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To give you an idea of how much cheaper the costs are on Arbitrum for delegation, check out the most recent delegation transaction hash found on Arbiscan.io HERE, which shows the cost was $0.10
For a point of comparison, a delegation on Ethereum with very low gas rate of 13 GWEI shows a cost of $2.55. Another transaction found cost $6.09 at 30 GWEI, so you can imagine how the costs raise exponentially when gas spikes to 100 GWEI or higher. There have been times where gas (due to a new project or NFT mint) has been high for weeks at a time. This could have prevented someone from delegating, or other transactions within the Graph due to costs.
Previously, a barrier to entry for delegation was the cost of ETH gas and the amount of time delegators had to wait in order to recoup those fees, as well as the tax of 0.05%, before becoming profitable. Due to the predictability, and costs that are fractions of what they once were, the time to recoup fees and gas is a negligible issue on L2. Depending on the size of your delegation, you should be able to recoup the tax fees relatively quick and start earning 8-15% APY. It will also be exciting to see if this could potentially increase earnings as a delegator, as indexers on L2 will only have to focus on the best allocations. Or perhaps some indexers will pass savings onto their delegators for a more competitive environment. Only time will tell. ⏰
So why can’t we just click a button and move everything over to L2?
The process is complicated and has many moving parts. A testament to this is the transition timeline was delayed from the initial expectation. The Graph wanted to ensure the process was as smooth as possible, especially for their customers using subgraphs. They wanted to ensure Decentralized applications — (also known as “dApps” or “dapps”) did not have unexpected downtime where they were inoperable.
Transfer tools allow you to move your existing delegation over from ETH to Arbitrum with little to no interruption to your delegation. You do not have to undelegate, and you can even choose a new wallet that you have control over.
The indexers will first have to move some (or all) of their stake over to L2. Indexers must do 100k GRT at a time minimum. Once your indexer moves stake over to L2, you as a delegator will get a notification on Graph Explorer, as shown below:
The Graph has made several video tutorials on the process. Below are only just a few. There are also ones for those who have GRT on vested contracts, which can be found on their youtube channel here.
— You may want to check with your indexer to see if they have a big allocation, or many allocations, ready to close. This is when you as a delegator will get your rewards, so it could be advantageous to time your move accordingly.
— Contact your indexer if possible to see if/when they plan to move stake to L2, and if so how much, as well as their opinion of you migrating.
— Ensure your delegator has enough capacity to handle your additional delegation on Aribtrum. Many of the indexers are not moving their entire stake over so they can support both networks during the transition. If you have a larger delegation, you should definitely ensure you don’t cause your indexer to be over delegated on Arbitrum with your transfer.
— You must transfer all your delegation at a time. Cannot do half or a portion, then later do the rest.
— If you are delegating to a smaller indexer, it is more likely they will move 100% of their stake over to L2. This would mean you would get no rewards if you do not migrate over.
— Keep in mind the indexer rewards are being diverted from ETH to Arbitrum at staggered increments, per GIP-0052. The current amount on Arbitrum at the time of this article is 5%, but that should increase to 25% after Transfer Tools are officially out. With amount of interest in L2, it maybe beneficial to make sure 25% indexer rewards have increased to 25% prior to using transfer tools.
- Bump to 25% on L2 after releasing all L2 Transfer Tools as described in GIP-0046.
- Bump to 50% on L2 after at least two weeks of step 1, and some increase in L2 participation.
- Bump to 95% on L2 two months after step 2, as long as everything is working as expected and there is a considerable increase in L2 participation.
- Bump to 100% on L2 a month after step 3, as long as a large percentage of subgraphs have transferred to L2.
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