The “Google” of blockchains? Ethereum’s missing piece
Sorting through a public blockchain’s data is one of the most difficult challenges in preventing decentralized applications from scaling into the mainstream.
This is where a crucial but little-known protocol called “The Graph” comes into play.
According to The Graph co-founder Tegan Kline, “The DeFi movement would not have happened without The Graph. The transparency that the graph brought through subgraphs really allowed the innovation to happen with DeFi.”
The graph is “extremely important for building within the blockchain space. So, similar to what Google does for Web2, The Graph does for Web3, and it makes it easy to access data from the blockchain.”
Kline explained The Graph with an analogy, “Ethereum without The Graph is like walking into a library where all the books are all over the floor and The Graph picks up the books and puts them in alphabetical order. So that way when you come in, you can find the book you’re looking for. The Graph does this with the data on the blockchain.”
Blockchain indexing is an important common good and lucrative product to serve the market. The Graph is not the only team working on a solution.
The most user-focused Ethereum indexing tool is Etherscan, a centralized platform. Etherscan allows users to query the blockchain for wallet addresses, transaction hashes, DeFi functions or even NFT collections.
This is great for most users, but it doesn’t scale to the application level. All decentralized applications must search the blockchain to find the user’s data. Relying on Etherscan for such a task means that if Etherscan goes down, or introduces a new payment wall, the “decentralized” application is useless.
The team behind The Graph protocol realized that this core infrastructure was necessary for decentralized applications to become a reality long before the rest of the industry.
“It was just Ethereum back then and they realized that this core part of the stack was missing. So instead of building an application and using bits and pieces that are centralized, [The Graph] actually went to build this core of the stack.”
“In earlier days, nobody believed in The Graph. They didn’t really understand. They thought it was basically just like an Infura or an Alchemy, sort of like a centralized node or an API. And then I think with the launch of the Graph Network, that’s when people really started to see the value of The Graph.”
The graph is powered by a governance token, GRT, which acts as currency for decentralized searches. As with any system that hopes to provide a decentralized good, there must be clear and enticing incentives for the community.
Individuals can earn GRT tokens from applications by providing them with search results. These fees are shared with delegators, who assign their tokens to whomever they believe provides the most value.
Individuals and applications can also earn GRT by “curating” subgraphs. A subgraph is a part of the blockchain that contains a specific set of data, perhaps Uniswap’s pools or The Art Blocks galleries. Those who curate the subgraphs most useful to the indexers earn BRT for their work.
The team behind the protocol, Edge & Node, relinquished their power to the community, so The Graph’s governance is already decentralized. The team is now focusing its efforts on improving the protocol with the community and expanding its capabilities to other blockchains.
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