What You Earn by Delegating GRT to an Indexer

Video what do you earn for delegating grt to an indexer

Delegators in the Graph Network play a vital role by staking GRT (Graph Tokens) with Indexers, contributing to network security without running their own Graph Node.

When you delegate to an Indexer, you can earn a share of the Indexer’s query fees and rewards. The number of queries an Indexer can handle depends on their stake (both their own and delegated) and the price they set for each query. So, the more stake allocated to an Indexer, the greater the number of queries they can process.

In this comprehensive guide, we will walk you through the process of becoming an effective Delegator in the Graph Network. As a Delegator, you will share earnings from the protocol in proportion to your delegated stake. Selecting the right Indexers requires careful consideration, taking multiple factors into account. Note that this guide assumes you already know how to set up Metamask correctly, as there is ample information available online. The guide is divided into three sections:

The Risks of Delegating Tokens in The Graph Network

Delegators cannot be penalized for misconduct, but there is a tax imposed on them to discourage poor decision-making that could compromise the integrity of the network.

It’s important to note that each time you delegate, you will be charged a 0.5% fee. For instance, if you delegate 1000 GRT, you will automatically lose 5 GRT.

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To ensure safety, Delegators should calculate their returns by delegating to an Indexer. For example, they may estimate the number of days required to recover the 0.5% tax on their delegated tokens.

Furthermore, when a Delegator wants to undelegate, their tokens are subject to a 28-day unbonding period. During this time, tokens cannot be transferred, and no rewards can be earned.

It’s worth considering that if you choose an untrustworthy or inept Indexer, you may need to undelegate, resulting in missed opportunities for earning rewards. This can be just as detrimental as burning GRT.

How to Calculate Expected Returns as a Delegator

Calculating returns as a Delegator involves several factors to consider:

  • Indexer’s Token Allocation: A technically inclined Delegator can assess an Indexer’s efficient utilization of available delegated tokens. If an Indexer isn’t maximizing their token allocation, they’re missing out on potential profits for themselves and their Delegators.

  • Reward Collection: Indexers have the flexibility to close an allocation and collect rewards anytime between 1 and 28 days. Therefore, an Indexer may have significant uncollected rewards, leading to lower total rewards. This aspect is particularly relevant in the early stages.

It is crucial to select a transparent Indexer who openly defines their Query Fee Cut and Indexing Reward Cut. Delegators should also examine the Parameters Cooldown time to understand the time buffer available. After considering these factors, calculating the Delegators’ rewards becomes relatively straightforward, following this formula:

Delegation Reward Formula

Choosing the Right Indexer

To make the best decision, Delegators should look for Indexers who are transparent, honest about their Query Fee Cut and Indexing Reward Cut, and have a good social and technical reputation. The Graph Discord community is an excellent resource to identify such Indexers. Many Indexers actively participate and are willing to answer questions. They have extensive experience in testnet Indexing for several months and genuinely strive to help Delegators maximize their returns, as it ultimately benefits the health and success of the network.

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Additional Considerations

Delegators should also take into account the delegation capacity when selecting an Indexer. The Delegation Ratio is currently set at 16. This means that an Indexer with a stake of 1,000,000 GRT has a Delegation Capacity of 16,000,000 GRT in delegated tokens that they can use within the protocol. Any delegated tokens exceeding this capacity will dilute the rewards for all Delegators and the Indexer.

Troubleshooting: “Pending” or “Queued” Transaction Issues in MetaMask

Sometimes, attempts to delegate to indexers via MetaMask can result in prolonged periods of “Pending” or “Queued” transaction status. This issue may occur if the gas fee set by the user is insufficient relative to the current prices. Consequently, the transaction may remain “Pending” in the MetaMask wallet for more than 15 minutes. While subsequent transactions can be attempted, they will not be processed until the initial transaction is mined because transactions for an address must be processed in order. In such cases, these transactions can be canceled in MetaMask, but gas fees will accumulate without any guarantee of success for subsequent attempts.

To resolve this issue, simply restart your browser (e.g., by entering “abort:restart” in the address bar). This will cancel all previous attempts without deducting gas fees from your wallet. Many users have reported successful transactions after restarting their browsers and attempting to delegate.

For detailed instructions on interacting with the Graph Network UI while considering all the information covered in this guide, please refer to 5 WS.

Remember, being a Delegator requires careful evaluation and consideration of various factors. By choosing the right Indexer and understanding the different parameters, you can make informed decisions that maximize your rewards in the Graph Network.

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