What is The Graph Protocol?
In short, Graph Protocol is a Cosmos Ecosystem Project which is a decentralized Blockchain Data Indexing and Querying protocol for networks such as Ethereum and Inter Planetary File System (IPFS).
To explain it further in a more simplified fashion, Graph is used to collect, store and process blockchain data from various applications and this facilitates in searches and thus improves performance.
The dapp devs can create APIs, called subgraphs, which can execute queries via the GraphQL on more than 30 networks and is currently powering some really well known applications such as Uniswap, Balancer, Livepeer, Audius, Decentraland among others. These dapps are spread over all major networks including Ethereum, Solana, Cosmos and Polygon.
A total of 1082 subgraphs have been published by the end of June, 2023, a number which has almost trebled in a year since the end of June, 2022 when it was 392 — a growth of 176% over a year.
The Graph has raised a total of $205 mn with the last funding round of $50 mn happening on 21st Jan, 2022 with the participation from Tiger Global, and the annual revenue for FY’22 was reported to be around $40 mn.
While, individual projects can fail or succeed, the protocols working on providing infrastructure related services for the Blockchain ecosystem are set to grow and thrive. The Graph surely seems to be one such protocol.
GRT token has many different functions in The Graph ecosystem such as governance (voting power), currency for fees/monetary exchange, and a reward mechanism for network participants.
GRT reached an All Time High (ATH) of over $2.3 in the last bull run on 14th Feb, 2021 and has been in decline thereon. It is currently trading at around $0.11 cents at the time of writing in July, 2023. Token unlocks and the bear markets played a major role in this decline. The overall marketcap currently stands at a little over $1bn, making a good upside possible if the project starts to get the PR attention and thus the retail investor eyeballs in the next bull run.
GRT has a total supply of 1 bn tokens, almost all of which are already in circulation (91% to be precise), thus there are no major unlocks that can potentially affect the price by changing the supply situation dramatically.
23.2% of the token rest with the Early Team and Advisors, another 20% lies with the Graph Foundation while 16.5% is held by early backers. The stake of these core participants thus constitutes over 50%, meaning a good skin in the game and indicates they have a significant stake in the outcome of the project and its token price, which should be seen as a positive for GRT.
A major threat to GRT’s potential seems to be the competition that has sprung up. Alchemy has emerged to be a strong player in this space and some others like TATUM and QEDIT are registering their presence too. While currently The Graph holds the market leader totem pole with over 30,000 developers reported to be using it, there might be some stiff competition coming in the future.
In order to prepare for the challenge from competition and the changing Layer 2 landscape, The Graph has added a SNARK force in its Road Map to take care of ZK rollups becoming popular, which is where the next level of growth may come from as more and more ZK rollup powered L2 get born. Improved User Experience is another focus area for The Graph team as per the Road Map.
It will probably be wise to allocate a small portion of your portfolio to this project or at least to the Blockchain Infrastructure industry related project(s)!
(Filecoin is another Web3 infrastructure related project that caters to decentralized data storage and one that has been growing its partnerships and thus adoption rapidly and counts some really big and established non-crypto players as clients as well. Its definitely on my watchlist and should be on yours as well.)
With tons of innovation happening in the Crypto space, it will be exciting to see how The Graph shapes up in the rest of 2023. Keep watching this space for future updates on this project and beyond!