What happened
As of 3 p.m. ET, The Graph (GRT +0.95%) had surged 8.3% higher over the past 24 hours. This move significantly outpaced the broader cryptocurrency market, which appreciated by only 0.9% over this time frame. With nearly 10 times the outperformance of the overall market over this period, investors may be curious as to what's driving this lesser-known token higher today.
CRYPTO: GRT
Key Data Points
As it turns out, The Graph appears to be benefiting around the highly anticipated upcoming Ethereum Merge. Ethereum's Merge will bring about a complete shift to proof-of-stake validation, greatly improving the energy efficiency of Ethereum's network. However, there happen to be some additional upgrades on the horizon which could benefit The Graph.
Proposal EIP-4844 is on Ethereum's roadmap for future upgrades after its highly anticipated Merge. This upgrade is an important piece of the efficiency puzzle Ethereum developers are looking to solve. EIP-4844 will allow for validators to no longer broadcast historical data older than one year. Accordingly, transactions should, in theory, be able to be processed more quickly (and potentially more cheaply), a big win for Ethereum's burgeoning ecosystem.
Where the historical data that's more than a year old will be stored remains a topic of discussion. That said, The Graph has been named as a crypto project that will provide markets with availability to this historical data.
So what
Markets are forward-looking. In general, most investors would probably agree that most of the enthusiasm around Ethereum's Merge has already been priced in.
There's always the potential for hiccups to The Merge, which could push back future proposals. As such, today's rally may be short lived.
However, looking past this key market-moving upgrade, investors may want to gain exposure to the tokens that could benefit from post-Merge upgrades, such as EIP-4844. The Graph is one such project providing unique upside to future developments.
Now what
The fact that investors are already talking about what's next even though The Merge hasn't officially happened yet is part of how investors' minds work. For those taking a long-term approach to investing in this space, roadmaps are key to understanding where future growth will come from. For Ethereum's proposed upgrades, integration with other projects such as The Graph appears to be necessary to allow for historical data to be reviewed.
As a key indexing protocol used for querying large blockchain networks, The Graph is a compelling long-term investment to consider. However, this potential future integration is one I think will only get more attention once The Merge is complete.
