only one really viable solution, which was GIP-0002. And even if we wanted to add the time period, it would mean a lot of time to actually get that implementation going. So I think the community after all ended up voting on releasing GIP-0002. And it wasn’t really as bad as people thought it was going to be Indexers aren’t dumping the market every day. So it was just pay the bills. You know.
Another topic of great interest to Delegators is the 28 day thaw period. What’s your perspective on this issue?
Yeah, I totally get the frustration right there. Like if you try to do the research and pick an Indexer. And suddenly the Indexer doesn’t want to play by the rules and like just does weird stuff and raises all the cuts. Right? And kind of scams you. You still have to bear undelegation period of, like 28 days. So I it’s one of the main issues right now, within the Delegators community, I think. And it’s, it’s an issue that’s being explored. So everyone’s like discussing about it. And we are actually trying to come up with a solution. Maybe it’s, it’s gonna be a GIP in the future. There is actually a forum thread that Brandon started, that basically wants to group all the Delegators feedback regarding both these bad actors and the 28 day period. So we could actually push for some GIP’s in the future in the short term, actually. So yeah, it’s one of the main issues with the delegation market right now. You could get stuck. Even if you did your research, you could theoretically get stuck with a bad Indexer and have to pay the price of waiting for 20 days, which is a huge opportunity cost. Unfortunately, right now, it’s the Wait works, hopefully we can change that in the future.
Let’s stay on this theme of 28 day periods. Is it a red flag for Delegators? If an Indexer doesn’t close their rewards allocations every 28 days.
It’s mostly a red flag because allocations don’t generate any rewards are query fees after the 28 days after it’s been like created. So basically, when you go above that point, that 28 days, if the Indexer hasn’t closed, it might be because, or it has to be because of an infrastructure issue, or because they run out of money to operate. So it’s for sure a red flag, they have to like, try to understand what’s going on with the Indexer. And ask him if he’s having some infrastructure issues or whatever, or why didn’t he actually closed because he’s actually losing money too. So nobody would be losing money just because they want to, there has to be something wrong for that to happen. So yeah, that would immediately raise a red flag for me.
Did you say that after a 28 day period, Delegators are no longer earning rewards with their Indexer?
Neither you nor the Indexer will be earning rewards past those 28 days, you will still be having the 28 prior days of rewards. So you will still have like a bag of 28 days’ worth of rewards. But you won’t be earning anything on the 29th day on and all the subsequent days that follow.
So when we say Indexers close allocations, what does that actually mean? Can you describe what closing allocations looks like?
It’s funny because it’s exactly what’s happening. You’re actually basically you have your own stake, right Indexers have their own stake, and they get delegated. So basically, they have a lot of GRT available for using in the protocol. And the way the Indexers use those GRT is by allocating to different subgroups. Basically, they say, I’m going to allocate X amount of GRT for the subgraph and X amount of GRT for these other subgraph. And by allocating, they are showing their interest in that specific subgraph, and basically signaling the protocol that they are going to be indexing and serving queries in that specific subgraph. So by doing this, they are actually participating in the rewards tied to that specific subgraph, or those specific subgraphs if they are more than one. And the way that you get paid is by closing and reopening allocation. So basically, the rewards calculation and the query fees payment are tied to the allocation by placement, right. So whenever you close an allocation, you basically withdraw that are located GRT, you trigger the rewards calculation and the payment distribution. Indexers don’t really do anything, they don’t distribute the GRT themselves. The protocol does automatically when you close allocations, and it’s automatically calculated by the cuts that you actually set as delegation parameters in your Indexer. So basically, when we say we are closing locations, we are doing exactly that. We are closing our allocations for specific subgraphs or for all the subgraphs that we are allocating towards. And when we do that, the payment distribution is triggered and everyone gets their trade off rewards the unrealized rewards
Is closing allocations expensive for Indexers?
