Curators are critical to the Graph decentralized economy. They use their knowledge of the web3 ecosystem to assess and signal on the subgraphs that should be indexed by The Graph Network. Through the Explorer, curators are able to view network data to make signalling decisions. The Graph Network rewards curators that signal on good quality subgraphs with a share of the query fees that subgraphs generate. Curators are economically incentivized to signal early. These cues from curators are important for indexers, who can then process or index the data from these signalled subgraphs.
When signaling, curators can decide to signal on a specific version of the subgraph or to signal using auto-migrate. When signaling using auto-migrate, a curator’s shares will always be upgraded to the latest version published by the developer. If you decide to signal on a specific version instead, shares will always stay on this specific version.
Remember that curation is risky. Please do your diligence to make sure you curate on subgraphs you trust. Creating a subgraph is permissionless, so people can create subgraphs and call them any name they'd like. For more guidance on curation risks, check out The Graph Academy's Curation Guide.
First we take a step back. Each subgraph has a bonding curve on which curation shares are minted, when a user adds signal into the curve. Each subgraph’s bonding curve is unique. The bonding curves are architected so that the price to mint a curation share on a subgraph increases linearly, over the number of shares minted.
As a result, price increases linearly, meaning that it will get more expensive to purchase a share over time. Here’s an example of what we mean, see the bonding curve below:
Consider we have two curators that mint shares for a subgraph:
- Curator A is the first to signal on the subgraph. By adding 120,000 GRT into the curve, they are able to mint 2000 shares.
- Curator B’s signal is on the subgraph at some point in time later. To receive the same amount of shares as Curator A, they would have to add 360,000 GRT into the curve.
- Since both curators hold half the total of curation shares, they would receive an equal amount of curator royalties.
- If any of the curators were now to burn their 2000 curation shares, they would receive 360,000 GRT.
- The remaining curator would now receive all the curator royalties for that subgraph. If they were to burn their shares to withdraw GRT, they would receive 120,000 GRT.
- TLDR: The GRT valuation of curation shares is determined by the bonding curve and can be volatile. There is potential for big gains as well as big losses. Signalling early means you put in less GRT for each share. By extension, this means you earn more curator royalties per GRT than later curators for the same subgraph.
In general, a bonding curve is a mathematical curve that defines the relationship between token supply and asset price. In the specific case of subgraph curation, the price of an asset (subgraph share) increases with each token invested and the price of the asset decreases with each token sold.
Bonding curve contracts are used for token issuance and enable end consumers to engage + purchase tokens outside of popular exchanges. In the case of The Graph, Bancor’s implementation of a bonding curve formula is leveraged.
Now that we’ve covered the basics about how the bonding curve works, this is how you will proceed to signal on a subgraph. Within the Curator tab on the Graph Explorer, curators will be able to signal and unsignal on certain subgraphs based on network stats. For a step by step overview of how to do this in the Explorer, click here.
A curator can choose to signal on a specific subgraph version, or they can choose to have their curation shares automatically migrate to the newest production build of that subgraph. Both are valid strategies and come with their own pros and cons.
Signalling on a specific version is especially useful when one subgraph is used by multiple dApps. One dApp might have the need to regularly update the subgraph with new features. Another dApp might prefer to use an older, well tested subgraph version. Upon initial curation, a 2.5% standard tax is incurred.
Having your curation shares automatically migrate to the newest production build can be valuable to ensure you keep accruing query fees. Every time you curate, a 2.5% curation tax is incurred. You will also pay a 1.25% curation tax on every migration. Subgraph developers are discouraged from frequently publishing new versions - they have to pay 1.25% curation tax on all auto-migrated curation shares.
For end consumers to be able to query a subgraph, the subgraph must first be indexed. Indexing is a process where files, data, and metadata are looked at, cataloged, and then indexed so that results can be found faster. In order for a subgraph’s data to be searchable, it needs to be organized.
And so, if indexers had to guess which subgraphs they should index, there would be a low chance that they would earn robust query fees because they’d have no way of validating which subgraphs are good quality. Enter curation.
Curators make The Graph network efficient and signaling is the process that curators use to let Indexers know that a subgraph is good to index, where GRT is deposited into a bonding curve for a subgraph. Indexers can inherently trust the signal from a curator because upon signaling, curators mint a curation share for the subgraph, entitling them to a portion of future query fees that the subgraph drives. Curators signal by depositing their GRT in exchange for subgraph specific ERC20 tokens, known as Graph Curation Shares (GCS). Curators that want to earn more query fees should signal their GRT to subgraphs that they predict will generate a strong flow of fees to the network.
Curators cannot be slashed for bad behavior, but there is a deposit tax on Curators to disincentivize poor decision making that could harm the integrity of the network. Curators also earn fewer query fees if they choose to curate on a low quality subgraph, since there will be fewer queries to process or fewer indexers to process those queries. See the diagram below!
Indexers can find subgraphs to index based on curation signals they see in The Graph Explorer (screenshot below).
- The query market is inherently young at The Graph and there is risk that your %APY may be lower than you expect due to nascent market dynamics.
- Curation Fee - when a curator signals GRT on a subgraph, they incur a 2.5% curation tax. This fee is burned and the rest is deposited into the reserve supply of the bonding curve.
- When curators burn their shares to withdraw GRT, the GRT valuation of the remaining shares will be reduced. Be aware that in some cases, curators may decide to burn their shares all at once. This situation may be common if a dApp developer stops versioning/improving and querying their subgraph or if a subgraph fails. As a result, remaining curators might only be able to withdraw a fraction of their initial GRT. For a network role with a lower risk profile, see Delegators.
- A subgraph can fail due to a bug. A failed subgraph does not accrue query fees. As a result, you’ll have to wait until the developer fixes the bug and deploys a new version.
- If you are subscribed to the newest version of a subgraph, your shares will auto-migrate to that new version. This will incur a 1.25% curation tax.
- If you have signalled on a specific subgraph version and it fails, you will have to manually burn your curation shaires. Note that you may receive more or less GRT than you initially deposited into the curation curve, which is a risk associated with being a curator. You can then signal on the new subgraph version, thus incurring a 2.5% curation tax.