All risks at a glance.

0.5% delegation fee

Whenever you delegate to an Indexer, the protocol will charge you with a 0.5% delegation fee.

28 day delegation unbonding period

If you choose to undelegate, your GRT are subject to a 28 day thawing period during which you cannot move your tokens.

ETH gas prices

In order to delegate GRT, you need to sign two ETH transactions. High gas prices could increase your delegation costs.

Indexer malperformance

Should your indexer perform poorly or stop operations, choosing to undelegate will present opportunity costs.

Detailed risk assessment.

Let’s have a more detailed look at the risks

GRT costs

0.5% deposit tax

Every time you delegate GRT to an Indexer, you need to take a 0.5% delegation fee into account. For example, if you delegate 10,000 GRT, you will be charged 50 GRT. Let us assume that your Indexer offers you an earnings potential of 2 GRT per day. Under this assumption, it would take you 25 days (50 GRT / 2 GRT) to break even. To make economically sound decisions, you have to calculate how long it takes you to earn back the 0.5% tax on your delegation.

Risk assessment

Low

Risk assessment

Moderate

Increased time to break even

ETH gas prices

Delegating to an Indexer will require you to sign two ETH transactions. The same holds true for undelegating your GRT. In case of high gas prices, you will have to calculate carefully whether or not it is economically sound to delegate small amounts of GRT.

For example, let us assume that signing two ETH transactions will cost you $25. Let us also assume that you only want to delegate $100. In this case, the transaction costs of delegating would make up a total of 25% of your GRT stack. This means that the time until you break even would be significantly increased.

Opportunity costs

28 day thawing period

If Delegators wish to undelegate, they cannot immediately access their tokens. Instead, In The Graph Protocol, undelegated tokens are subject to a 28 day thawing period. Once the undelegation period of 28 days has passed, Delegators can freely transfer their tokens or re-delegate them to another Indexer.

Please note: You will not be able to earn any delegation rewards during the period of 28 days.

Risk assessment

Low

Risk assessment

Low

Opportunity costs

Indexer malperformance or inactivity

Choosing a reputable, trustworthy and effective Indexer is an important decision that should not be taken lightly. Delegators who do not do their due diligence face the risk of delegating to an Indexer with a poor performance. Similarly, they may risk choosing an Indexer who engages in dubious practices or subsidises Delegators for a short time to advertise an attractive APY (Annual Percentage Yield) that is not realistic in the long run.

We will show you in the following tutorials how you can avoid all of this by choosing a trustworthy and effective Indexer.

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Selecting Indexers