The Importance of Data in Blockchain and Its Retrieval Methods

Data is the core of Blockchain technology and is crucial for developing decentralized applications ( dApp ). Although current discussions are largely focused on data availability ( DA ), data accessibility is equally important but often overlooked.

In the era of modular Blockchain, DA solutions have become a necessity. They ensure that all participants can access transaction data, enabling real-time verification and maintaining network integrity. However, the DA layer is more like a billboard than a database, meaning that data is not stored indefinitely but will be deleted over time.

In contrast, data accessibility focuses on the ability to retrieve historical data, which is crucial for developing dApps and Blockchain analysis. Although less discussed, it is equally important as data availability. Both play different but complementary roles in the Blockchain ecosystem, and a comprehensive data management approach must address both issues simultaneously to support robust and efficient Blockchain applications.

Traditional Methods of Blockchain Data Retrieval

Blockchain has fundamentally changed infrastructure since its inception and has driven the creation of dApps in areas such as gaming, finance, and social networking. However, building these dApps requires access to a large amount of blockchain data, which is both difficult and costly.

For dApp developers, one option is to host and run their own archive RPC nodes. These nodes store all historical Blockchain data from the beginning, allowing for complete access to the data. However, maintaining archive nodes is costly, and their querying capabilities are limited, making it difficult to query data in the format that developers need. While running cheaper nodes is an option, these nodes have limited data retrieval capabilities, which may hinder the operation of the dApp.

Another approach is to use commercial RPC node providers. These providers are responsible for the costs and management of the nodes and provide data through RPC endpoints. Public RPC endpoints are free but have rate limits, which may affect the user experience of dApps. Private RPC endpoints offer better performance by reducing congestion, but even simple data retrieval requires a significant amount of back-and-forth communication. This makes them request-heavy and inefficient for complex data queries. Additionally, private RPC endpoints are often difficult to scale and lack compatibility across different networks.

Better Choice: Blockchain Indexer

Blockchain indexers play a crucial role in organizing chain data and sending it to databases for easier querying, which is why they are often referred to as "the Google of Blockchain." They index blockchain data and make it available using SQL-like query languages such as GraphQL API (. By providing a unified query interface, indexers allow developers to quickly and accurately retrieve the information they need using standardized query languages, greatly simplifying the process.

Different types of indexers optimize data retrieval in various ways:

1. Full Node Indexer: Runs a complete Blockchain node and directly extracts data, ensuring data completeness and accuracy, but requires a large amount of storage and processing power.

2. Lightweight Indexer: Relies on full nodes to fetch specific data on demand, reducing storage requirements but potentially increasing query time.

3. Dedicated Indexer: Optimized retrieval for specific types of data or Blockchain, such as NFT data or DeFi transactions.

4. Aggregated Indexer: Extracts data from multiple blockchains and sources, including off-chain information, providing a unified query interface, particularly useful for multi-chain dApps.

Ethereum alone requires 3TB of storage space, which continues to increase as the blockchain grows. The indexer protocol deploys multiple indexers, allowing for efficient indexing and high-speed querying of large amounts of data, which RPC cannot achieve.

Indexers also allow for complex queries, easy data filtering, and post-analysis data extraction. Some indexers can aggregate data from multiple sources, avoiding the need to deploy multiple APIs in multi-chain dApps. By being distributed across multiple nodes, indexers provide enhanced security and performance, while RPC providers may experience interruptions and downtime due to their centralized nature.

In summary, compared to RPC node providers, indexers improve the efficiency and reliability of data retrieval while reducing the cost of deploying a single node. This makes the Blockchain indexer protocol the preferred choice for dApp developers.

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Indexer Use Case

Building a dApp requires retrieving and reading blockchain data to operate services. This includes any type of dApp, such as DeFi, NFT platforms, games, and even social networks, as these platforms need to read data first in order to execute other transactions.

DeFi

DeFi protocols require different information to quote specific prices, rates, fees, etc. Automated Market Maker )AMM( needs price and liquidity information from the liquidity pool to calculate swap rates, while lending protocols need utilization rates to determine lending rates and the debt ratio for liquidation. It is essential to input the information into the dApp before calculating the rates executed by users.

Game

GameFi requires fast indexing and access to data to ensure a smooth gaming experience for users. Only through quick data retrieval and execution can Web3 games compete with Web2 games in terms of performance, thereby attracting more users. These games need data such as land ownership, in-game token balances, and in-game operations. By using indexers, they can better ensure a stable data flow and normal uptime, guaranteeing a perfect gaming experience.

NFT

The NFT market and lending platforms need to index data to access various information, such as NFT metadata, ownership and transfer data, royalty information, etc. Quickly indexing such data can avoid browsing through each NFT one by one to find ownership or NFT attribute data.

Whether it's the DeFi automated market maker )AMM( that requires price and liquidity information, or the SocialFi application that needs to update new user posts, the ability to quickly retrieve data is crucial for the normal operation of dApps. With the help of an indexer, they can efficiently and accurately retrieve data, providing a smooth user experience.