Unfortunately, yes, allegations can cost from like 50 or $100 to $200. Right now, with the current gas prices. And if gas prices spike, it can even be more than that. And the cost is linear. And what I mean by this is like it scales linearly with the amount of subgraphs. So if you have one subgraph, you will be paying between $100 to $200 but if you have like 1000 subgraphs, you will be paying $100 per subgraph. So your cost basically skyrockets. And also like 1000 subgraphs is not impossible. It’s not like it’s never going to go that high. Because the hosted service is currently indexing over 9000 subgraphs. So yeah, it’s an issue right now. It’s costly and it will be costly. And so like we move to layer two solution or whatever.
Is it possible that an Indexer would never close their allocations?
Theoretically speaking, yes. He could like turn off his whole infrastructure. And basically the agent service is what they of closing the allegation, but Delegators can close locations past the 28 day period. The downside to this is that they will be losing or forfeiting all the indexing rewards, which is the inflation based rewards. Because to basically have those rewards added to the distribution, you need to provide a valid proof of indexing, which can only be provided by the Indexer himself. So yeah, you would be forfeiting a part of the but there might be like some cases where you want to close the location for your Indexer, if he’s shutting down separation, or he, I don’t know, disappeared, or whatever. And these like scenarios are word like, whenever you have a big query fees, marks of rewards, you could theoretically close the location to distribute those rewards, since the only records that cannot be retrieved by the regulators are the indexing rewards which are tied to the Indexer operation, and you can’t actually provide a proof of indexing for the your Indexer. But you could still like get all the query fees generated on those 28 days, if your Indexer disappears for some reason, and you have to close it yourself.
So then how would you advise Delegators? To go about selecting an Indexer?
I’ve been asked this very same question a few times in the past. And there’s always like the same answer, right. So you can’t really give them much information, because most of the information that they need is already there, like, check that the Indexer is trustworthy. What does trustworthy mean? I don’t know. Just check like he has made allegations in the past, he has paid and or close the allegations and distributed rewards with other litigators within a reasonable schedule that he has previously explained or showcased. You really need your Indexer to be active anywhere, it doesn’t matter if it’s in Discord in Telegram group or whatever, you really benefited. If the Indexer actually takes the time to explain things to Delegators and give information, useful information, like we closed our allocations, your payments are ready or whatever, right. So basically have, I don’t know if it’s a direct line of communication with your Indexer, at least, you need to know where your Indexer communicate stuff. Because if he eventually needs to, like stop his operations, or whatever, you really need to know beforehand, you can’t really be expected to react. So that’s one of the most important ones on basically also, if you really care about APY, you need to know how much your index is charging you for the service. You can check that, by the way with the effective cut parameter, which is a calculated parameter that you could look up basically tells you how much of the rewards that you’re making are going towards the Indexer. Basically, how much he charges you for the service. And that’s mostly the all the parameters, you can actually look for Indexer. And then you have eventually choose, there are a lot of Indexers that are charging mostly the same within eight to 12%, effective gut and that also trustworthy, like, I don’t know, p2p, framework labs, and many of the other smaller Indexers they all like, charge somewhat around the same figures. So then it’s up to exactly up to us, if you like, how a certain Indexer communicates his stuff, and how a certain Indexer does business, right? Maybe you don’t like someone and you don’t want to relate to him, even if he is a really good Indexer later down the road. We could also like examine how well they do in the query market, right? How many queries they are serving, how many rewards they are generating, or fees they are generating from the queries, and basically have a few more data points to compare. But right now, it’s only like rewards so you can only compare why effective cut.
Do you think the relationship between Delegators and Indexers will change after the migration to the mainnet?
I don’t know if the relationship was changed a lot like Indexers and Delegators will still be basically doing exactly the same. Indexers will still be indexing and the Delegators will still be delegating their money to or their GRT to Indexers. And the relationship should still be symbiotic in the same way that it was before. But the Delegators will have a lot more data to compare different Indexers. They will also have apart from the exact data they have right now. They will have performance statistics, right. So how many queries they are serving, how much they actually charge for each query. Are they indexing my favorite subgraphs or not? I don’t know, that could be another parameter that you want to if you are a Delegator. So their relationship will still be the same, they will, they will still be delegating money to the Indexers. And they should still be trying to communicate with their Indexer and follow their communications. So, it will still work the same way. But they will have more information. So that’s always a good thing, right?
