The Graph: How to become a Curator

The Graph overview

The Graph is a decentralised protocol for querying and indexing data from blockchains. It is the backbone of major crypto projects like Uniswap, Lido, Livepeer and Decentraland. Basically, any dApp in order to be truly decentralised has to store its data on a distributed database. And The Graph is where dApps can store and collect information in a familiar Web 2.0 fashion but with Web3 security and reliability.

You can capitalise on major Web3 projects’ successes and failures and earn fees on The Graph platform. The Graph supplies the databases and computing powers to support these projects and this work is done by the indexers. This work is backed by delegators that stake GRT by delegating it to them. Anyone can become a delegator and get between 9% and 15% APY on their GRT tokens.

Those looking for a higher yield and comfortable with higher risks can consider becoming a curator.

How to become a curator and earn up to 30% APR on The Graph

A Curators’ job is to identify the most prosperous Web3 projects that use The Graph as their database and buy their shares. When a curator holds these shares they get a part of the query fees served by indexers with some of them returning up to 30% APY.

With the new dashboard made by P2P for curators, it has become easier than ever to make data-driven decisions.

https://reports.p2p.org/superset/dashboard/graph_curation

The first tab (subgraphs) is designed to give you data on where the upcoming query fees are going to be higher.

The creators’ share column would help you identify how many other curators may leave and thus lower your share price, as it is unlikely (but still possible!) for subgraph creators to abandon their own subgraph.

Query fees (QF) probability is calculated based on the past 30 days. If there were no queries in the last month, the probability of new queries is close to 0. The percentage takes into account all closed allocations, their size, and duration and estimates the probability of the next query.

QF APR is estimated based on the annualised Price per Share changes in the last 30 days based on indexers' allocation collect events.

QF APR If You Signal N GRT is calculated considering current signals & query fees collected in the last 30 days.

How are query fees accrued

Everything starts with indexers allocating their GRT to subgraphs. They would allocate their tokens proportionally to the number of signals on the subgraphs.

In the table below Proportion = Signals / Allocated GRT

If for example, curators added signals to the UMA subgraph, this would in theory lead to more indexers allocating GRT there. An allocation generates rewards for a period of 28 epochs only (approx. 28 days). After that, the allocation stops generating rewards and indexers have an incentive to close them. They may also close their allocation earlier if the signals on the subgraphs change. You can observe indexers' behaviour towards particular subgraphs in the Selected Subgraphs’ Current Indexers’ Allocations table.

Here's how the allocation lifecycle plays out:

Because Indexers have to pay gas for every action sometimes they choose not to collect query fees if the reward doesn't outweigh the cost. They can store those query fees and accumulate them until it is economically viable to claim them. To help you predict whether an indexer will claim query fees, we provide you with the stats for previous allocations. Curators only get their share of query fees after the indexers claim them.

Differences between the share price and the token price

Query fees are not the primary source of income for curators. Most of the tokens earned come from the shares' price changes.

The share price is not tied to the project’s token price. For example, changes in the Uniswap token price, UNI, do not correlate with changes in price for its subgraph shares. Some of the projects with a subgraph do not have a token at all, for example, Connext has not released its token yet. You also need to pay attention to the subgraph publisher. For example, Messari has published subgraphs for Uniswap, Lido and other projects, but those subgraphs are not used by Uniswap or Lido, but by Messari.

With the help of our new tools, you can take a look at how other curators earn GRT on the share price changes. You can try to figure out the tactics that others use to become more profitable by taking a look at their portfolio and the actions they took.

Shares price and bonding curve

When signalling onto the subgraph a curator buys shares. The price of a share is pre-determined by the bonding curve and each subsequent share is more expensive. The same logic applies in the opposite direction. If someone sells a share, the share price of each curator on that subgraph drops as the price goes down the bonding curve. This process is well documented in The Graph's official documentation. The primary way to earn rewards in curation is by being among the first to notice the true potential of a subgraph.

There are a few tactics that can be applied to be successful in this way of earning rewards. One that is very frowned upon by the community is the use of front-running bots that signal on a subgraph as soon as it appears in the network. There are different proposals on how to decrease their impact on the industry. These bots are not as aggressive as in other parts of the crypto ecosystem, so they still leave an opportunity for common investors to earn rewards in the curation market.

Projects with big names, such as Lido, Messari, and Curve get their signals very quickly as it is assumed that they will generate both hype and query fees that would generate rewards. But keep in mind that anyone can create a subgraph with any name, so it is better to make sure that the subgraph you plan to signal on is the official one. In all the cases mentioned above, a good place to discuss any Curation related questions is the official discord channel.

We hope our new tool helps you in your curation process decision-making, or if it is the case, it helps you get started. We are always happy to hear your feedback on the work we are doing, so do not hesitate to reach out, and make suggestions on how we can make The Graph even better.

Check out the tool below.

Superset

About P2P Validator

P2P Validator is a world-leading non-custodial staking provider with the best industry practices and proven expertise. At the time of publishing, P2P Validator is trusted with over $1B in staked assets by over 30,000 delegators across 40+ networks.