The Graph Proposes Gradual Increase in Indexing Rewards on L2 – A Move to Achieve Faster Transactions and Lower Gas Costs

On April 23rd, the decentralized indexing protocol The Graph community proposed a proposal to gradually increase the indexing reward of 5% on L2 to 100%, and proposed a timetable and implementation process, from 5% to 25% (expected for the week of May 8, 2023), then to 50% (expected for the week of May 22), 95% (expected for the week of July 24), and finally to 100% (expected for the week of August 28). The Graph states that it is expanding to L2 to achieve faster transactions, significantly reduce gas costs, and participate more openly in the network. Transferring indexing rewards from Ethereum to Arbitrum will enable more indexer to run on L2, and also provide more rewards for curators and clients.

The Graph community proposes to gradually increase the 5% index reward on L2 to 100%

Introduction

On April 23rd, the decentralized indexing protocol The Graph community proposed a proposal to gradually increase the indexing reward of 5% on L2 to 100%, and proposed a timetable and implementation process, from 5% to 25% (expected for the week of May 8, 2023), then to 50% (expected for the week of May 22), 95% (expected for the week of July 24), and finally to 100% (expected for the week of August 28). The Graph states that it is expanding to L2 to achieve faster transactions, significantly reduce gas costs, and participate more openly in the network. Transferring indexing rewards from Ethereum to Arbitrum will enable more indexer to run on L2, and also provide more rewards for curators and clients.

The Need for The Graph to Expand to L2

The Graph is a decentralized protocol that indexes data and helps developers to build and access open APIs called subgraphs. These subgraphs provide developers with access to data from blockchain and decentralized applications (dApps) that can be used to create new user experiences and interfaces. However, with the increasing number of dApps being developed on Ethereum, the amount of data that needs to be indexed is growing at an exponential rate, making it difficult for the existing indexing infrastructure to keep up.
This is where The Graph’s expansion to Layer 2 (L2) comes into play. By expanding to L2, The Graph aims to reduce gas costs and enable faster transactions for its users. At present, the high gas costs on Ethereum make it difficult for smaller developers to use The Graph’s services, limiting the protocol’s adoption. By expanding to L2, The Graph aims to lower these barriers and increase accessibility to its services.

The Proposed Timetable and Implementation Process

The Graph’s proposal outlines a timetable and implementation process for gradually increasing the indexing reward on L2 from 5% to 100% over the next few months. The process is expected to take place across four phases, each of which will see a gradual increase in the indexing reward.
In the first phase, which is expected to take place in the week of May 8, 2023, The Graph plans to increase the indexing reward on L2 from 5% to 25%. In the second phase, which is expected to take place in the week of May 22, the indexing reward will be increased further to 50%. In the third phase, which is expected to take place in the week of July 24, the indexing reward will be increased to 95%. Finally, in the last phase, which is expected to take place in the week of August 28, the indexing reward on L2 will reach 100%.

The Benefits of the Gradual Increase in Indexing Rewards

The gradual increase in indexing rewards on L2 will have several benefits for The Graph’s users. Firstly, it will provide more rewards for curators and clients using The Graph’s services, increasing the incentive for them to participate in the network. This, in turn, will increase the number of subgraphs available on The Graph’s network, making it more attractive to developers.
Secondly, the move to L2 will significantly reduce gas costs for The Graph’s users. This will be particularly beneficial for smaller developers who may not have the resources to pay high gas fees on Ethereum. The lower costs will enable them to access The Graph’s services and build their own subgraphs, helping to increase the protocol’s adoption.
Finally, the move to L2 will enable The Graph to participate more openly in the network. Currently, The Graph operates on Ethereum, which has limited scalability and high gas costs. By expanding to L2, The Graph will be able to operate more efficiently and participate more fully in the broader ecosystem.

Conclusion

The Graph’s proposal to gradually increase indexing rewards on L2 is a significant move that will have far-reaching benefits for developers and users using The Graph’s services. By expanding to L2, The Graph aims to reduce gas costs and enable faster transactions, making it more accessible to developers and users. The move will also provide more rewards for curators and clients using The Graph’s services, increasing the incentive for them to participate in the network.

FAQs

Q1. Has The Graph’s proposal been approved yet?
A1. The proposal has been submitted for feedback from the community, and the implementation process is expected to begin in May 2023.
Q2. Will the gradual increase in indexing rewards on L2 have any impact on existing users?
A2. No, existing users will not be impacted by the move to L2. The gradual increase in indexing rewards will be implemented in a manner that is seamless for users.
Q3. How will the move to L2 impact The Graph’s adoption?
A3. The move to L2 is expected to increase The Graph’s adoption by reducing gas costs and increasing accessibility to its services. By providing more rewards for curators and clients, the protocol will also be more attractive to developers.