Overview

Indexer incentives .

The Indexers active in The Graph Network are incentiviced to provide their services through indexing rewards, query fee rebates and distributions from the rebate pool. Let’s have a detailed look at the three revenue sources on Indexers.

Indexer-Rewards

The Three Revenue Streams of Indexers.

The Three Revenue Streams of Indexers

Indexing Rewards
Query Fee Rebates
Rebate Pool 

How exactly are these revenues generated and how are they distributed?

Revenue stream #1

Indexing Rewards.

The rewards for indexing subgraph deployments in The Graph Network are generated by a protocol-wide inflation that is set to 3% annually. The indexing rewards constitute an incentive for Indexers to index the contents of subgraphs. Distribution of indexing rewards ensues proportionally to the amount of indexing work of an Indexer on a subgraph.

Revenue stream #2

Query Fee Rebates.

Indexers serve queries for indexed data from data consumers. Typically, these consumers are end-users, developers and applications. In order to query data, consumers pay query fees to Indexers based on the metered usage.

Query fee rebates are the payments Indexers receive for serving queries by consumers on the network.

Indexers can utilize different pricing strategies to attract data consumers and are free to set their pricing models independently. Similarly, data consumers can set their preference for query fee pricing. Additionally, consumers can define parameters for the query processing of Indexers.

State channels mediate the payments between an Indexer and a gateway. Included in each query request originating from a gateway is an associated proof of query result validity.

Query fees are decided by the market forces of supply and demand.

Revenue stream #3

Rebate Pool.

All participants of The Graph Network are rewarded from a Rebate Pool based on their contributions to the network. The creation of the Rebate Pool follows the Cobb–Douglas Production Function and a fixed portion of query fees are contributed to it. Intended outcome of the Rebate Pool is to encourage Indexers to stake GRT tokens in approximate proportion to earned query fees in the network.

Rebate-Pool-Indexer

Contributions to the Rebate Pool are calculated by means of the Cobb–Douglas Production Function. Consequently, the resulting stake is allocated on the particular subgraphs for which the query fees were generated.

  • Indexers receive 100% of their fees back as a rebate when allocating stake proportionally to their fee contribution to the pool. This is considered the optimal allocation.

Indexing Reward Cut and Query Fee Cut.

Indexers in The Graph Network define the costs for their services by deciding upon the indexing reward cut and the query fee cut. The total amount of generated GRT is distributed among the Indexer and their Delegators based on the defined percentages.

Summary.

The revenue sources of Indexers consist of Indexing Rewards, Query Fee Rebates and distributions from the Rebate Pool.

  • Indexing Rewards
  • Query Fee Rebates
  • Rebate Pool

Indexers can freely decide which indexing reward cut and query fee cut percentages to define but need to take competitors and their own cost structures into account.

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