The Graph — Research by Cryp2Gem

APIs for a vibrant decentralised future

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The Graph, founded in 2018, San Francisco, US, is a decentralized protocol for indexing and querying data from blockchains. The Graph is a solution on how to optimize accessing your database and process queries more efficiently.
Data access and processing is an essential part of all systems, software and devices. When you think about blockchain data and database management it all becomes more difficult. Distributed ledger technology databases are exchanged and stored in a decentralized network of nodes and access of that scattered data is way more challenging.

The Graph is using a GraphQL, flexible query language from Facebook, for indexing data from blockchain networks. The architecture of Graph’s protocol (detailed description) consists of open API subgraphs which can be composed into a united global graph of publicly available information. All those databases can be queried, indexed, processed and shared. The developers can use existing subgraphs or issue new ones for DApps. This is a simple and fast process.

“dApps need a way to get and transform data from underlying data sources. IPFS provides cheap storage and Ethereum enables atomic transactions but data is rarely stored in a format you can consume directly in your applications. It’s currently difficult to get data to power web or mobile apps directly from an Eth node. Developers have to build custom indexing and querying infrastructure to power their applications, similar to the beginning of the internet when people were building their own servers in C++. The indexing and querying layer was missing from the Web3 stack, so the Graph team set out to create it.” (source)

Currently, the Graph supports Ethereum, IPFS and POA but cross-chain is in the plan after the decentralised network launch that is planned until the end of 2020. The Mission Control incentivised testnet (https://thegraph.com/testnet) is live with 210 indexers listed on the day of publishing this article. Amongst the projects which issued subgraphs are ENS, Compound, Uniswap, Livepeer, USDC, Synthetix, Alchemy, Maker DAO, Gnosis, Decentraland, Aave, iExec, Balancer and others. All the information is available on their explorer. There are currently over 2300 subgraphs deployed.

In 2020, the daily query volume grows exponentially. In July they already had over a billion queries per month which quadrupled by October. The Graph might become one of the pillars for Web 3.0 as an access point, a bridge to the blockchain databases. For that, they will need interoperability (on the roadmap after the launch of mainnet).

Daily Query Volume, Octoreb 2020
Daily Query Volume, October 2020

The Graph will be an open query marketplace powered by GRT utility token that is used for staking and governance. To use the Graph ecosystem a developer or a DApp needs to pay for fees for querying the subgraph. Those fees are collected by the graph nodes who process the queries and curate the subgraph being queried.

The Graph uses a dynamic algorithmic subgraph valuation. Developers of DApps need to rely on accurate and efficient APIs. While indexers stake GRT in order to serve and collect query fee, curators identify subgraphs and stake GRT on subgraphs. Curators are essential entities of the protocol as they signal on specific subgraphs to indicate to Indexers which data should be indexed. Curation occurs on a bonding curve, so the sooner you signal on a relevant subgraph, the more you earn. Curators are incentivized to signal indexers on the highest quality and usage frequency of subgraphs, to ensure DApps are querying the correct APIs and to earn fees for their curation work. With an increasing demand for queries, the more query fees are earned by indexers.

Curators Dynamic Bonding Curve

The Graph will integrate scalable state channels into their network which will allow to scale query interactions on Layer 2 and enable secure peer-to-peer (P2P) micropayments.

The Graph had four funding rounds based on the information found on the Crunchbase. Multicoin Capital leaded $2,5 million Seed Round in January 2019. There were also South Park Commons, Reciprocal Ventures, Kilowatt Capital LLC, DTC Capital, Compound and CoinFund amongst other investors.
Lemniscap invested in Series A funding in June 2019 and Digital Currency Group in Venture Round in January 2020. The amount raised is not known. The most recent Funding Round was in June 2020 with Coinbase Ventures, DTC Capital, Digital Group, Framework Ventures and Multicoin Capital invested $5,1 million. Altogether they have raised $12,7M from seed and private sales and another $12M will be raised in an upcoming public sale. Some details about early investments are not confirmed and disclosed by the team, but some information about those details of private sales metrics were found on the Crunchbase and were used for calculation of the seed and private deals token prices offered. The actual prices may be different due to inaccurate information gathered.

TOKEN METRICS:
FULLY DILUTED MARKET CAP
: $300M (considering token price $0,03)
INITIAL MARKET CAP: $37,4M (considering token price $0,03)
TOTAL TOKEN SUPPLY (INITIAL): 10 billion GRT
INITIAL CIRCULATING SUPPLY [%]: 12,4%

Total GRT (ERC-20 token standard on Ethereum) token supply at genesis token generation event will be 10 billion GRT with a new token issuance in the form of indexing and curating rewards will begin at 3% annually.