Analysis

The indexer provides a method to extract specific data from the raw Blockchain data ), including smart contract events within each Block (. This offers opportunities for more specific data analysis, thereby providing comprehensive insights.

For example, perpetual trading protocols can identify which tokens have high trading volumes and which tokens incur fees, thereby deciding whether to list these tokens as perpetual contracts on their platform. DEX developers can create dashboards for their products to gain insights into which liquidity pools offer the highest returns or the strongest liquidity. They can also create public dashboards that allow developers to freely and flexibly query any type of data to be displayed on the charts.

As there are multiple Blockchain indexers available, identifying the differences between indexing protocols is crucial to ensuring that developers choose the indexer that best fits their needs.

Blockchain Indexer Overview

The Graph

The Graph is the first indexing protocol launched on Ethereum, which allows for easy querying of previously hard-to-access transaction data. It uses subgraph definitions and filters to collect subsets of data from the Blockchain, such as all transactions related to a certain DEX USDC/ETH pool.

Using index proof, indexers stake the native token GRT for indexing and querying services, and delegators can choose to stake their tokens here. Curators can access high-quality subgraphs, helping indexers determine which subgraphs to curate data for to earn the best query fees. In the transition towards greater decentralization, The Graph will eventually stop its hosting services and require subgraphs to upgrade to its network while providing upgraded indexers.

Its infrastructure brings the average cost per million queries to $40, much lower than the cost of self-hosted nodes. Using file data sources, it also supports parallel indexing of both on-chain and off-chain data for efficient data retrieval.

The rewards for The Graph's indexers have steadily increased over the past few quarters. This is partly due to the increase in query volume, but also attributed to the rise in token prices, as they plan to integrate AI-assisted queries in the future.

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Subsquid

Subsquid is a peer-to-peer, horizontally scalable decentralized data lake that efficiently aggregates large amounts of on-chain and off-chain data, protected by zero-knowledge proofs. As a decentralized worker network, each node is responsible for storing data from a specific Block subset, accelerating the data retrieval process by quickly identifying the nodes that hold the required data.

Subsquid also supports real-time indexing, allowing indexing before the block is finalized. It supports storing data in formats chosen by developers, facilitating easier analysis using tools like BigQuery, Parquet, or CSV. Additionally, subgraphs can be deployed on the Subsquid network without migrating to the Squid SDK, enabling no-code deployment.

Despite still being in the testnet phase, Subsquid has achieved impressive statistics, with over 80,000 testnet users, deployed over 60,000 Squid indexers, and more than 20,000 verified developers on the network. Recently, Subsquid launched the mainnet of its data lake.

In addition to indexing, the Subsquid Network data lake can also replace RPC in use cases such as analytics, ZK/TEE co-processors, AI agents, and Oracles.

SubQuery

SubQuery is a decentralized middleware infrastructure network that provides RPC and indexing data services. It originally supported the Polkadot and Substrate networks and has now expanded to include over 200 chains. Its operation is similar to The Graph, which uses indexing proofs; indexers index data and provide query requests, while delegators stake their shares to the indexers. However, it introduces consumers to submit purchase orders to ensure that the indexers' revenue is guaranteed, rather than the managers.

It will introduce SubQuery data nodes that support sharding to prevent continuous synchronization of new data between each node, thereby optimizing query efficiency and moving towards greater decentralization. Users can choose to pay a computational fee of about 1 SQT token for every 1000 requests, or set custom fees for the indexer through the protocol.

Although SubQuery launched its token earlier this year, the issuance rewards for nodes and delegators have also increased in USD value on a month-on-month basis, which indicates a continuous increase in the number of query services offered on its platform. Since the TGE, the total staked SQT has increased from 6 million to 125 million, highlighting the growth of its network participation.

Covalent

Covalent is a decentralized indexing network created by block sample producers )BSP( network nodes through bulk export to create copies of blockchain data and publish proofs on the Covalent L1 blockchain. This data is then refined by block result producers )BRP( nodes according to established rules to filter out the data that meets the requirements.

Through a unified API, developers can easily extract relevant Blockchain data in a consistent request and response format, without writing custom complex queries to access the data. The CQT token, settled on Moonbeam, can be used as a means of payment to extract these pre-configured data sets from network operators.

The rewards of Covalent seem to show an overall upward trend from the first quarter of 2023 to the first quarter of 2024, partly due to the increase in the price of Covalent token CQT.

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Considerations for Choosing an Indexer

Customizability of Data

Some indexers ) such as Covalent ( are universal indexers that provide standard pre-configured datasets solely through APIs. While they may be fast, they do not offer the flexibility needed for developers requiring custom datasets. By using the indexer framework, it allows for more customized data processing to meet application-specific needs.

Security

Index data must be secure; otherwise, dApps built on these indexers are also vulnerable to attacks. For example, if transactions and wallet balances can be manipulated, the dApp may lose liquidity, thereby affecting its users. Although all indexers adopt some form of security through staking tokens, other indexer solutions may use proofs to further enhance security.

Subsquid provides options using optimistic and zero-knowledge proofs, while Covalent has also released proofs containing block hash values. The Graph offers a dispute challenge period for indexer queries in an optimistic challenge window manner, while SubQuery.