Mastering Delegation: A Guide to Navigating the Graph Protocol
Delegating GRT (Graph Tokens) within the Graph Protocol ecosystemđ has emerged as a pivotal mechanism for fostering decentralized data indexing and querying across various blockchain networks. By entrusting GRT tokens to network participants, known as Indexers, individuals and entities can contribute to the networkâs overall health and efficiency while earning rewards in returnđ°. This fundamental process of delegation not only fuels the Graph Protocolâs mission through which participants delegate, curate, and query data on the protocolâs decentralized indexing and querying network, but also underscores the significance of community-driven collaborationđ€.
In order to delegate, you donât need vast technical knowledge of the protocol. However, you should familiarize yourself with the mechanics of how GRT, the utility token, and the ecosystemđ works. A great place to start is Graph Academy â here. This goes over the basics of delegation and explains the process. It is recommended to also read over other parts of the process, which includes Indexing and Curation, to fully understand all the aspects of The Graph.
Please see these two previous articles that go over some FAQs for Delegators and how to choose an Indexer:
In this article we will attempt to cover some of the key items to look out for, however you can also review this previous article on how to choose an Indexer:
Get to Know and Understand Your Web3 Wallet
The Graph aims to be used by a vast array of people, and thus works on a variety of wallets, even hardware wallets đ. However, if you are a new Web3 participant who may not be familiar or comfortable using a Web3 wallet, it is highly recommended that you first familiarize yourself with the wallet of your choice. The most commonly used and talked about wallet is MetaMask, which is compatible with The Graph. It is simple to setup and use, and can be a great choice for those newly jumping into the world of Crypto. Graph Academy has a guide here. đ
Here is a quick guide found to help navigate MetaMask:
Here is an article that covers many of the top wallets of 2023:
Choosing your Indexer
After getting the hang of your wallet to help safeguard your crypto, and ensuring it is compatible with the Graph Explorer, the next part is choosing an Indexer to delegate to. As of the date of this article, there are 222 Indexers to choose fromđ.
Due to the mechanics of The Graph, it is important to choose reputable Indexer(s) to delegate to, as youâre subject to a 28 epoch (or approximately 28 day) thaw/unbonding period before you can switch to a new Indexer. If you delegate to a low quality Indexer and want to switch to another one, you risk opportunity cost while you wait for your undelegation to complete. It is highly recommended to read through this Graph Academy section â here
Per Brandon Ramirez, E&N â âThe undelegating period is intended to, among other things, prevent double-counting of delegation across multiple simultaneous allocations, by undelegating and immediately redelegating to an Indexer. Because of that, the undelegating period needs to be at least as long as the maximum duration of an allocation, which is 28 days. Allocations are allowed to go that long to give Indexers the flexibility to spend less gas on opening/closing allocations.â
It is not uncommon for many participants when first delegating, or switching to another Indexer, to go solely for the highest return or APY shownđ. This is usually not a great approach, as often times this calculation is based on historical information that is not updated until an Indexer closes their allocation(s) and opens new ones. This can lead to occurrences where the APY is not actually as high as indicated.
To explain further, the below snapshot from 6/9/2023 of the Graph Explorer shows the top two Indexersâ estimated APY was 37.87% for Graph-Foundrydigital.eth and 34.73% for Gunray:
Graph-Foundrydigital.eth had three recent allocations go past 28 days, however this wasnât nearly as bad as Gunray, so weâll use them for our example. If you click on the Gunray Indexer, and then choose past allocations, you will see this Indexer had an allocation at the time that was open past 28 epochs, as well as a general history of going well past 28 epochs. If a Graph Indexer goes beyond the 28-epoch allocation period, it can potentially lower rewards for Delegators. It should also be noted that itâs possible for anyone to close an Indexerâs allocation, should it go past the 28 epoch threshold, which would result in no rewards given for the Indexer or their Delegators.
The rewards earned by Delegators are directly tied to the Indexerâs performance and the amount of data they index and is queried within the network. This is also bad for the entire ecosystemđ, since Indexers need to optimize their allocations to help projects that need Indexers, while also seeking the best rewards for their Delegators.
If you look at Gunrayâs current allocations you will only see allocations of 0 and 1, which are backup Indexer allocations. These allocations still do some indexing, but they do not earn Indexer Rewards that translate to Delegation Rewards. Gunray, as of the date of this article, has no open allocations. The Indexer has 1.4-million self-stake and approximately 189-thousand delegation not put to work in the network, just sitting idle.
Another area to check when APY seems too good to be true is if an indexer just had a big undelegation.
The indexer Flynodes.eth looks like great choice here with juicy APY. Well, they just had large amount of delegators unstake. You can see below, there were 7 totaling approx 1.4M.
Why would this give a false APY? The indexer can utilize the 1.4M GRT that is pending undelegation during the thaw period. The current delegators will benefit until this large thaw time (28 epochs, approx 28 days) runs out. But afterwards, the indexerâs APY will go back to previous levels.
The overall point is that Delegators need to look beyond the APY when evaluating an Indexer. Had you chosen Gunray or Flynodes as your Indexers, it would have cost you time having to undelegate, as well as ETH gas for the initial delegation, corresponding undelegation, and the new delegation to another Indexer. A bit of research can save you a lot in the long run!
