Thread by @MTorygreen

@graphprotocol is one of the most important pillars of the #Web3 ecosystem

It serves a vital role for DeFi, NFTs & L1s, but 99% of people don’t understand how it works

Here’s an explanation that a 5-year-old can understand

(and why many investors are watching $GRT)

👇

🧵

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The Graph Network is a decentralized querying tool for #blockchains

(I’ll explain what this means in a second)

It's powered by the $GRT token which trades at $0.06 (for a FDV of $578M)

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This thread will explain:

• What is blockchain querying

• Why current methods for searching blockchains are inadequate

• How #GRT solves that problem

• How it works

• The #tokenomics of $GRT

• Why demand for the $GRT token may skyrocket in the next bull market

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🔶 What is Querying?

One of the biggest advantages of blockchains is that they are public

Through a process known as “querying” – which is just a fancy term for “searching” – anyone can see every transaction on a blockchain

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For example, users can:

• Search any address and find all of their transactions

• Track the flow of a token through different accounts

• Find out who owns a particular asset, such as a Bored Ape

• Check the total supply of a token

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This transparency brings multiple benefits…

It can create accountability for public institutions, reduce fraud and corruption and even catch criminals!

For instance, federal agents were able to track funds from the 2016 Bitfinex hack, recover $3.6B and make two arrests

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🔶 Problem

While great in theory, searching a blockchain for information is easier said than done

Users who want to read data have two options:

• Running their own blockchain node

• Using a third-party block explorer such as Etherscan

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🔹 Running a Node

Blockchain networks are composed of thousands of individual computers called nodes, which each maintain a copy of the network’s shared database

While anyone running a node can query a blockchain, its expensive, time consuming and technically challenging

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🔹 3rd Party Query Services

As such, many users prefer third-party block explorers such as Etherscan

Services like Etherscan host their own nodes, use them to search on a user’s behalf, and then charge a fee

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While this is convenient, there’s one major problem – these services are controlled by a single party, meaning that they could:

• Manipulate the data

• Go offline

• Charge whatever they want

This defeats the point of #Web3!

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🔶 Solution

The Graph solves this problem by providing a decentralized search service

It allows users to search for data without being directly connected to the chain OR going through a centralized third-party provider

That’s why some call it the “Google for blockchains”

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The Graph currently supports data from almost 40 different blockchains including Ethereum, NEAR, BNB, Polygon, Optimism, Arbitrum, Fantom and Cosmos

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🔶 How does it work?

From a technical perspective, a better way to think about The Graph might be as a “marketplace of Googles”

It’s a network of hundreds of individual block explorers that provide their searching services for a fee

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Data for different protocols is organized into subgraphs, and this ecosystem of subgraphs is maintained by several players:

• Consumers

• Indexers

• Curators

• Delegators

Let’s explore each…

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🔹Consumers

The end-users of The Graph that initiate search requests and pay fees to the Indexers in $GRT, the platforms native token

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🔹 Indexers

The “workhorses” of the network that provide indexing services in exchange for a fee

They are independent providers that operate in a decentralized marketplace known as the Query Market

To incentivize proper behavior, indexers must stake $GRT as collateral

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🔹 Curators

Curators analyze The Graph’s vast network of subgraphs and help Indexers identify which are the best

They earn a portion of the fees generated by each subgraph

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🔹Delegators

Delegators loan $GRT to indexers to stake and receive a portion of the profits

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🔶 Traction

The Graph has achieved significant traction since launch

To date, 63,000+ subgraphs have been deployed on its hosted service and subgraphs on its decentralized service have been growing nearly 100% per quarter!

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Notable protocols using The Graph include Livepeer, Opyn, Audius, Uniswap, Aave, UMA, Dodo, Lido and Sushiswap

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🔶 Team

The Graph was founded in 2018 by @yanivgraph, @RezBrandon and @jannispohlmann

It lists 74 employees on LinkedIn

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🔶 Investors

The protocol has an impressive roster of investors including @fenbushi, @DCGco, @multicoincap and @cbventures

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🔶 Tokenomics

$GRT is the native token of The Graph protocol

It has a circulating supply of 8.7B and total supply of 10.5B

Below we will cover $GRT ’s:

• Usage

• Initial distribution

• Emissions schedule

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🔹 Token Usage

$GRT is a utility and governance token with three uses

• Fees: Customers pay to access data with $GRT tokens

• Collateral: Indexers stake $GRT as collateral

• Governance: The $GRT token can be used for governance

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🔹 Initial Distribution

The Graph minted 10 billion tokens in its launch in December 2020

These tokens have a 5-year unlock schedule, and were distributed as follows:

• 34% to initial investors

• 23% to the team

• 8% to Edge & Node

• 35% to the community

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🔹 Emissions Schedule

$GRT is an inflationary token

The protocol expects 3% inflation per year through rewards, but also expects to burn 1% of total query fees and deposit taxes

Both the burn and inflation rates can be adjusted by governance

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🔶 The Big Picture

@graphprotocol is tackling significant and fundamental issues that will shape the future of #web3

Like a blockchain version of Google, its ultimate goal is to index the data of the new economy

Unlike Google, it’s doing this in a decentralized way

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The Graph is also catching the eye of value investors

As @tradinglord points out, the token is down 98% from its ATH yet adoption continues to grow

https://twitter.com/tradinglord/status/1597684410467635200

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If you’d like to learn more about The Graph, I suggest checking out the following accounts:

• @ConquererCrypto

• @German_TheGraph

• @GraphAdvocates

• @graphtronauts

• @pdiomede

• @ricburton

• @tradinglord

I hope you've found this thread helpful.

Follow me @MTorygreen for more fundamental analysis on Web3 protocols.

Like/Retweet the first tweet below if you can:

https://twitter.com/MTorygreen/status/1605971477131509785