State of The Graph Q1 2024

Key Insights

• Demand for data on The Graph Network reached an all-time high of over 1.6 billion queries in Q1’24, up 66% from 1 billion in Q4’23.
• As of March 31, 2024, a total of 1,952 subgraphs have been published from The Graph’s hosted service to the decentralized network, up 29% from 1,509 at the end of Q4’23. The Graph's decentralized protocol supports over 40 networks as of Q1’24.
• Demand-side revenue in USD increased 42% QoQ, driven by query volume increase. In GRT terms, demand-side revenue decreased 33% QoQ.
• Indexing rewards increased 6% QoQ in GRT terms. In USD terms, indexing rewards grew by 92% QoQ to 19 million USD, driven by an increase in GRT/USD exchange rate.
• The Graph completed the first out of the three phases of its larger plan for the sunrise of decentralized data, aimed at upgrading all subgraphs to The Graph Network.

Primer

The Graph is an indexing protocol that provides onchain data — such as DeFi transactions or liquidity pool data — from a wide spectrum of sources. It removes the need for data consumers (e.g., app developers) to build out complicated infrastructure to get onchain data. Instead, data consumers pay to query custom APIs of onchain data — called “subgraphs” — via the GraphQL API. Subgraphs define a data schema to be indexed, making that data queryable. Subgraphs can be developed and queried by anyone.

To ensure the protocol runs correctly and efficiently, The Graph network incentivizes several key roles within its ecosystem of both technical and non-technical participants:

• Indexers process and store onchain data from subgraphs. They usually have advanced technical knowledge to operate nodes. In return, Indexers receive query fees from data consumers and indexing rewards from new token issuance.
• Curators are economically incentivized to analyze and signal which subgraphs are valuable to index. Curators earn a 10% portion of the query fees generated by particular subgraphs.
• Delegators do not employ resources to index onchain data; instead, they delegate The Graph's native utility token GRT to Indexers. In return, Delegators earn a portion of query fees and indexing rewards without running nodes themselves.

As of Q1’24, The Graph's decentralized protocol supports over 40 networks. The newly supported chains include Base, Near, Scroll, and zkSync, in addition to already supported chains such as Arbitrum, Avalanche, Celo, Ethereum, Fantom, Optimism, and Polygon.

The Graph completed the first phase of its three-phase plan to upgrade all subgraphs to The Graph Network. Previously, The Graph completed the transition to Arbitrum One (L2) to reduce gas fees and transaction times. Complementing this transition, L2 Transfer Tools are aimed to help all Delegators and Indexers streamline L2 adoption.

Website / X (Twitter) / Discord

Key Metrics

Performance Analysis

The Graph Network is used by developers and data consumers that pay to query subgraph data. The performance of the network can be measured by the growth of queries serviced, the active subgraphs serving queries, the network's revenue in query fees, and the activity of the key ecosystem participants.

Usage

Query Volume

Queries on The Graph Network reached an all-time high of over 1.6 billion in Q1’24, up 66% from 1 billion in Q4’23. In terms of the chains that drove most queries throughout Q1’24, The Graph Network Mainnet leads the way with 831 million successful queries (52% of the total of 1.6 billion queries in Q1’24), followed by Arbitrum One with 363 million (23%), and Polygon with 264 million (17%).

Notably, query volumes reverted from a downward trend from Q2’23 and increased steadily ever since. The rebound in query volume is mostly driven by the general crypto activity recovery. More recent contributing factors to the increase in query volume are: the introduction of a free query plan of 100,000 queries per month to help developers get started on the network, as well as the increasing number of supported networks (40+ as of Q1’24).

Subgraphs

To bootstrap The Graph, a hosted service was initially created. This service hosts subgraphs as the protocol gradually transitions to its decentralized network. The hosted service is free (subsidized by The Graph ecosystem) and offers indexing infrastructure run by Edge & Node, the initial team behind The Graph. The first decentralized subgraph launched on the decentralized network in Q1'21. As of Q1'24, The Graph is a hybrid of its hosted service and decentralized network.

