*obligatory not financial advice*
What is The Graph?
The Graph is often called "Google of Blockchains". That is because it makes it possible to search for blockchain data in a decentralized way.
It is a data indexing protocol on the Ethereum blockchain, that makes important blockchain data more accessible for developers of DApps. Although Ethereum is a public blockchain with all of its data openly accessible, it can be very difficult and time intense to go through all that data, which makes it impossible to build more complex DApps, at least without them being very slow.
If you want to build a DEX aggregator similar to 1inch for example, then your DApp needs to be able access price and liquidity data from different DEXes like Uniswap and Sushiswap, which would take just a few seconds. But if you also want to see past trading behavior and orders from the different DEXes, then it could take multiple hours if not days to get all your wanted data, which would make your DApp useless for active trading.
For more complex applications on Ethereum there is a demand to have certain data easier and faster available and The Graph provides just that. The idea is similar to Oracles, just in reverse. Chainlink provides off-chain data, The Graph provides on-chain data.
How does The Graph work?
It is basically a sort of marketplace for specific data. The marketplace is divided into smaller sections called "subgraphs", that are basically a description of a specific smart contract and all important data relevant for a developer that wants to access the information. Those subgraphs are similar to bookmarks in a textbook, you don't need to read the entire book to get the information you want, instead you can just go to the marked page.
Whenever a developer requests any data, the "indexers" of the Graph Network search though the relevant subgraphs to find it, in exchange for a fee. The indexers choose the subgraphs based on their quality that is being reviewed by "curators", who are also creating new subgraphs.
Indexers have to stake GRT tokens and if the misbehave, don't do their job or give their users wrong data their stake can be slashed. The curators need to stake their tokens at a subgraph to inform indexers that they have quality, they earn a cut of the fees if their subgraph is often used, so they want to pick high quality subgraphs with useful information that is needed by many users. Curators can't get their stake slashed, but they have high withdraw fees so that they don't switch subgraphs often but instead search for high quality information and then actually commit to it for a long time.
The GRT Token
The GRT token is the native utility token of The Graph. It had an initial supply of 10 billion and has constant inflation rate of 3% per year. However, 1% of the searching fees are being used to burn GRT, so are the withdraw fees of curators, which means that the token could become deflationary if they are enough users.
It is used for paying fees, for staking and to encourage network participants to do their job. The network users pay fees in GRT. Indexers and Curators need to stake, and they can lose part of their funds either by slashing or by withdraw fees. Any token holder can also delegate their funds to an indexer to earn a part of their fees.
Early investors hold a huge amount of the supply and are subject to unlock periods of between 6 months and 10 years, most of their supply will be unlocked within the first 2 years after the token launch in December 2020. This is far from optimal because the circulating supply of token tripled in the first 6 months! And it will continue to grow further. A higher supply leads to a lower price. However, this will be over in a few years and the demand for the token could be high enough.
There has been a huge downwards trend in May, but at that time the entire crypto market was bearish. Other than that, it had a rather good price performance despite the huge increase in supply. The Graph is an infrastructure tool like Chainlink and many new DApps will likely be built with its help, so there could be a huge demand for the token in a few years.
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