ℹ️What is Subsquid (SQD)?

All about the Subsquid protocol. For more information, check out the full offical documentation at: docs.sqd.dev/overview

Background

Subsquid is a decentralized data indexing protocol designed to streamline cross-chain data querying and extraction across various blockchain networks. The Subsquid network, powered by the native SQD token, supports secure and efficient data operations without the need for complex infrastructure.

The protocol offers seamless integration with major blockchain ecosystems, providing developers with tools to efficiently query and index blockchain data. SQD tokens are crucial for network security, as they are used in validator auctions and as part of a value capture mechanism through fees.

Subsquid's full system overview can be found here.

Staking and SQD's Role in the Subsquid Network

In the Subsquid network, staking involves committing SQD tokens to secure the network's decentralized data indexing services. Validators, who operate indexing nodes, must stake SQD tokens to participate in the network. These tokens are used as collateral in a competitive auction process where validators bid to be included in the active validator set. The more SQD tokens a validator stakes, the higher their chances of securing a spot in the network.

Validators who successfully secure a spot through the auction are responsible for processing and indexing blockchain data across different chains. Their performance directly impacts their rewards, which are distributed in proportion to the amount of data they process and the overall network activity. Validators who do not make it into the active set can still participate as backup validators, earning a portion of the network rewards. These backup validators provide an additional layer of security and redundancy, ensuring that the network remains resilient and operational even if primary validators fail.

Staked SQD tokens are locked for the duration of the validator's participation in the network, which is typically one epoch. After this period, validators can choose to withdraw their tokens or keep them staked for the next auction cycle. This ongoing auction process ensures that only the most committed and well-resourced validators participate in securing the network, thus maintaining high levels of performance and security.

For SQD token holders who wish to support the network but do not want to run a validator node, there are options such as delegating their tokens to existing validators or using liquid staking solutions like stSQD. These solutions allow users to earn staking rewards while maintaining liquidity, offering a more flexible way to participate in the network.