In March, The Graph completed the first phase of its three-stage plan for the sunrise of decentralized data, aimed at upgrading all subgraphs to its decentralized network. The completion of this first phase — called Sunray — brought more chains, free queries, and improved billing. The end goal of the sunrise of decentralized data is to retire the hosted service endpoints, as all subgraphs upgrade to The Graph Network.

Over the past five quarters, the number of subgraphs launched on The Graph’s Network has grown steadily. As of March 2024, there were a total of 1,952 active subgraphs on the decentralized network, up 29% QoQ from 1,509 at the end of Q4’23.

Simultaneously, The Graph's decentralized protocol supports over 40 networks as of Q1’24. The newly supported chains include Base, NEAR, Scroll, and zkSync, in addition to already supported chains such as Arbitrum, Avalanche, Celo, Ethereum, Fantom, Optimism, and Polygon.

Source: The Graph Explorer

Notably, the snapshot subgraph is the first subgraph that crossed the 1 billion lifetime queries on the decentralized network. Other subgraphs that generate significant query volume are the Uniswap V3 subgraph and the Vela Exchange subgraph.

The number of deployed subgraphs on The Graph’s Network is expected to continue increasing, as more chains are supported by The Graph.

Ecosystem Participation

Subgraphs provide an arena for both technical and non-technical ecosystem participants to interact symbiotically:

• Indexers operate Graph Nodes to process and store onchain data. Data consumers can then query this data via GraphQL, an open-source language for The Graph’s APIs.
• Curators signal to Indexers which subgraphs are worth indexing. Curators also often act as subgraph developers.
• Delegators are ecosystem participants who may lack the technical know-how or resources to index; they may choose to delegate GRT to Indexers.

Staked GRT is required for indexing subgraphs. As Indexers receive more GRT via delegation, they increase their capacity to index a larger number of subgraphs on the network. Indexers monetize their indexing and query processing services on The Graph's query market by staking GRT.

The minimum stake for an Indexer is currently set at 100,000 GRT (approximately $39,000 as of March 31, 2024). On top of this minimum, Indexers can also receive delegated stake from other ecosystem participants. Delegators can increase their total stake up to 16x an Indexer's personal stake.

Indexers actively serving queries on The Graph Network decreased 25% to 127 at the end of Q1’24 from its peak of 429 at the end of Q1’23. This continuous decrease in Indexers actively serving queries can be attributed to the conclusion of The Graph’s Multi-Chain Incentivized Program at the end of Q1’23 as well as to some Indexers simultaneously un-staking their GRT. Notably, this drop in the number of Indexers has not resulted in performance drops of Indexers covering a large number of subgraphs. A subsequent analysis of the number of allocations and subgraphs served by Indexer will be provided in the next quarters.

Revenue

The GRT token follows the Stake-for-Access model, also known as a utility token model. Participants in The Graph's ecosystem earn revenue in GRT by performing work in the form of indexing and querying services on the decentralized network. Both services require GRT to be staked. Indexers' stake comprises their own GRT tokens (i.e., self-stake) and GRT delegated toward them (i.e., delegated stake).

Both indexing rewards and query fees are funneled through Indexers who then distribute it to Delegators and Curators. Every Indexer is free to define their own individual cut of query fees and indexing rewards, based on the supply-and-demand dynamics of the open marketplace. According to this individual cut, each Indexer then distributes the indexing rewards and query fees with Delegators, whereas the Curators earn a 10% portion of the query fees generated by particular subgraphs.

Source: The Graph: Choosing Indexers

As per the above example, if an Indexer sets the query fee cut to 13.96%, their Delegators would receive the remaining 86.04% of the fee revenue proportional to their stake. While Delegator stake cannot be slashed, Delegators should still consider several factors when staking GRT with Indexers. These factors relate to:

• Indexer choice, i.e., choosing effective Indexers with the most optimal balance between reward payouts and “skin-in-the-game” from allocation of self-stake.
• Unbonding period, i.e., no GRT transfers or rewards are possible within a 28-day window after un-delegation.
• Delegation tax of 0.5%, i.e., calculating how long it takes to earn back the 0.5% tax on delegation.

Indexing Rewards

Indexing rewards come from a GRT annual inflation, derived from the GRT issuance rate. Rewards are distributed to staked Indexers in return for providing indexing and querying services on The Graph’s open marketplace.

