A Deep Dive into Subsquid

We recently announced the Subsquid Community Sale scheduled for January 18, 2024, at 18:00 UTC.

The Subsquid Network is an innovative decentralized data lake and query engine designed to offer developers performant and permissionless access to data, aiming to contribute to the creation of a neutral and open internet based on Web3 principles.

In our conversation with the Subsquid team, we explored the real-world issue they solve, their approach to making blockchain data more cost-effective, the utility of the SQD token, their growth strategy, and emerging trends in Web3 data.

Let’s dive in.

1. What is Subsquid and what problems does it solve?

Subsquid Network is an innovative decentralized data lake and query engine designed to offer developers performant and permissionless access to data, aiming to contribute to the creation of a neutral and open internet based on Web3 principles. Secured by Zero-Knowledge (ZK) proofs, the Subsquid network features a modular architecture designed for exceptional scalability and developer convenience, specifically optimized for blockchain indexing, dApp development and analytics.

Subsquid is a response to unscalable and rigid monolithic indexing frameworks like the Graph that had previously gained popularity and market traction among Web3 developers. Today, these frameworks are struggling to adapt in a rapidly evolving blockchain environment. Additionally, the Subsquid network serves as a highly efficient and decentralized alternative to centralized infrastructure firms, including large RPC and API providers.

2. How does Subsquid make blockchain data more affordable?

Subsquid currently offers historical data access at an exponentially lower cost than RPC or API providers. With time, the network’s data cost reductions will extend also to real-time data (unfinalized “hot blocks”). Here’s some details to how Subsquid’s cost reduction mechanisms work:

• Infinite horizontal scalability: Subsquid is designed to scale indefinitely as new nodes join the network. This means that as the network grows, it can handle increasing amounts of data without a proportional increase in costs. In other words, the data lake offers a kind of ‘shared cost infrastructure’ where the cost of the management of the data in the network is shared between an ever-increasing number of data consumers (dApps, analysts, and others).  
• Efficient data storage and retrieval, powered by Duck DB: Data is compressed and distributed among network nodes, and each node efficiently queries the local data with DuckDB. By leveraging this new kind of database technology, we have developed an efficient storage and retrieval mechanism that reduces the overall cost of managing and accessing large amounts of data very significantly.

3. What are the inherent use cases of the SQD token?

The SQD token is a critical component of the Subsquid ecosystem. Use cases for the SQD token are focused on streamlining and securing network operations in a permissionless manner:

1. Alignment of incentives for infrastructure providers: SQD is used to reward node operators that contribute computation and storage resources to the network.
2. Curation of network participants: Via delegation, the SQD token design includes built-in curation of nodes, facilitating permissionless selection of trustworthy operators for rewards.
3. Fair resource consumption: By locking SQD tokens, consumers of data from the decentralized data lake may increase rate limits.
4. Network decision making: SQD token holders can participate in governance, and are enabled to vote on protocol changes and other proposals.

4. How does Subsquid plan to build and engage a healthy community around the SQD token?

As demonstrated by its highly successful testnet with over 58,000 decentralized indexers deployed so far, Subsquid has developed multiple incentivization mechanisms for both technical and non-technical community members.

Technical community members, including developers and data analysts, get inherent value from the network itself and from the tools built on top of it. In addition to this, Subsquid works with a vast ecosystem of enterprises and Web3-native tooling projects to carry out joint integrations and large DevRel efforts and events.

For non-technical community members, Subsquid carries out extensive actions in order to build awareness for the network’s value based on the large ecosystem of projects that use it. Regular crypto users can easily start to understand Subsquid’s ‘deep tech’ by understanding how it helps them to access and utilize their favorite consumer applications!

Furthermore, delegations – which can be made permissionlessly by any SQD holder – are an essential part of the network whereas the community signals which worker nodes are performing well. This is an essential curation function in the network and provides a way for non-technical persons to generate value for the network themselves.

5. What exactly is a ‘modular approach’ to data, and how has Subsquid executed on this strategy?

Subsquid has taken a modular approach to data to provide flexibility, efficiency, and scalability in handling various types of data within the Web3 ecosystem. This modular approach is designed to address the diverse needs of decentralized applications (dApps) and to accommodate different types of data sources. Here's why and how Subsquid has implemented this modular approach:

• Data agnostic and flexible data ingestion: Web3 applications require access to a wide range of data sources, including on-chain data from blockchains, off-chain data from external APIs, and other decentralized storage solutions like IPFS and Arweave. By taking a modular approach, Subsquid can handle data from virtually any source.
• Efficient data handling: Different types of data require different handling processes, such as storage, retrieval, and querying. By modularizing its data handling capabilities, Subsquid can optimize its processes for specific data types, ensuring efficient and scalable operations tailored to the needs of each data source.
• Scalability and extensibility: A modular architecture allows Subsquid to scale and evolve its capabilities more effectively. New modules can be added to support new data sources or functionalities without requiring major changes to the existing system, making it easier to adapt to changing requirements and technologies in the Web3 space.
• Customization for specific use cases: Different dApps have different requirements for data handling based on their use cases. By providing a modular framework, Subsquid enables developers to customize and configure the data handling process to suit their specific use cases, ensuring that the platform can meet the diverse needs of the Web3 ecosystem.
• Interoperability for builders: A modular architecture promotes interoperability by allowing different modules to work together seamlessly. This interoperability is essential in the decentralized landscape, where applications often need to interact with multiple data sources and other components to function effectively.

6. What is the best way to get involved in the Subsquid community?

First and foremost, Subsquid’s incentivized testnet is about to enter its second phase. Like the community sale, the Subsquid testnet can be found on the CoinList platform. The testnet includes participation opportunities for both technical and non-technical community members.

Developers are encouraged to take some time to read the official Subsquid documentation. In the documentation, they will find links to appropriate chats for technical discussion. This, of course, is in addition to Subsquid’s Twitter and Discord.

7. 2023 was a big year for Web3 data. What data trend is the Subsquid team most excited about in 2024?

In 2024, one of the most exciting data trends is the increasing popularity and adoption of open-source analytical database management systems like DuckDB. These systems are gaining traction due to their exceptional performance and versatility, particularly in handling complex analytical workloads on large datasets.
Additionally, the trend towards embedding these database systems directly into applications is transforming how developers approach data analysis, enabling seamless integration of analytical capabilities without the need for separate database servers. This trend represents a shift towards more efficient and flexible data analysis solutions, which is especially relevant in today's fast-paced and data-driven environment. As far as the Subsquid knows, theirs is the first Web3 project to implement DuckDB at significant scale, and they don’t expect to be the last.

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