Do you think the Indexer community tracks and monitors the price of GRT as closely as members of the Delegator community often do?
I’m mostly run the technical side of my Indexer. As I’m not the owner of the Protofire. So I don’t get to call the shots in the business part of the Indexer. But I’m guessing it does make sense to keep tabs on how much the GRT is worth, since it will be a part of your equation for your prices. You’re basically everything relates to how around you run infrastructure, and how much can you like expect to scale whenever it’s needed. So yeah, it’s probably a big part of the indexer community to like, you need to know how much you’re earning, and how that compares to how much you’re basically having to pay your infrastructure. So you need to have a metric to compare both sides, if that makes sense.
There’s an argument that often pops up on Twitter. And on community boards within the Delegator community. The argument is this: ‘That it’s in the best interest of some member of the ecosystem to have a lower priced GRT. Would you be willing to address that idea? Is it in the best interest of any member of The Graph community to keep low or somehow suppress the price of GRT?’
I don’t think so. I guess the number one reason why people expect that the cheap GRT would be good, is because of queries, because you have to pay for queries with GRT. But Indexers actually have to set the price for the queries they are serving, every Indexer will be sitting at different price, most likely or within a reasonable margin from each other. And if GRT like suddenly skyrockets to, I don’t know, $100, most likely Indexers will like drive down the price of each query, because they can charge a lot for each query, because people won’t be using the service if it’s too expensive, right? So there’s no reason why GRT couldn’t go higher because of query cost or whatever, it actually benefits a lot of people if it goes a little bit higher, instead of like being a drawback, because of course it will, will make like running the Indexer more profitable, and Indexers wouldn’t need to cut corners in their infrastructure scaling, or whatever. So yeah, I don’t think there’s a reason in protocol as to why GRT has to be cheap or whatever.
Another one of these arguments among Delegators, is the release of GRT anticipated sometime in the next few months. Would you be willing to address that? Should the Delegator community have any concerns about the release of all those GRT?
I don’t exactly remember, I think it was like close to 4 billion GRT in June or something. Mostly those are like, basically, early investors bags that are going to be released. Most of them are either been actually staked, or will be staked in the future, I don’t really know what an early investor is going to be doing with its own money. It could be like a sold in the market, I don’t really expect it to be sold in the market. Because usually early investors want the project to succeed is they actually put money really early there. But really, most likely, nobody knows. But it will happen. We will actually take a few examples, like Solana or other protocols where a big investors, bags were unlocked. And actually the price went up, which most people wouldn’t actually have thought that that will happen. But that did happen. And it really I don’t know. It’s like, it’s tied to how an investor will think of the project. They usually think long term, not short term. So we don’t really know what could happen. But I don’t think anything bad will happen because the tokens will be unlocked. I don’t really know we are actually just guessing here. But that’s mostly what’s going to happen. Also, we have to remember like even Curator, Curator testnet rewards will be unlocking like every four months. And that’s not going to drive the price down every three months, because we already went through one of the unlocks and price didn’t go down because of it. It just stayed the same and even maybe went up. But we don’t really know what happened. Hopefully, doesn’t really impact anything and I don’t think it will but Of course, the markets the market and you never know what could happen.
Sometimes members of the Delegator community talk about the release of all this GRT in the context of inflation. But those are really two different things, right? How do you think about inflation, and how it relates to Delegator rewards?