Indexing rewards increased 92% QoQ to $19 million in Q1’24, mainly driven by the appreciation in the USD price of the GRT token. In GRT terms, indexing rewards stay relatively stable (decreased 0.5% QoQ) from 74.6 million GRT in Q4’23 to 74.3 million GRT in Q1’24.

Query Fees (Network Usage Fees)

Data consumers (e.g., app developers) pay query fees for Indexers to fetch and organize data. As of Q1’24, The Graph delivers data to projects like Polygon, Art Blocks, and Loopring.

Query fees are determined by market demand and further distributed to Curators, Indexers, and Delegators.

Total revenue from query fees increased 42% QoQ in USD terms to $43,000 in Q1’24. This decrease in demand-side revenue in USD has been primarily driven by optimizations in query pricing. In terms of the chains that drove most revenue from query fees throughout Q1’24, The Graph Network Mainnet leads the way with nearly $23,000 (53% of the total revenue from query fees in Q1’24), followed by Arbitrum One with over $9,000 (23%), and Polygon with over 7,000 (17%).

For The Graph, the Q1’24 total revenue from query fees (over $43,000) made up 0.2% of the total indexing rewards (approximately $19 million). This distribution indicates that The Graph’s network participants still strongly rely on indexing rewards for sustaining their day-to-day operations.

Qualitative Analysis

Key Developments

Subgraph Support for 40+ Chains

Subgraph support on The Graph Network now includes over 40 chains. The newly supported chains include Base, Near, Scroll, and zkSync, in addition to already supported chains such as Arbitrum, Avalanche, Celo, Ethereum, Fantom, Optimism, and Polygon.

Sunrise of Decentralized Data

The Sunrise of Decentralized Data includes three phases: Sunray, Sunbeam, and Sunrise.

The first phase of the upgrade — Sunray — was completed in March. All developers can now upgrade their hosted service subgraphs to The Graph Network. Sunray brought more chains, free queries, and improved billing. Notably, a free query plan of 100,000 queries per month has been introduced on The Graph Network. This helps developers get started on the network and scale their development.

The second phase of the upgrade — Sunbeam — is currently live until June. Once the Sunbeam phase concludes, new subgraph updates will only happen on the Subgraph Studio; subgraphs "with substantial query traffic" will automatically upgrade to The Graph Network.

In the third phase of the upgrade — Sunrise — hosted service endpoints will be retired as all subgraphs upgrade to The Graph Network.

Graph Node v0.34.1 (GGP 0037)

Previously ratified in GGP 0036, the Graph Node v.0.34.1 update includes:

• Improved query performance
• Improved Substreams-powered subgraphs
• Improved indexing accuracy

Graph Horizon

The Graph Horizon proposal outlines the next evolution of The Graph protocol, which was first introduced in the Graph Foundation's New Era roadmap. The proposal addresses existing limitations and focuses on scaling the protocol to organize the world’s public data.

Key features of Graph Horizon include an immutable generalized staking contract, increased stake representation, a fully permissionless indexing method, decentralized arbitration, and reduced governance intervention. Additionally, it proposes a shift towards indexing fees instead of relying on indexing rewards.

Currently under deliberation are the two approaches for deploying Horizon: either as a new protocol alongside the existing one or as an update to the current protocol.

Subgraph Radio

The GraphOps team, a core dev team at The Graph, has announced Subgraph Radio, a tool within The Graph Network that aims to boost data and information exchange between Indexers and subgraph developers. The release of Subgraph Radio 1.0.0 includes the following features: database persistence, more rigorous validation methods for configurations, usage of relay nodes, and new end-to-end tests.

Subgraph Multichain Support

The Graph announced that Subgraph now supports over 40 networks. Among the newly supported chains are Base, NEAR, Scroll, and zkSync. Developers on previously supported chains such as Arbitrum, Avalanche Celo, Ethereum, Fantom, Gnosis, Optimism, and Polygon, can now upgrade their Subgraph from the hosted service, allowing them to query The Graph Network virtually.

Storage and Retrieval of Blobs

The Graph announced a long-term solution for the storage and retrieval of blobs following EIP-4844. The announcement explained that blobs being stored for 18 days before being pruned is a challenge for historical record-keeping.

