Economics of The Graph: Choosing the Right Indexer

January 27, 2021

We recommend delegating to an Indexer that has an on-chain identity, and is considered trusted/credible validator on other staking networks. Figment’s Graph delegators are currently earning substantially more in staking income if they ran their own Indexer.

The Graph is a decentralized solution to the problem of querying blockchains. Although the mainnet just launched, The Graph could very soon be considered critical infrastructure for Ethereum development. The Graph Indexers market is secured by Proof of Stake, but not all staking mechanisms are equal from a token holder perspective. The Graph is unique in the sense that its staking parameters are very much different from a Cosmos/Tendermint or Substrate based protocol.


Stake-based security enables token holders to use their stake to earn a share of new issuance subsidies (ie. newly-minted tokens sometimes called “inflation”) and usage fees earned from operating a node. Outside of this general theme, Proof of Stake incentive mechanisms can be very different. It is important to do your own research before deciding to stake/delegate tokens on a network or to a particular validator on a network. For the sake of keeping this article short, we will only be discussing how rewards are distributed to delegators on The Graph. That said, delegators on any network should always:

  • Delegate to a trusted and credible validator or node operator.
  • Understand the slashing risks.
  • Understand the bonding/unbonding periods.
  • Use a secure self-custody method (eg. Ledger hardware wallet) or a credible custodian.

Quick Facts on The Graph

  • Total Initial Token Supply – 10 Billion GRT
  • New Issuance rate – 3%
  • Delegation Fee – 0.5% (burned)
  • Unbonding Period – 28 days
  • Token Burning – ~1% of query fees and 100% of the 0.5% delegation fees

Delegating GRT

If you have participated in staking on other networks, delegating GRT is relatively easy via The Graph Network Interface, but the information you see associated with Indexers profiles mean something very different on The Graph.

Rewards cut + Fee cut 

In comparison to most other networks where the majority of operator commission rates (or fees) hover around 5-15%, The Graph couldn’t look more different. At first glance, fee and reward cuts of 90%, 50%, or even 20% may seem like the Indexer is just being greedy, but that is not necessarily the case.

The Indexer fee and reward cuts take into account the entirety of GRT staked and delegated to a specific indexer, which includes the mandatory Indexer self-bond. This is unlike most Cosmos SDK/Tendermint based blockchains where the Commission fee you see is associated only with your delegation. If your Graph Indexer doesn’t regularly adjust their cut rates, a large delegation or undelegation could suddenly and dramatically change what you are earning.

Understanding your real return using The Graph Network Interface requires you to reverse engineer things with some math, since your real return is associated with the Indexer fee and reward cut + the ratio between staked and delegated GRT.

Delegation Ratio: Figment is subsidizing staking income

Because the fee and reward cut is associated with the entirety of GRT staked, you must take into account the ratio between the two.

For example, if an Indexer has a 90% fee and reward cut with 900 GRT staked and 100 GRT delegated, totaling 1000 GRT, the Indexer’s real fee would be 0% to its delegators. is an excellent resource to use for understanding real reward cuts from a delegator perspective.

You can check out our Indexers’ current effective rates by typing in our Indexer addresses, and you’ll see that we’re actually subsidizing our delegators.

That means delegators would currently earn substantially less in staking income if they ran their own Indexer than if they delegate to Figment.

Figment’s Indexer Adresses:



Dilution from Overdelegation

A GRT delegator must also take into account delegation capacity when choosing an Indexer on The Graph. Rewards for GRT delegators will become diluted if an Indexer is over capacity.

For example, let’s say an Indexer has a total capacity of 1M GRT. The maximum amount of rewards that Indexer can receive would be for 1M GRT. If this Indexer becomes over delegated by 1M GRT bringing the total to 2M GRT, the rewards would be cut in half for all GRT delegators.

We recommend delegating to an Indexer with a large delegation capacity, especially when you take into account the long unbonding period and 0.5% tax on delegations.

Trust is Paramount

The Cooldown parameter indicates how long Indexers are locked into their current fee and reward cut. Until the protocol is upgraded, delegating to a trusted and credible Indexer is paramount on The Graph, since many Indexers on The Graph have understandably not set their Cooldown parameter.

Indexers need to be flexible on their cut rates in order to fairly share staking income and also to stay attractive for incoming delegations. That said, an Indexer with a Cooldown parameter set to “0” could, at any time, change their fee and reward cut to 100% and claim all of the rewards on their Indexer.

We recommend delegating to an Indexer that has an on-chain identity, and is considered trusted/credible validator on other staking networks.

We will be dynamically updating our reward and fee cuts in order to ensure that our GRT delegators continue receiving a competitive reward rate as more delegations are allocated to our Indexers.

Useful Links

Token economics
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