One of the ways that Indexers Delegators and well everyone is being paid in the network is by rewards, right? Indexing rewards. Indexing rewards come from basically GRT inflation, basically GRT is being minted every so often to pay for those indexing rewards. GRT is also being burned at the same time. Currently, right now, it’s not really balanced. But every time well, if you are a Delegator, you will know this by now. But every time you delegate a certain percent, which is I think 0.5% of your of your grts being burned as a Delegation Tax. And there’s also like other instances where a GRT is being burned within the Rebates and Curation Market. Right now, of course, the Curation Market isn’t active, so there’s no burning on that point. I don’t really remember where GRT is being burned. But at some point in the in the code, there are multiple places where it’s been burned. But yeah, so inflation is basically the way that indexing rewards are being paid, and will be paid because it’s as per rules, right? Protocol rules. But it’s not like something really worrying. A lot of crypto currencies actually have the same methodology. Like even Ethereum itself. It’s an inflation based currency. Of course, Ethereum also burns some of its own balance as most inflation based currencies do. But yeah, it’s basically part of the protocol.
Can you go into a little more detail about how those rewards are allocated?
Basically, you could think of us if they printed a certain amount per day, and distributed among the network. But the way they distribute it is, it’s been like, let’s say allocated towards different subgroups, not in the same way as Indexer allocate ther GRT. Rather, the network allocates a certain amount of rewards for each subgraph that that is deployed on the network. Depending on how much signal that subgraph pass, and by signal, I mean, the Curator signal, the signal that tells you that a subgraph is worth indexing. So if a subgraph has more signal, it will be getting a bigger cut of the whole day, the GRT printing, which is at around 800,000 GRT per day, I think somewhere around that figure. So let’s say you have to subgraph on the whole network. And each of them has the same amount of signal, each of them will be receiving around 400,000 GRT which will be distributed as indexing rewards to every Indexer that is indexing that specific subgraph, proportionally to the amount of stake that each of the Indexers has, so, you have a lot more stake, you will be getting a lot more indexing rewards. That’s why people really compete to get more delegations. Because if you get more delegations, you will have a lot more GRT to be able to allocate words subgraph and the more GRT that you allocate or stake towards the subgraph, the more rewards you will be getting for that subgraph allocation. It’s probably a little bit confusing. This is Juan and I’m an Indexer, Delegator. It’s my conversation with the GRTiQ podcast has been so good to you, then please consider supporting future episodes by becoming a subscriber GRTiQ.com/podcast for more information that GRTiQ.com Thanks for listening.
Sometimes the Delegator community gets confused about whether they’re able to earn query fees Indexer rewards or both? Can you walk us through that relationship between Delegators, Curators and Indexers and then query fees and indexing rewards?
Curators and Delegators both serve different purposes. The Delegators basically only provide economic security for the network by locking tokens. Curators, on the other hand actually have a strict purpose on the network. They are there to curate subgraphs and signal which subgraphs are worth indexing the way. Basically, the Curation Market is exactly what it sounds like it’s a Curation Market, you need to curate stuff and signal whether something is worth indexing. So basically, the way they work is different, and the rewards they get are different. And they come from different sources, right Delegators get a share of the indexing rewards and query fees generated by your Indexer. Curators get that fixed share of 10% of all the query fees generated for this subgraph, they curated. But they also get exposure to the bonding curve concept for subgraph, which is like, I don’t know, it’s kind of risky. Because the way the bonding curve work is, if you get in early, you get a lot more shares for less price. But if you get in late, you get a lot, a lot less chairs, for a lot more price, right. So someone that gets in early could get out of the bonding curve, and basically drive the price down by doing so. It’s not like they have malicious intent. It’s just like they want to get out and the bonding curve will go down, the price of the shares that you bought will go down. So you could actually get less money if you then get out. It’s really weird how the bonding curve works. I’m not really a fan of it, but it makes sense for curation. So like to avoid basically having oversaturated subgraphs, because a lot of people just go on and say the subgraph was already curated, and it’s good, I am gonna put money there. So I get more money. The bonding curve is there to disincentivize this approach. So yeah, it’s like they are totally different roles within the network.
As you’ve mentioned, the Curator role and curation services isn’t fully active in the protocol, what should we expect when that changes, and we see a lot more Curators and curation services in the mainnet.