To ensure long-term availability, The Graph has built an indexing and storage solution for blob data by combining technologies such as Firehose and Substreams. This allows users to query blob data by either getting data directly from the Firehose-enabled Beacon Chain Substreams (gRPC API) or getting data from a Substreams-powered subgraph (GraphQL API) available on The Graph Network.

Key Governance

Technical Advisory Board

The Graph Protocol introduced the launch of the Technical Advisory Board and its six inaugural members: @facuspagnuolo, @marcandu, @HopeYen11, Derek Meyer, Anirudh Patel, and @0xJoBlo.

IndexerRelayer

Introduced by Usher Labs, the IndexerRelayer is designed to enhance data indexing and verification across various chains. IndexerRelayer transforms a centralized Graph Node into a tool for obtaining cryptographically signed attestations of indexed data.

The IndexerRelayer uses a third-party validator set for real-time confirmation of events. The team is focused on evolving IndexerRelayer, focusing on notarization and proof generation methods involving RPC endpoints, aiming to minimize reliance on third-party validators. The current proposal aims to get support to replace the current validator set with a notarization functionality, seeking to enhance the system’s efficiency and reliability.

Delegation of Responsibility (GIP 0064)

This proposal aims to reduce the time it takes for new features and fixes to be supported on The Graph Network by indexers. It attempts to achieve this by getting the Graph Council to delegate responsibility for the specification of the protocol-supported version of Graph Node to the Graph Node development team.

Subgraph Availability Manager (GIP 0038)

This successful proposal implements a new smart contract, the SubgraphAvailabilityManager. The motivation is to evolve the current system where a single Subgraph Availability Oracle (SAO) verifies subgraph data. The protocol moves towards a more distributed model by transitioning to a system with five independent oracle operators and requiring a consensus of at least three affirmative votes to make decisions.

This proposal also introduces an Oracle Operator Charter that will govern these operators' duties, responsibilities, and conduct, ensuring they operate within the framework's regulations.

Closing Summary

Demand for data on The Graph Network reached an all-time high of over 1.6 billion queries in Q1’24, up 66% from 1 billion in Q4’23. As a result of this increase in query volume, demand-side revenue in USD increased 42% QoQ. Indexing rewards increased 6% QoQ in GRT terms. In USD terms, indexing rewards grew by 92% QoQ to 19 million USD, driven by an increase in GRT/USD exchange rate.

Since Q1’21, The Graph has been focused on the migration from a hosted service to a decentralized network. As of Q1'24, a total of 1,952 subgraphs have been published from The Graph’s hosted service to the decentralized network, up 29% QoQ from 1,509 at the end of Q4’23. Simultaneously, The Graph's decentralized protocol supported over 40 networks as of Q1’24.

In Q1’24, The Graph completed the first out of the three phases of its larger plan for the sunrise of decentralized data. As more subgraphs are migrated to the decentralized network in the coming quarters, The Graph will continue to remove technical barriers for developers, ultimately leading to faster innovation across the entire crypto space.

Let us know what you loved about the report, what may be missing, or share any other feedback by filling out this short form. All responses are subject to our Privacy Policy and Terms of Service.

Messari is a Core Subgraph Developer for The Graph and the recipient of a grant from The Graph Foundation. Author(s) may hold cryptocurrencies named in this report, and each author is subject to Messari’s Code of Conduct and Insider Trading Policy. Additionally, employees are required to disclose their holdings, which are updated monthly and published here. This report is meant for informational purposes only and should not be relied upon. This report is neither financial nor investment advice. You should conduct your own research, and consult an independent financial, tax, or legal advisor before making any investment decisions. Nothing contained in this report is a recommendation or suggestion, directly or indirectly, to buy, sell, make, or hold any investment, loan, commodity, or security, or to undertake any investment or trading strategy with respect to any investment, loan, commodity, security, or any issuer. This report should not be construed as an offer to sell or the solicitation of an offer to buy any security or commodity. Messari does not guarantee the sequence, accuracy, completeness, or timeliness of any information provided in this report. Please see our Terms of Service for more information.

No part of this report may be (a) copied, photocopied, duplicated in any form by any means or (b) redistributed without the prior written consent of Messari®.