#14 - The Graph: Reading Data, The Web3 Way
Pioneering Decentralized Blockchain Indexing to Build a Better Internet
Stanford Blockchain Review
Volume 2, Article No. 4
📚 Michael Macaulay – Edge & Node
🌟 Technical Prerequisite: Low/None
Introduction
The Internet was supposed to be a digital paradise where we could connect with anyone, anywhere, and access limitless information. A place to transcend physical and cultural limitations to expand humanity’s collective knowledge in ways never before imagined.
But instead of this multicultural utopia, we’ve ended up with a digital dystopia, where the very companies we trust to connect us with the world are also exploiting us for profit. Our data, the very essence of our digital selves, is often used against us by corporations to keep us hooked and extract as much value as possible, and the hyper-commercialization of the modern Internet has gone against all of its founding principles. How do we restore this balance, and give the power and profit back to end users? This is the ultimate question behind web3.
Web3 promises a “new Internet,” one that operates vastly differently from its predecessor. Powered by public blockchains where we own our data, control the platforms we use, and are rewarded for contributing to the network, web3 blockchains are public ledgers that offer access to anyone and everyone. But reading blockchain data is notoriously difficult. And this is actually a serious problem for the burgeoning web3 movement - what good is a public ledger if nobody can access it? Many web3 users have reluctantly turned to private companies to read blockchain data, fundamentally undermining the ethos of the movement and repeating the mistakes of web2. Services such as Alchemy, Infura, and Etherscan, all of which are centralized services owned and operated by for-profit companies, have become widely adopted across the industry.
For the web3 movement to truly succeed, we need to have a decentralized solution to access data. And this is the fundamental purpose of The Graph. Thanks to the thousands of independent network participants, web3 users can continue to write data to blockchains in a permissionless way, but they can also read it too, unlocking the possibility of true data ownership for all.
In this essay, we will first examine in detail the problem of online feudalism that web2 has created. We will then present the novel paradigm that web3 presents, before outlining (on a high level) how The Graph attempts to solve the problem of reading blockchain data, as well as highlighting the importance of doing so in a decentralized manner in order to adhere to the philosophical principles of a decentralized new Internet.
Web2 and Online Feudalism
Thanks to their undisputed reign over the Internet, web2 companies have shifted from creating value to extracting it, breathing new life into the haunting spirit of feudalism.
Feudalism can be described as, “a way of structuring society around relationships that were derived from the holding of land in exchange for service or labour.” One group of people own the land, and let everyone else live on it in exchange for work. Feudalism created a society of rampant inequality, where the producers of wealth lived in destitution, while the extractors of wealth lived in luxury. The monopolies of big tech have revived this bygone economic system and adapted it for the digital world.
Instead of land, big tech owns the platforms everyone relies on for work, social connection, and entertainment. It may seem like we get to use these platforms for free, but we don’t. We are, in fact, providing them with “service or labour” without even realizing it by giving them unlimited access to our data.
In Radical Markets, Eric A. Posner and E. Glen Weyl argue that data is labor. The value behind any given tech company is not the platform itself, but the data users create when using the platform. Instead of working in a field to produce a crop, we either doom-scroll on social media or visit websites to produce lots of data. The profits are generated when this data is sold to advertisers, governments, and whoever else wants it. In essence, we are creating billions of dollars in value for platforms that extract and sell our data. And our only compensation is reposted memes sprinkled between the non-stop barrage of ads.
Our digital footprints have been harvested, siloed, and auctioned to the highest bidder. Consequently, we have been reduced to commodities, no different from the landless peasants of medieval times. The entire system is predicated on the profit of the few at the expense of the many.
Web3 represents a paradigm shift that gives users ownership over their data and partial ownership over the platforms that generate it, allowing for user participation in network governance. However, reading data from the blockchain is challenging and requires specific hardware and skills. As a result, many web3 users have relied on centralized services like Alchemy, Infura, and Etherscan to read blockchain data. Although these services provide a gateway for users to access the information stored on the blockchain, they introduce a single point of failure, and undermine the core ethos of decentralization.
In the same way that blockchain revolutionized and decentralized databases, we must now have a blockchain access protocol that revolutionizes and decentralizes this crucial step of blockchain data access – one which a truly decentralized Internet cannot do without.