Basically, there will be signaling towards subgraphs. So whenever Curator actually get the chance to start within the network, there will be more movement toward indexing more and more subgraphs, which will in turn, generate, let’s say more traction for the protocol. So more subgraph signaled, and let’s say more quality subgraphs being signaled, will allow Indexers to start indexing more subgraphs and generate more queries, because people are going to be wanting to be able to query those subgraphs that should generate more rewards for Delegator actually. Because if there are more queries, queries are being paid and more money to go into the Indexer. And thus, more money is going to all the Delegators representing the Indexer. So that’s one of the things they can actually expect. There’s also like the chance that they could actually become Curators themselves, if they want to participate in a more like, active role. At the Delegator roles. It requires a lot of research initially, but then you can, you could like actually, just leave the money there. And let the Indexer keep working and check every so often and just like move the money whenever you need. So yeah, like mostly, they can expect more subgraphs to be migrated than more subgraphs that we actually indexed and more queries on if everything works well enough more money for them.
Many Delegators are getting excited about the idea of possibly acting as a Curator. Can Indexers act as Curators as well?
The person itself can, but the..and I think the others to the others actually can be a Curator. It’s not like they are you can’t delegate or curate if you’re an Indexer, you can use your GRT within the network in any way that you want. You could be an Indexer and delegate a part of your GRT to another Indexer. I don’t know why you would you like to do that. But you technically can. And you can also curate subgraphs with your GRT. It’s just like, you only need GRT in a wallet to be able to curate, to delegate and to index. Although, of course, indexing has a minimum stake that you need, which is quite high. So you have some restrictions there. But you could totally be any role you want. As long as you have the GRT to do it.
Juan, you’re very active in both The Graph Discord, and in The Graph forum. I’m curious what the most common question you receive from Delegators is.
Yeah, mostly like how to be an Indexer. That’s the number one question by far. And as I said earlier, like it’s always the same answer. You need to do your own research and pick your own Indexer because we can’t actually tell you which Indexer is best since usually, that’s the question like, which is the best Indexer, there’s no single best Indexer, everyone’s different, and everyone will charge you a different amount of money to actually be a Delegator. And they will provide a different service right now it’s mostly the same because there are there’s only like a single subgraph to index. But in the future, every Indexer will be most likely indexing different subgraphs and have different exposure to the rewards and the orifice. So right now, that’s the number one question that I get asked a lot in the Delegator community. And then of course, the, let’s say, obligated question about why there’s a 28 day thawing period. And I always try to like refer to the forums, because it’s been explained a lot, or to one of the many community driven documentation sites. Yeah, mostly, it’s been answered a lot. And it’s been really studied. And there are solid answers as to why there’s a 28 day throwing period, but it’s being like, it’s weird when you start delegating. So it’s been asked a lot.
What types of announcements or upcoming news should members of the Delegator community be watching for?
Well, from one side, you could argue that the interest in The Graph developers on making life easier for Delegators by coding and implementing analytic solutions to most of their current problems like 28 day thawing periods when you are delegated to a bad Indexer. Or maybe I don’t know, making it easier to delegate or making it easier to move your delegation to another Indexer. That’s for sure. One of the main things that will be coming soon, or relatively soon, since there are forum posts, trying to gather all the data from all the from the Delegator community, to really be able to focus on specific proposals that would make their life easier. And that’s one of the main things to look forward in the future. And the other like, also main thing is the subgraph migration. If new subgraphs start, let’s say, being migrated to the network, and we started getting more and more query volume, and Indexers can start really serving a lot of queries and generating more money with the queries, they will also get the exposure to all those query fees, and be able to have a, let’s say better APY than they have currently, which probably makes them a lot happier than they are right now. The current APY is like around 10%, which could be argued that is kind of low, or on the low side within the crypto space. So for sure, like having a bigger APY, which is more based on queries rather than inflation, it would be awesome, and would really, or actually probably make them a lot happier. And so those are like the two main things that they could expect from the future. And I think they should be pretty happy when those things finally arrived. It’s not only the Delegators that are actually looking forward to it Indexers are also like looking forward on improvements within the network. And not only improvements that like affect them. Of course, if the Delegators get the chance to I don’t know, move their delegations without having the thawing period, so they can react to buy the Indexers and stuff. This also impacts Indexers in a lor of way, because the delegation market would be a lot more engaged a lot better for them, and would actually really improve the chances of actually good Indexers to succeed, because they Delegators wouldn’t be stuck with bad Indexers. And they will be a lot more like lenient and wanting to improve the whole network that’s treating them well, so to speak. So yeah, it should impact everyone in a better way.
