Blockchain Indexing

What is Blockchain Indexing

Blockchain indexing is the process of organizing and making searchable the vast and rapidly growing data generated by blockchain networks.

A fundamental issue with blockchains is that their data is inherently unsearchable. Indeed, blockchain structures are append-only and do not support conventional searching and querying methods.

Blockchain indexing enables users and applications to quickly retrieve specific information from blockchain transactions, smart contracts, and events, without having to scan the entire chain each time.

Example

Let's consider a scenario where a Web3 project has introduced its own ERC-20 token, named "LDX." The team behind this project is interested in real-time monitoring of the yield from the "LDX-ETH" liquidity pool.

Since this information isn't readily available directly from the blockchain, they would need to employ blockchain indexing. This would involve tracking and indexing "add" and "remove" liquidity events associated with the smart contract that manages the "LDX-ETH" liquidity pool.

How does Blockchain indexing works ?

In the early days, developers would query the blockchain directly using RPC, which was slow and inefficient. Consequently, some developers started hosting their own blockchain nodes to improve performance.

Some developers extracted the entire dataset from the blockchain and stored it in a traditional database. They applied existing database indexing to enhance data retrieval speeds for dApps. However, replicating the entire blockchain in a database proved to be time-consuming and space-inefficient, particularly for applications that only utilize a subset of the data.

What is an Indexer

An Indexer in the context of blockchain technology is a specialized software tool designed to optimize data queries by creating a searchable index of blockchain data. This process involves reading the blockchain, extracting relevant information, and organizing it in a way that makes data retrieval more efficient for users and applications. By doing so, Indexers alleviate the need for each application to run and query a full blockchain node directly, significantly reducing the resources required and improving query performance. Indexers are essential not just for enhancing search capabilities but also for facilitating complex data analysis, improving the usability and scalability of blockchain applications.