The Graph Proposes to Gradually Increase Indexing Reward on L2
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 a
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%
The Graph is a decentralized indexing protocol that is designed to organize and index data from blockchains and offer an API for developers to interact with that data. On April 23rd, the community behind The Graph proposed a proposal to gradually increase the indexing reward on Layer 2 (L2) from 5% to 100%, while providing a timetable and implementation process.
Table of Contents
– Proposal Details
– Benefits of Transferring Indexing Rewards to L2
– The Graph’s Expanding Reach
– The Graph’s Roadmap for Indexing Rewards on L2
– The First Phase (May 8)
– The Second Phase (May 22)
– The Third Phase (July 24)
– The Final Phase (August 28)
– Conclusion
– FAQs
Proposal Details
The proposal put forth by The Graph community aims to transfer indexing rewards from Ethereum to Arbitrum to enable more indexers to run on L2. Indexers are essential players in The Graph’s ecosystem, and they earn indexing rewards for processing and indexing data from various blockchains. By allowing more indexers to participate on L2, The Graph hopes to achieve faster transactions, significantly reduce gas costs, and participate more openly in the network.
Benefits of Transferring Indexing Rewards to L2
Transferring indexing rewards to L2 offers several advantages over sticking to Ethereum’s Layer 1. L2 is designed to take off some of the network’s stresses, reducing Ethereum gas costs, and latency. Additionally, it enables more people to run The Graph’s node or indexer service, and it incentivizes more client usage by giving curators and clients more rewards. The process will happen gradually, intending to ensure a smooth transition that won’t put a strain on the network.
The Graph’s Expanding Reach
With the growth of popular decentralized applications, the demand for access to reliable blockchain data has surged, increasing the need for protocols like The Graph. As a result, The Graph has seen its ecosystem expand in recent years, with more adoption, integration, and potential blockchain projects. The Graph is used by several popular projects, including Uniswap, Synthetic, and Aave, making it necessary to maintain a continuous flow of reliable network data off-chain.
The Graph’s Roadmap for Indexing Rewards on L2
For The Graph, the indexing reward is critical to incentivizing more indexers and improving the protocol’s reliability. The transition to L2, therefore, requires a configurable system to enable the indexing rewards’ gradual increase. The Graph’s roadmap for indexing rewards on L2 sets a timetable and implementation process that will ensure that the transition occurs smoothly, as follows:
The First Phase (May 8)
The first phase of the transition will begin on May 8, 2023, with a target indexing reward of 25%. This initial phase aims to gauge the system’s ability to support indexing rewards without leading to overburdening of the system’s resources. If indicators show that the initial phase is successful, the transition can continue to phase two.
The Second Phase (May 22)
The second phase of the transition will begin on May 22, 2023, targeting an indexing reward of 50%. This phase aims to increase the reward’s proximity to Ethereum’s original reward while remaining within L2’s suitable limitations. The goal is to continue assessing the resilience of the system and whether the expected performance is achieved. If the second phase is successful, The Graph can explore the idea of introducing phase three.
The Third Phase (July 24)
The third phase of the transition is expected to begin on July 24, 2023, with a target indexing reward of 95%. This phase aims to achieve an indexing reward amount that surpasses Ethereum’s Layer 1 limits while preventing excessive strain on L2 resources. The Graph will assess if phase three’s performance is behind what is expected or unexpected. Once they assess phase three, the Graph can finally proceed to the final phase.
The Final Phase (August 28)
The final phase of the transition is to occur on August 28, 2023, with a target indexing reward of 100%. This mark signifies the full transition to L2, and The Graph’s ecosystem is set to enjoy the benefits that come with it. The Graph will continue exploring and assessing the system to ensure that it is the right choice for future growth and user experience.
Conclusion
In conclusion, The Graph’s proposal to gradually increase indexing rewards on Layer 2 aims to incentivize more participation in the ecosystem while reaping the benefits that come with Layer 2 networks. The gradual transition period grants the community ample time to assess the system’s efficacy, ensuring a smooth transition. With more indexer participation, faster transactions, reduced gas costs, and the ability to participate more openly in the network, The Graph’s reach can continue to expand.
FAQs
What are Indexing Rewards?
They are rewards earned by indexers for processing and indexing data from various blockchains.
What is L2?
L2 is Layer 2 network, an Ethereum scaling solution that offloads network traffic onto a secondary, less congested network.
What are the Benefits of Using L2?
L2 helps to reduce gas costs and latency, increases node and indexer service performance while incentivizing further client usage, providing curators with more rewards.
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