What Do You Earn For Delegating GRT to an Indexer?
Currently, you can expect only about 6-7 GRT in rewards per 10,000 GRT delegated to indexers, who take a 15% cut. Delegators are network members who assign (or “stake”) GRT to one or more Indexers.
Delegators help to secure the network without having to run a Graph Node themselves. Delegators earn a portion of the Indexer’s query fees and rewards by delegating to them.
While you can participate in the network’s security and stability by running a Graph Node, delegating your GRT to an indexer will earn you a share of the fee or reward from the Indexer. The more GRT you stake in an indexer, the more queries it can process. Stakes are calculated based on the cost of each query. To learn more, read our GRT delegating guide.
When delegating GRT to an indexer, you give them the right to choose who should index your GRT. Indexers must be reliable and do their jobs well, or they may end up delegating your GRT and risk losing your reward. Indexers are paid using the Cobbs Douglas formula, which means they share a portion of their rewards with their indexers. This fee is included in the Delegation UI. The delegate will then be paid a 0.5% fee for delegating their GRT to an indexer.
The protocol sets the fees for delegating GRT to an indexer. Each transaction will generate a fee to the rebate pool, which will be re-distributed based on the stake and Cobbs-Douglas Production Function. Indexers will receive more rebates if they perform more valuable work than other indexers. Therefore, Indexer’s fees are calculated according to the GRT that the Indexer has staked.
For the Indexer, they take a percentage of the reward from delegating GRT. This can vary widely, and the Indexer will have a lower or higher APR depending on how well they perform the indexing task. Indexers can earn between 6% and 15% of the total GRT indexed. A small percentage of the rewards accrues at the Indexer’s address, so the fees will be lower for indexers than for delegating GRT to an indexer.
Delegating tokens to an indexer may have several implications for the system. For one, it could lead to multiple allocations of GRT tokens, artificially inflating the total number of tokens allocated. As a result, delegators may have a more significant number of tokens allocated to them than their total stake. In addition, their tokens remain allocated for 28 days after delegating.
A set of criteria generates inflationary rewards. The Indexer stakes their GRT in the network and receives a share of the total fees for each query. If malpractice occurs, the Indexer may lose its tokens. Additionally, the Indexer’s stake in the network token is allocated to the number of subgraphs based on the curation signal. This distribution helps bootstrap new subgraphs.
As a result, indexers are rewarded with a higher proportion of the rewards when they delegate to them. For example, since indexers have a maximum delegation capacity of sixteen, an indexer with 100 GRT can receive up to 1,600,000 GRT. However, if the Indexer has excess capacity, he will not receive any rewards based on the surplus. Moreover, the additional TSOs will dilute the Delegator’s rewards.
The cut-rate is not an accurate indicator of the potential earnings for indexers. This is because the commission fee that indexers earn depends on the stake ratio of the Delegator and their commission fee. However, it is essential to keep in mind that burnt rebates reduce the profitability of indexers and delegators. Consequently, indexers must adjust their cut-rate to ensure a fair distribution of the staking income.
Using a Metamask or WalletConnect wallet, delegate your GRT token to an indexer. If you want to earn a reward, click on the Indexer Fee Cut tab, and note the amount of reward cut the Indexer keeps from each query. You can find this information at the bottom of the Indexer Fee Cut tab. Alternatively, you can log in to the Ethereum network to delegate your GRT token to indexers.
The first and most important rule is to choose the Indexer carefully. There is a cooling-off period where a delegated indexer must wait 28 days before they can redelegate the tokens.
If you redelegate your tokens to an indexer and they do a poor job, the delegated tokens will be unable to earn rewards and will be burned. Make sure you choose an indexer with a high enough reputation and performance rating. Otherwise, you’ll lose your delegating fee and the rewards you’ll receive.
Query Fees for delegating GRT to indexers vary. Indexers have their own stakes in GRT, and the reward pool is proportional to the number of delegated tokens. This gives consumers the idea of the economic security of the queries. This also helps indexers build a reputation among consumers, which is beneficial to both parties. Moreover, delegating GRT to an indexer allows passive token holders to participate without risk of loss.
The GRT token is a token that indexers earn from queries, while regulators get their fee in exchange for metering. This metric helps maintain the economic transparency of the network and allows indexers to earn GRT tokens in exchange for their work. As a result, these indexers are critical to the overall security of the network. If the algorithm is not scalable, consumers will have to pay for the indexing services.
Limit of delegated stake
There are a couple of important factors to consider when setting up your delegation pool. Firstly, you should choose a time frame. The duration of the delegation period can be anything between a day and 28 days. If you choose the latter, the Indexer will share a smaller proportion of their rewards with the Delegator.
When setting up your delegation pool, you should make sure to consider the number of tokens you want to delegate. Ideally, you will only delegate as much as you can afford to lose. Similarly, you should not price your queries too high. This will result in your delegated tokens being diluted.
Another thing to consider is the amount of money you want to allocate to your indexers. You can choose to assign a certain percentage of your total GRT to your indexers. For instance, if you decide to delegate 80% of your total GRT, the Indexer will keep 80% of the rewards.
For the rest of the network, the Indexer will share only 80% of his/her rewards with the delegators. You should also consider the timeframe for which the Indexer can change the fee and cut the reward to the delegated stake. This way, you will avoid wasting your time calculating the total amount you have delegated to your indexers.
The delegated stake must be small enough for the Indexer to accept. To avoid a payout dispute, you must ensure that you have sufficient skin in the game. In other words, the limit of delegated stake when indexing grt
The Unbonding period for delegating GRT to an Indexer is a mandatory 28-day period, after which tokens belonging to undelegated Indexers cannot be transferred or earned for 28 days. During this time, it is crucial that the Delegator chooses an Indexer that is worthy of his trust. A bad indexer will cause the Delegator to lose his delegation fee, while a good one will keep receiving the reward for 28 days.
There are some pros and cons to shortening the unbonding period for delegating GRT to an Indexer. The unbonding period will increase market liquidity, freeing up the time for Delegators to respond to Indexers’ requests and reduce their gas expenses. However, it may also decrease the profitability of delegating since Indexers will have to close allocations more frequently than every 28 days.
One of the biggest drawbacks of this design is that indexers don’t know their total earning potential. Since they don’t know the amount of their total stake, they can’t adjust the cut-rate to ensure an equitable distribution of staking income. In addition, the cut-rate depends on the ratio between the Delegator’s stake and the Indexer’s stake. This is a design flaw, and Figment intends to change it as soon as possible.
As long as the Indexer follows the rules of the Unbonding period, they won’t lose their tokens for misbehavior. Indexers are also responsible for the maintenance of data on the Ethereum blockchain. They keep these by using complex smart contracts and the Bored Ape Yacht Club’s efforts. As a result, the data on the blockchain is hard to read directly.