Graph Protocol: Fundamentals, technicals, tokenomics and future outlook

4 min readDec 23, 2021

What is Graph Protocol?

Graph protocol, often referred to as the google of blockchain, is an indexing protocol for querying networks like Ethereum and IPFS. The Graph offers applications a public infrastructure for web 3 that is decentralised and censorship-resistant

In simple terms, indexing is the process of arranging or organisation of data in accordance with specific schemes. DeFi and NFT projects like Uniswap and Cryptopunks store data on the Ethereum blockchain that are hard to read. In the case of Cryptopunks, basic information such as supply should be readily available since it’s all included in the smart contract. However, advanced queries like analytics, filtering across specific addresses holdings, and aggregation are not possible by just smart contracts. These data are hard to obtain and require hours or days for decentralised applications and projects to aggregate, based on all the blockchain information.

The graph protocol solves this problem and offers a crypto-native solution to indexing problems faced by applications, by decentralising the query and API layer. In addition, the Graph provides teams with trustworthy public infrastructure so that they can focus on building instead of core functionalities.

How Does It Work?

The Graph works by allowing decentralised applications first to add data to Ethereum through transactions on smart contracts. Graph nodes then continuously scan new blocks in the blockchain for the application’s subgraphs, and when the node finds one, it updates data entities. The application then queries the graph node through a complex process for the indexed data and displays this data for the end-user.

The efficient operations of the graph are ensured by the following roles:

Indexers — Indexers operate nodes in the graph protocol and are incentivised for their activity.
Curators — Curators are the individuals that signal the valuable indexes in subgraphs.
Delegators — Delegators stake GRT on behalf of indexers and leave the operations of nodes to them as well.

Use Cases So Far

Graph protocol has been used predominantly by DeFi and NFT decentralised applications. As shown above, the daily query volume from applications has steadily increased over the past 2 years. Large protocols like Uniswap, Synthetix, Dodo, Sushi swap, ENS, Bancor, Compound and more all use Graph’s services.

Example of Uniswap using the Graph Protocol

Tokenomics

GRT, the native token of the graph protocol has the following utilities attached to it:

GRT is used as a work token that is locked up by curators, indexers and delegators
Medium of exchange and queries paid in GRT
Protocol burns GRT from supply using a percentage of fees

Growth and Future Outlook

Since its inception in 2020, the graph protocol has expanded to multiple blockchains as well as Layer 2’s and has reached record adoption. As we saw, the DeFi sector has been the single most user of the protocol to receive queries and the number of applications using the service is set to increase. Recent news of graph being a good contender for helping to scale Ethereum in the future has also brought more attention to the protocol. The state of decentralised applications is only set to increase over the next few years. This should increase the adoption and usage of the graph protocol extensively.

GRT, the native token, is up 28.6% since the beginning of the year and is ranked 48'th among all other cryptocurrencies.

Buy GRT on BitYard today!

Purchase GRT and over 300 other cryptocurrencies on BitYard today! Click here for the detailed guide on how to purchase cryptocurrencies in BitYard.

Check out our other crypto analysis below:

If you enjoyed reading this article, make sure you follow us on our medium page to stay updated for more exciting content! As usual, none of this information is financial advice, and you should do your own research before investing in any of these projects mentioned in this article.