All risks at a glance.

Bonding curve risks

Minting the curation shares of a subgraph occurs on a bonding curve. If other curators sell their curation shares after you have minted them, the value of your shares will decrease and you will receive less GRT back

ETH gas prices

In order to deposit GRT to mint curation shares, you need to sign two ETH transactions. Burning curation shares also requires two transactions. High gas prices could increase your curation costs and will reduce your profit margin.

2.5% curation fee

Whenever you curate on a subgraph, the protocol will charge you with a 2.5% curation fee. The same holds true for automigrating or committing to the latest version of a subgraph.

Subgraph assessment

Curators are incentivized to identify quality data sources. Should a subgraph turn out to be less attractive to data consumers as expected, the subgraph will generate less query fees and Curators will face opportunity costs.

Detailed risk assessment.

Let’s have a more detailed look at the risks

Loss of value

Bonding curve risks

The Graph uses bonding curves to incentivize curators in an economic game to identify high-quality subgraphs. To signal on a subgraph, Curators deposit GRT into the subgraph’s bonding curve. In doing so, Curators mint curation shares of the subgraph, which entitle Curators to a portion of the subgraph’s query fees.

Using a bonding curve to mint and burn curation shares has the consequence that the value of the shares will increase proportionally when the supply of shares increases through minting. This is the case when other curators mint new curation shares of the subgraph as they start signaling on it. In this scenario, the value of your shares increases, which means that you would receive more GRT back than you initially deposited when you unsignal.

The opposite is the case when curators unsignal from the subgraph you are signaling on by burning their curation shares. If this happens after you have minted your shares, your shares will reduce in value. If you were to burn your curation shares, you could potentially receive less GRT than you initially deposited.

Risk assessment

Skills required

Risk assessment

Low

Curation taxes

2.5% curation fee

Curators will have to pay a 2.5% curation fee when they deposit GRT into the bonding curve to mint curation shares. If a subgraph developer creates a new version of the subgraph, Curators can automigrate to the latest version or signal on a specific version. However, doing so results in another curation tax, which is split half in half between Curator and the subgraph’s Developer.

Additional gas costs

ETH gas prices

In order to mint and burn curation shares as well as committing to the latest version of a subgraph, you need to sign two ETH transactions for each action you want to take. If gas prices are high, it could reduce your profit margin – depending on the total amount of GRT you are operating with as a Curator.

Risk assessment

Low

Risk assessment

Medium

Opportunity costs

Subgraph assessment

The shared goal behind curation is to identify quality data sources so that Indexers can index these. For this reason, The Graph has introduced curating on a bonding curve as an economic incentive for Curators to signal on high-quality subgraph with an attractive potential to generate high query fees. Curators that falsely evaluate the attractiveness of a subgraph may face the risk of earning significantly less query fees that they would with a popular subgraph.

As a Curator, you may earn very little or no query fees at all if you signal on subgraphs that don’t receive queries or just a small amount of queries. The same holds true for a specific subgraph version you have chosen to curate if it doesn’t receive queries or just a small amount.

Summary

The Curator role does not require advanced technical skills. However, there are certain risk involved for Curators. Depending on the individual’s risk tolerance, Curation may be especially attractive for those who are able to accurately evaluate subgraphs and have a good understanding of the underlying mechanics of bonding curves. The risks for Curators include:

  • Asset depreciation as a result of depositing into the bonding curve of a subgraph whose curation shares are being burned by other Curators
  • Curation taxes for each transaction. This can become costly if Curators often switch to another subgraph or have to commit to the latest version of the subgraph
  • High gas prices could reduce your profit margin, especially if you are curating with a smaller stack of GRT
  • Making false judgements about the attractiveness of a subgraph

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