FUNDS RAISING INFO:
*Seed Round (Early Backers): 17% total supply — 1,7B GRT — $51M valuation
$0.0015 / locked for 6 months when most tokens become liquid and the rest is unlocked after 1 year. Raised $2,5M.
*Private Round (Backers): 17% total supply — 1,7B GRT — $51M valuation
$0.003 / tokens are locked for 12 months with 12 months linear vesting afterwards. Raised $5,1M.
*Strategic Sale: 2,1% total supply — 210M GRT — $6,3M valuation
Token price $0,025 / tokens are locked for 1 year. Raised $5,2M.
*Public sale: 4,2% total supply — 420M GRT — $12,6M valuation (also initial circulating supply)
Token price $0.03 / No lockup. Will raise $12,6M.

TOKEN DISTRIBUTION:
23% Team and advisors
20,3% Graph Foundation
3,15% Curator Program Grants
3,15% Testnet Indexer Rewards
2,1% Educational Programs
0,35% Bug Bounties
17% Seed Early Backers
17% Private Backers
2,1% Strategic GRT Sale
4,2% Public GRT Sale

Please see the token distribution unlock schedule in the graph below.

GRT vesting and distribution schedules

Some of the details about the fundraising are not publically shared. The token unlock schedule and token distribution are known but the raised amounts and token prices of seed and private funding rounds are not provided by the Graph team. The reason for non-transparency seems to be due to the very steep differences between early investors token prices and public as well as strategic token offering prices. Early Backers have a 17% token allocation and x20 advantage compared to the public token sale price. Private Backers also have a 17% token allocation and x10 token price advantage compared to the public sale and vice versa considering the seed sale token price. All early investors have a very big token allocation with 34%. That represents a big staking share and governing power. They have another advantage as they will be able to stake and delegate their tokens before they’re unlocked. All the raised $7,6M came from around 60 different accredited investors (some of them are mentioned in this article). The high staking share and very low token prices of the early investors can lead to high governing power and/or dumping and selling pressure. Most seed investors tokens become liquid after 6 months since the launch of the Mainnet. This is an important date to watch for if looking from the long term investor perspective.

The Graph Network (GRT) public token sale will take place on October 22nd 2020. Registration and whitelisting are currently ongoing. The Graph will be selling 400M GRT during this round and aims to raise $12M USD. The tokens will become liquid with Mainnet launch which is planed until the end of 2020. As stated, public retail investors will have a huge disadvantage compared to early investors. The will have a personal purchase cap $1,000-$5,000. The accepted currency will be ETH. It would make more sense to enable stablecoin currencies which are not subjected to volatility.

People behind the Graph are co-founders Yaniv Tal (Project Lead), Brandon Ramirez (Research Lead) and Jannis Pohlmann (Tech Lead). Yaniv and Brandon studied Electrical Engineering at USC and worked together at MuleSoft, an API developer tools company that IPO’ed and sold to Salesforce.

An index is used to speed up searching in the database, speeds up the dapp and makes the business more effective, better.

“Co-founder Yaniv Tal believes that because Web3’s infrastructure is not yet ready, blockchain developers have been working hard to expand their ideas. The team used to spend months building private index servers and operating the servers themselves. The Graph builds an indexing protocol that allows developers to build beautiful consumer applications without running servers. Yaniv Tal said that the decentralized network of The Graph will ensure that the crypto economy has a reliable open data layer, and new applications can be built on a reliable basis.”

The Graph might become one of the best solutions for indexing in the future. A gateway to data on different blockchains which is not easy to index due to the scattered information in a decentralised architecture on several nodes. Their queries marketplace will enable optimization of accessing databases and processing of queries, as well as indexing and sharing, more efficiently.
The numbers of users, indexers and queries are growing weekly. The Graph just might become one of the pillars for Web 3.0 as an access point, a decentralised APIs alternative and a bridge to the blockchain databases.

If we consider some of the most widely adopted essential blockchain solutions like IPFS for storage, Chainlink for data feed services, Ankr for node infrastructure, we can also mention the Graph for indexing in that context.

As a comparison: Chainlink raised $32M, Filecoin raised $260M, Ankr raised $15M and the Graph will raise $24,7M.

The only issue, which is quite a biggie, is a non-transparency of the team regarding early investment details and the very favourable investment conditions that were offered to those backers. Those details should always be disclosed. This might overweight the technical greatness and potential when considering an investment, a long term one.

Cryp2Gem team is always available for any further discussions in our social media. Looking forward to all the feedback.

Cryp2Gem Telegram Community Chat & Twitter & e-mail.

Our team is always available and happy to help if we can! Don’t hesitate to reach us.

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Researchers & fundamental analysts (::) Building crypto thirsty Cryp2Gem community. Searching and researching for blockchain future disruptive innovators.

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Cryp2Gem

Cryp2Gem

Researchers & fundamental analysts (::) Building crypto thirsty Cryp2Gem community. Searching and researching for blockchain future disruptive innovators.

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