Overview: A blockchain data indexer is a decentralized protocol that performs the role of an intermediary when it comes to blockchain searches.
Blockchain aims to give people more control over their experiences and finances without the need for centralized services, but that can only be done if users have access to data within the blockchain. Only if.
When Satoshi Nakamoto designed the world’s first blockchain, it was a relatively easy thing to do, but a multichain consisting of hundreds of decentralized networks without special tools for data retrieval. world, it’s becoming much more difficult. That’s because while blockchains are open and public by design, it is difficult for users to access the data stored on them.
The challenge of accessing on-chain data stems from Nakamoto’s lack of foresight. When he was focused on aspects like Bitcoin’s consensus mechanism and execution, he probably wasn’t thinking about a world where there are hundreds of different blockchains and layer 2 networks built on top of them. As such, blockchain does not have a reliable way for users to read all data stored on the blockchain.
For example, if a decentralized application wants to check the transaction history on Solana, it needs to process over 300 terabytes of data, and that number is constantly growing as new transactions and blocks are added. .
Problems with storing data in blocks
A common way to access on-chain data is through something called an RPC node. RPC stands for “Remote Procedure Call” and is a protocol used by individual nodes to communicate with the blockchain. However, searching blockchains using RPC calls is a difficult process thanks to the way these distributed ledgers process and store data sequentially, block by block.
As blocks are added to the blockchain, it becomes longer and longer, and important data is scattered all over the place, categorized by creation time. Unfortunately, this means that blockchain is incredibly confusing. While it’s still fairly easy to search for data within a particular block or information related to a particular account, it becomes more difficult when doing more complex searches that involve querying multiple blocks.
Because data is scattered all over the place, retrieving information takes time, creating problems for decentralized applications where smart contract logic requires such data to function as designed.
EVM-based chains share an interoperable data scheme that facilitates search, but it does not extend to SVM chains or other popular networks. This creates a huge headache for anyone trying to manipulate data at a multi-chain scale.
Who needs blockchain data?
Modern dApps need access to blockchain data. This is to enable the most advanced features such as analytical tools and smart contracts.
Accessing multi-chain data can significantly improve DeFi applications. This gives users a better experience with greater liquidity available and real-time updates on what is happening across numerous blockchains. NFT marketplaces can also benefit from having access to blockchain data. This will allow us to provide users with more insight into the collection of different chains, their prices, and what people are doing with them.
Another example is SocialFi protocols such as Farcaster and Lens. These need to store more than just transactional details, such as who follows whom and what those people are posting and saying to each other. Retrieving all this data will require some serious searching.
Additionally, there are countless scenarios where easily accessible blockchain data can pave the way for even more advanced use cases, such as decentralized AI. For example, large-scale language models can use on-chain data such as social graphs to curate content, identify trends, and generate reputation scores for participants based on previous blockchain interactions.
Blockchain is expected to underpin a new generation of more sophisticated dApps, but for that vision to become a reality, developers need an easy way to access blockchain.
Easier access with data indexers
The key to the blockchain data kingdom lies in data indexers. A data indexer is a protocol that indexes the entire content of a blockchain network by scanning all blocks posted to the blockchain network. This information is stored in a format that is more consistent and easier to query, for example, similar to a SQL database. Top examples of these data indexers include The Graph and SQD.
A blockchain data indexer is a decentralized protocol that acts as an intermediary when searching a blockchain and allows developers to easily access information within the blockchain.
The advantage of data indexers is that they allow blockchain data to be stored in a more logical and searchable manner. So, for example, a smart contract can be stored with all transaction IDs and block numbers associated with it, making it easy to retrieve that information.
Data indexers are written in high-performance code designed to facilitate quick queries, and are used to create databases that store data in a more logically organized manner, as well as APIs for accessing that database. configured. You also need an archive node to keep fetching new transactions as blocks are added to the chain, giving you access to the most up-to-date information.
Data indexers free developers from having to worry about what’s happening in multiple base layers and the L2 structures above them. This is because all this activity is stored in a logical way, making dApps super fast to access.
What is a data indexer?
One of the first decentralized data indexers to emerge was The Graph, which allows any dApp to access an open marketplace of data powered by the GRT token. Graphs are based on complex distributed networks containing users who need to access and use blockchain data.
Other participants are the indexer, which queries that information on behalf of the user, and the curator, who selects the most reliable and accurate subgraphs. These are individual schemas that determine how blockchain information is indexed, structured, queryable, and retrieved.
At The Graph, the work of indexers and curators is encouraged, integrity is ensured through a dispute system where anyone can challenge indexers and request proof of their work, and we are incentivized to deliver accurate results at high speed. . If an indexer is found to be fraudulent, its staked GRT will be reduced and distributed to challengers, giving them an incentive to act honestly.
Building on the success of The Graph is SQD, one of the most advanced data indexers available. SQD was launched last year and aggregates on-chain data into parquet files that are then distributed across nodes hosted in a decentralized data lake. This allows anyone to build their own indexer and run it on the SQD network.
With SQD, queries are sent to worker nodes that host the desired data range. These nodes are assigned to specific segments of blockchain data by the scheduler and provide a detailed map for querying the data that the dApp needs to access. Since there are usually multiple worker nodes storing data in the same range, algorithms are used to fairly distribute the query volume among them.
SQD makes multi-chain data much easier to obtain by aggregating data from many networks into one huge decentralized data lake. Additionally, SQD’s network scales with each new node added to ensure it can handle the bandwidth and data throughput required to support exponential growth.
Like The Graph, SQD’s network encourages participants to be rewarded for their efforts. This has the effect of increasing capacity to meet demand, minimizing query costs, and eliminating bottlenecks.
Key to Multichain Web3
By combining decentralized storage, efficient APIs, and a framework for rapidly retrieving blockchain data, SQD has shown that it can manage the growth and sprawl of a multi-chain blockchain world.
The SQD SDK enables developers to extract even more value from SQD’s networks with a variety of storage solutions and the ability to index and store data in real-time. SQD claims to have the ability to index real-time on-chain data up to 1,000 times faster than traditional subgraphs. This makes SQD stand out as one of the most important future cogs in the nascent Web3 world.