The Graph: Reading web3 Data, the web3 Way
Officially, The Graph is a decentralized indexing protocol that provides easy access to the world's blockchain data through a marketplace of open APIs called subgraphs. Informally, you can think of it as web3’s Google. It enables developers to access blockchain data in a permissionless, decentralized, and open manner. And as Vitalik Buterin has mentioned at EthCC, it has become the de facto industry standard for accessing blockchain data in a web3 native way.
An open system of APIs
Subgraphs are the cornerstone of The Graph's decentralized network, offering the web3 ecosystem organized, aggregated, and readily available blockchain data. And the best part? Anyone can build a subgraph and make it available to query, making it an accessible tool for developers and enthusiasts alike. Once published, subgraphs can be queried using GraphQL, unlocking a wealth of insights into blockchain data. For example, you can query blockchain data from Snapshot’s subgraph to see voting history, active votes, and voting delegation power.
But what truly sets The Graph apart is its elegant and powerful system of incentives for network participants. By incentivizing thousands of independent participants to work together, The Graph empowers a decentralized community to provide high-quality, reliable blockchain data to the world. It's an exciting time for web3, and The Graph is leading the way towards a more accessible and decentralized future.
The Graph’s Stakeholders (in GRT)
GRT is the native work-utility token on The Graph. It is used to reward and enable contributions to the network. Anyone can earn GRT for participating as one of the roles on The Graph. The primary network roles are: Indexers, Delegators, subgraph developers, and Curators.
Indexers are the backbone of the network, operating indexing nodes using Graph Node, an open source project built by core developer teams at The Graph. The more queries they serve and the more subgraphs they index, the more GRT rewards they earn. Before an Indexer can begin serving queries, they must stake 100,000 GRT with the network to ensure they have skin in the game. At the time of writing, there are over 451 Indexers serving queries.
Delegators, on the other hand, can passively earn GRT rewards by delegating GRT to Indexers. It's a non-technical role that enables Indexers to earn more rewards. Most Indexers offer between 9-12% annual rewards, making it an attractive option for Delegators.
Subgraph developers play a crucial role in building and testing subgraphs before publishing them to The Graph's decentralized network. Once published and curated, Indexers will begin serving data queries to those subgraphs, unlocking the data to be easily queried by anyone.
Curators seek out valuable subgraphs and "curate" them with GRT to increase their curation signal. When subgraphs have a strong curation signal, Indexers will begin indexing them and serving queries to consumers. Curators earn a percentage of all future query fees for identifying important subgraphs.
All of these different roles of different network participants are outlined in the above diagram. As we can see, one of The Graph’s primary innovation is in coordinating different stakeholders incentives through the use of the GRT token, ultimately to benefit end users and facilitate a truly decentralized method of blockchain data queries. This process of incentive alignment for a common good symbolizes what web3 is all about: replacing the need for trust for a centralized entity (such as Alchemy or Infura) with a truly decentralized process, allowing uses to not need to place (or misplace) their trust any single point of failure.
Conclusion
The hyper-commercialized modern Internet is fundamentally the failure of a trust-based system. We placed our data, our identity, our trust in a system in hopes that it would be kept in good faith, but instead had this data harvested for profits’ sake. As large companies monetize through divorcing content value from content creators, the “little guy” is left with nothing but ads and data breaches. This is the fundamental status quo that web3 is trying to change through its transparent, trustless, and decentralized nature.
But old habits die hard, and there is a tendency to slip back into the comforts of outsourcing infrastructure components – such as blockchain indexing and searching – to centralized parties, and in the process create centralized bottlenecks and thus forsake the principles of web3. This is why presenting viable decentralized solutions to all these critical infrastructure components is so important for web3’s long-term health.
As an industry pioneer and leader in decentralized blockchain data query, The Graph is proud to be such a beacon of decentralization, showing that it is indeed possible and economically viable to build a system where trustlessness and decentralization is the norm, and user ownership is sacrosanct. The time has come to leave behind web2 feudalism and create a new Internet that serves the interests of everyone. Together, we shall build a new Internet, one that is no longer the feudal estate of the few, but rather a truly public protocol for the many.
After all, this is what the Internet was meant to be.
About the Author
Michael Macaulay is a technical writer at Edge & Node, where he writes blogs, tutorials, and documentation about The Graph. He actively publishes web3 & programming tutorials on his Medium blog.
References
[1] The Graph: A Decentralized Query Protocol for Blockchains
[2] Radical Markets: Uprooting Capitalism and Democracy for a Just Society
[3] The Graph GRT Token Economics
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