What’s your advice for Delegators? Who want to get more involved in the broader graph community?
Well, one of the main ways they can actually get more involved in The Graph community, is by participating in the forums. There’s a lot of discussions going on in the forums, most of us are trying to improve the protocol. We’re trying to generate new ideas on how we could actually do that. And having other points of views, rather than most the Indexer point of views, is actually really, really helpful. It allows us to, like understand how what changed that we might not think would impact alot might actually impact other places of the protocol or other roles in the protocol. And without Delegators we wouldn’t be able to really have a clear picture of how improvement proposal could actually impact the whole protocol, right? So one of the main ways would be to participate more in the forums. There are a lot of delegates participating in the forums, and it’s been awesome having all those discussions. Sometimes like when we discussed GIP-0002 things can be a little tense. And I know it’s probably not the best environment at those times. But we should all remain civil. And we should all realize that everyone’s working here to improve protocol for everyone, not for ourselves only. So that’s one of the main ways. Other ways, of course, participate freely in the Discord and Discord chat. There are a lot of questions from other Delegators, Curators, software developers regarding The Graph, and having people that want to answer questions is, of course, really helpful. Because, as you know, I spend a lot of time in Discord trying to help everyone and having more people do it would be awesome. Like, would really be helpful, because I usually don’t see every issue that’s going on in Discord chat, as well as in all of the Telegram groups that are actually going on around the community. So yeah, that’s one of the main ways they can they also have to like remember that a GIP’s are always voted on Snapshot. And voting on Snapshot, it’s also a really great way to improve The Graph protocol. Because it’s, I use a really useful signal on whether a change might not be the good idea that we actually thought it was. And that we need to rethink it. Like we could reference GIP-0002. GIP-0002 like, have tons of positive votes. But we had to rethink whether that was a good idea because of the foreign participation of the Delegators, which was really helpful in really having an idea of why some parts of GIP-0002 might be controversial and might not be the perfect solution. Of course, we ended up going through GIP-0004 and realizing that we really couldn’t do anything better right now. And we needed that fix. But having Delegators participate, helped a ton in really making this really well run governance, if you will, and really been thinking about all the different aspects of the protocol before really committing to a solution. So yeah, that’s the main ways they could actually be more involved in the protocol.
From your perspective, why is The Graph so important?
Well, I’ve been working with The Graph and subgraphs for at least over a year, actually. And I’ve had a chance to like really experience why are subgraphs important, and why people actually want to have a subgraph implemented for their protocol, it makes life much easier for developers, for everyone that’s trying to develop an application that has to use blockchain data, having a subgraph available is it makes your life easier. And it’s not like it makes it a little bit easier, it makes it a lot easier. It’s just, you have all the data that you need available. And you can really speed up the process of developing your own application, without having to lose time implementing a proprietary solution to index or actually process the blockchain information. So I really think like The Graph has a lot of potential. Actually, it’s already like already settled, The Graph is being used by a lot of people. But the network itself could scale up even further. Right now, we have only a single Indexer are running, if you will, in production, which is the hosted service, because every everyone else still hasn’t had the chance to index a lot of subgraphs and serve them. So when the network’s ready to scale up, which apparently we’ll be quite soon, this like really scale up the reach that The Graph protocol has right now. So that that’s a really big thing.