A better measure for APY is to use historical APY đ. Graphscan.io offers a 60 day historical return:
Indexer Reward Cuts and Query Fee Cuts
Indexers share both their Indexing Rewards, and their Query Fee rewards with Delegators. Think of the queryFeeCut and indexingRewardCut like sharing a pie between an Indexer (the person managing the data) and their Delegators (people who trust the Indexer).
queryFeeCut:Imagine the Indexer gets paid every time someone uses the data they organized. If the queryFeeCut is set to 95%, it means the Indexer keeps 95% of the money earned from peopleâs usage, and the remaining 5% is shared among the Delegators.indexingRewardCut:When the Indexer does a good job organizing data, they earn rewards. If the indexingRewardCut is set to 95%, it means the Indexer keeps 95% of the rewards earned, and the other 5% is divided among the Delegators.
So, these cuts determine how much of the earnings and rewards the Indexer gets to keep, and how much is shared with the people who trust and support them (Delegators). Itâs like deciding how to split a pie between the person doing the work and the people who assist them.
Where to find this information:
You can check on Graph Explorer when you click on the Indexer page. It shows you the percentage, and if you hover over the âiâ, it gives you the definition.
Seek Community Feedback
Since which Indexer you choose to delegate to is important, itâs helpful to first narrow down your search to a few, then ask around in various communities for feedback and experience. You could have missed something in your review, or someone may know something you do not. For instance, db-bestake and nodehodler have unstaked their indexers. You would not want to begin a delegation, and if you are currently delegating with either â you should undelegate, as no rewards are being generated.
List of Communities
You can always join Graphtronauts telegram â here. Also here is a list of a few others we suggest:
Does the potential Indexer have a way to contact them?
Being able to contact your Indexer in a decentralized network is essential for transparent updates on performance, rewards distribution, and operational changes. This communication helps foster trust between the Indexer and their Delegators, enabling quick problem resolution. A reputable Indexer more than likely has a channel for communication.
It is especially important to have the ability to ask your Indexer a question or have them clarify something for you. It's also nice to get updates, especially now during the transition to Arbitrum on L2, which is a complex maneuver.
For ease and simplicity, the Graphtronauts appđČ â here has many of the Indexer websites or contact information listed, when you click on an Indexer. However, you can also ask in the various communities listed above.
Graph Forumâ Know your Indexer Episodes
There are many âKnow your Indexerâ question and answer forum posts on the Graph Forum â here. Including this post on our very own Graphtronauts Indexer â here
Check Delegators on a Potential Indexer
Another way to do some research is to check stats on the Delegators of an Indexer you are considering delegating to. Try to find a Delegator with a comparable amount of GRT you intend to delegate. This can give you an idea of what to expect over a period of time, or possibly disclose red flags. Perhaps the expected rewards are lower than you anticipated, and this could lead to questions you may want to ask the Indexer for clarification.
You can see this by heading to the Indexer on the Graph Explorer, then clicking on the delegators tab. âUnrealized Rewardsâ are rewards that have been earned, but they only become âRealized Rewardsâ when an Undelegation is fully completed.
Many of the statistics and notifications of delegation rewards are available on the Graphtronauts appđČ. Feel free to review this article which shows more details here:
Exciting News: The Graph is in the process of moving to L2 Arbitrum!
As of the time of this article, The Graph has begun the process of migrating operations from ETH over to Arbitrum. How does this affect your decision of delegating? đ€ If you are already delegating, itâs suggested to wait for the upcoming arrival of Transfer Tools. This will be a one-click, easy way to move your delegated GRT from ETH over to L2 (after your indexer begins transferring their stake) with little to no interruption to your rewards. đŒ
If you hold GRT tokens on an exchange like Binance, you can simply withdraw them onto Arbitrum directly. đ If you hold your GRT on ETH, or an exchange that will not allow withdrawals on Arbitrum, you can use the Arbirtrum Bridge â link here. Just be sure to choose Arbitrum One and not Nova.
For more information on this, please read the Graph Docs â here. Or you can join our Telegram group (linked at the bottom of this article) if you have any questions. đŹđ
Do you have any questions?
Graphtronauts is the largest, unofficial community for long-term GRT holders who believe in The Graphâs web3 vision for the future. Our goal is to educate the broader crypto community and help them become contributing members within The Graph ecosystem.
If you have any questions, or concerns, or want to submit feedback, you can reach out to us using our social channels:
- App: graphtronauts.app
- Telegram: t.me/graphtronauts
- Twitter: twitter.com/graphtronauts_c
- YouTube: youtube.com/@graphtronauts
- Blog: blog.graphtronauts.com
- Warpcast: warpcast.com/~/channel/graphtronauts
- Reddit: reddit.com/r/Graphtronauts
- LinkedIn: linkedin.com/company/graphtronauts
Graphtronauts indexer is live on The Graph!
You can read our official launch announcement here.
If you want to delegate to us, you can go directly in Graph Explorer, using the link here.
You can contact us using our dedicated social channels for our Indexer operation:
- Twitter: @graphtronauts_x
- Discord: Join our Server
- Telegram: @GraphtronautsIndexer
- Delegate to us
