The Graph Network > Delegating


Reading time: 7 min

Delegators are network participants who delegate (i.e., "stake") GRT to one or more Indexers. Delegators help secure the network without running a Graph Node themselves.

Delegators earn a portion of an Indexer's query fees and rewards by delegating to them. The amount of queries an Indexer can process depends on their own stake, the delegated stake, and the price the Indexer charges for each query. Therefore, the more stake that is allocated to an Indexer, the more potential queries they can process.

Delegator Guide

Link to this section

This guide will explain how to be an effective Delegator in the Graph Network. Delegators share the earnings of the protocol alongside all Indexers based on their delegated stake. A Delegator must use their best judgment to choose Indexers based on multiple factors. Please note this guide will not cover steps such as setting up Metamask properly, as that information is widely available on the internet.

There are three sections in this guide:

  • The risks of delegating tokens in The Graph Network
  • How to calculate expected returns as a Delegator
  • A video guide showing the steps to delegate in the Graph Network UI

Delegation Risks

Link to this section

Listed below are the main risks of being a Delegator in the protocol.

The delegation tax

Link to this section

Delegators cannot be slashed for bad behavior, but there is a tax on Delegators to disincentivize poor decision-making that could harm the integrity of the network.

It is important to understand that every time you delegate, you will be charged 0.5%. This means that if you are delegating 1000 GRT, you will automatically burn 5 GRT.

In order to be safe, a Delegator should calculate their potential return when delegating to an Indexer. For example, a Delegator might calculate how many days it will take before they have earned back the 0.5% tax on their delegation.

The delegation unbonding period

Link to this section

Whenever a Delegator wants to undelegate, their tokens are subject to a 28-day unbonding period. This means they cannot transfer their tokens or earn any rewards for 28 days.

Another thing to consider is how to choose an Indexer wisely. If you choose an Indexer that is not trustworthy or not doing a good job, you will want to undelegate. This means you will be losing a lot of opportunities to earn rewards, which can be just as bad as burning GRT.

Delegation unbonding Note the 0.5% fee in the Delegation UI, as well as the 28 day unbonding period.

Choosing a trustworthy Indexer with a fair reward payout for Delegators

Link to this section

This is an important aspect to understand. First, let's discuss three very important values, which are the Delegation Parameters.

Indexing Reward Cut - The indexing reward cut is the portion of the rewards that the Indexer will keep for themselves. This means that if an Indexer's rewards are set to 100%, as a Delegator you will get 0 indexing rewards. If you see it set at 80% in the UI, that means as a Delegator, you will receive 20%. An important note - at the beginning of the network, Indexing Rewards will account for the majority of the rewards.

Indexing Reward Cut The top Indexer is giving Delegators 90% of the rewards. The middle one is giving Delegators 20%. The bottom one is giving Delegators ~83%.

  • Query Fee Cut - This works exactly like the Indexing Reward Cut. However, this applies explicitly to returns on the query fees the Indexer collects. It should be noted that at the start of the network, returns from query fees will be very small compared to the indexing reward. It is recommended that you pay attention to the network to determine when the query fees in the network will start to be more significant.

As you can see, in order to choose the right Indexer, you must consider multiple things. This is why we highly recommend exploring The Graph Discord to determine which Indexers have the best social and technical reputations and which reward Delegators consistently. Many of the Indexers are very active in Discord and will be happy to answer your questions. Many of them have been Indexing for months on the testnet, and they are doing their best to help Delegators earn a good return, as it improves the health and success of the network.

Calculating Delegators expected return

Link to this section

A Delegator must consider a lot of factors when determining the return. These include:

  • A technical Delegator can also look at the Indexer's ability to use the Delegated tokens available to them. If an Indexer is not allocating all the tokens available, they are not earning the maximum profit they could be for themselves or their Delegators.
  • Right now, in the network an Indexer can choose to close an allocation and collect rewards anytime between 1 and 28 days. So, it is possible that an Indexer might have a lot of rewards they still need to collect, and thus, their total rewards are low. This should be taken into consideration in the early days.

Considering the query fee cut and indexing fee cut

Link to this section

As described in the above sections, you should choose an Indexer that is transparent and honest about setting their Query Fee Cut and Indexing Fee Cuts. A Delegator should also look at the Parameters Cooldown time to see how much of a time buffer they have. After that is done, it is fairly simple to calculate the amount of rewards the Delegators are getting. The formula is:

Delegation Image 3

Considering the Indexer's delegation pool

Link to this section

Another thing a Delegator has to consider is what proportion of the Delegation Pool they own. All delegation rewards are shared evenly, with a simple rebalancing of the pool determined by the amount the Delegator has deposited into the pool. This gives the Delegator a share of the pool:

Share formula

Using this formula, we can see that it is possible for an Indexer offering only 20% to Delegators to actually provide a better reward than an Indexer giving 90%.

Therefore, a Delegator can do the math to determine that the Indexer offering 20% to Delegators is offering a better return.

Considering the delegation capacity

Link to this section

Another thing to consider is the delegation capacity. Currently, the Delegation Ratio is set to 16. This means that if an Indexer has staked 1,000,000 GRT, their Delegation Capacity is 16,000,000 GRT of Delegated tokens that they can use in the protocol. Any delegated tokens over this amount will dilute all the Delegator rewards.

Imagine an Indexer with 100,000,000 GRT delegated to them, but their capacity is only 16,000,000 GRT. This means effectively, 84,000,000 GRT tokens are not being used to earn tokens. So, all the Delegators and the Indexer, are earning way less rewards than they could be.

Therefore, a Delegator should always consider the Delegation Capacity of an Indexer, and factor it into their decision making.

Delegator FAQs and Bugs

Link to this section

MetaMask "Pending Transaction" Bug

Link to this section

When I try to delegate my transaction in MetaMask, it appears as "Pending" or "Queued" for longer than expected. What should I do?

At times, attempts to delegate to indexers via MetaMask can fail and result in prolonged periods of "Pending" or "Queued" transaction attempts.

For example, a user may attempt to delegate with an insufficient gas fee relative to the current prices, resulting in the transaction attempt displaying as "Pending" in their MetaMask wallet for 15+ minutes. When this occurs, a user can attempt subsequent transactions, but these will only be processed until the initial transaction is mined, as transactions for an address must be processed in order. In such cases, these transactions can be cancelled in MetaMask, but the transactions attempts will accrue gas fees without any guarantee that subsequent attempts will be successful.

A simpler resolution to this bug is restarting the browser (e.g., using "abort:restart" in the address bar), which will cancel all previous attempts without gas being subtracted from the wallet. Several users who have encountered this issue have reported successful transactions after restarting their browser and attempting to delegate.

Video guide for the network UI

Link to this section

This video guide fully reviews this document and explains how to consider everything in it while interacting with the UI.

Edit page

Edit page