So how do you think about the impact that The Graph will have in the broader crypto community?
That’s also a really good question. I guess, since subgraphs, are really useful and make developers life easier, it could be extremely important for blockchains, or for the actually for the future of blockchains. Basically, from the point of view of mainstream adoption, I mean, the crypto community and the blockchain community have a lot of, say builders and developers that really want to create new stuff within the ecosystem for the Ethereum or Bitcoin or for whatever. But they usually have to go and do stuff that they don’t really need, or they wouldn’t need if they had an easier way to get the blockchain data of the blockchain and into their applications. And basically The Graph covers exactly that use case of making it easier for developers to actually focus on whatever they actually want to do instead of having to focus on the details of implementation, and how they actually gather the data on the blockchain itself. So I think it will be really, really important in the future and the mainstream adoption of blockchain technologies.
Can Web3 exist as we all envision it without The Graph?
It’s debatable. There might be a Web or Web3 to exist. Without this, it has existed for a few years without it. But for it to really scale up, and really free developers from the hassle to understand the whole blockchain, basically all the blockchain stuff on how every walk blockchain works, just to develop a specific app that doesn’t really have to do much with how the blockchain works. Because if you’re building like, I don’t know, a Decentralized Finance product, why do you have to care as a developer, how the blockchain is going to be allowing you to get data off the blockchain? Right? It’s like, it’s such an implementation detail that shouldn’t be really bothering you a lot. And right now, it’s actually making a lot of products kind of really impossible to work if you just use bare blockchains. And having a solution to get the data of the blockchains, which is actually easy to use, and relatively straightforward to implement. It’s a game changer.
What are some of the challenges ahead for The Graph?
Well, one of the main challenges is actually being successful in the subgraph migration, being able to like scale up Indexer infrastructures, make the network actually be able to serve queries, right? So like, start moving the whole network towards production ready status, if you will, like, and pushing that exact network into the production environment for everyone, like having actual protocols pay for queries, having the network itself being able to serve more queries than the hosted service right now, which would be amazing, and will allow The Graph to scale up incredibly, because right now, the main limitation for The Graph is that the hosted service can’t scale up perpetually, at some point, the infrastructure is going to be so big, that it’s going to be hard for a team to be able to maintain it, which might be already happening, since it’s a gigantic index operation that the whole Edge & Node team had to undertake. So yeah, basically, there’s a lot going on with the network, and it’s going to be awesome for the future.
As you think about the future Juan, do you think that The Graph can actually change the world?
Well, that’s always what you will want in what you work, righ?. So you always want that your work is actually changing the world. I think it could help crypto change the world, for sure, crypto. Crypto as a whole is a really game changer, especially for like underdeveloped countries. And I can partially talk with experience here. As we discussed previously, like I’m from Argentina, we have a lot of economic issues within your country. And crypto actually helps mitigate some of them, you get ways to save money that you wouldn’t otherwise with your local banks. And it buries even better of a solution for many other countries around the world that are having economic issues. So for sure crypto can change the world, and The Graph can be there to support it. So in a way, The Graph will be changed in the world together with the whole crypto space.
Juan, you’ve been so generous with your time, thank you for sharing so much information with us. If listeners want to stay in touch with you, what’s the best way to connect or follow you?
Well, I have a Twitter account if you want to follow me I think Twitter handle will be linked somewhere and you can also find me on this curve. I basically answer all the questions all the time within the Discord, the The Graph Discord, those are like the two main ways that you can find me.
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DISCLOSURE: GRTIQ is not affiliated, associated, authorized, endorsed by, or in any other way connected with The Graph, or any of its subsidiaries or affiliates. This material has been prepared for information purposes only, and it is not intended to provide, and should not be relied upon for, tax, legal, financial, or investment advice. The content for this material is developed from sources believed to be providing accurate information. The Graph token holders should do their own research regarding individual Indexers and the risks, including objectives, charges, and expenses, associated with the purchase of GRT or the delegation of GRT.