Covalent Network (CXT)

Covalent (CQT) is a long-term data availability solution providing infrastructure that indexes and structures data

Basics

• Founded in:
• Mainnet release:
• Based in:
• Blockchain data provider

History

• From Our Network (12-7-2024):

"Covalent migrated its native token from CQT to CXT on the July 10. This transition includes staking and governance migrations to Ethereum, ensuring token security and liquidity improvements. The migration will be automatic for current CQT holders, stakers, and exchanges."

• From their Twitter (30-4-2021):

"Today, we’re excited to announce the launch of the @Covalent_HQ Network; the decentralized data infrastructure layer of Web 3.0. This launch will gradually move the platform beyond a centralized blockchain data API."

Audits & Exploits

• Bug bounty program can be found [insert here].

Governance

• From a commissioned Messari report (25-4-2024):

"Covalent has three core network operators: BSPs, Refiners, and Query Operators. BSPs extract data from various blockchains and upload it to storage instances as block specimens. Refiners structure and transform block specimens into block results (queryable data) and upload them to storage instances. Query Operators load block results into local data warehouses and serve API queries. Currently, this role is operated by Covalent Labs but will be decentralized in the future.

Covalent increased its network operator set by decentralizing the Refiner role and adding two new BSPs in Q3 2023. Though Covalent appears to have 31 total operators, only 8 operators produce both block specimens and block results. Considering that Covalent Labs continues to run the Query Operator role, opening block result production to a set of Refiners added an additional layer of decentralization to the network, lowering single-point-of-failure risks and adding redundancy."

• At the moment (30-3-2021) users have to create a user account at Covalent to access APIs.
• From EthHub (4-5-2021):

"The Covalent Network will resemble a virtual, global co-operative for blockchain data and will be governed by the Covalent Query Token (CQT) which will allow holders to propose, vote on, and make changes to the parameters of the network."

Token

Token allocation

Inflation

• Went from 7.7% in Q1 2023 down to 2.9% Q1 2024:

"BSPs and Refiners are currently subsidized with roughly 20 million CQT rewards per year. Before subsidization ends by 2026, Covalent plans to implement a revenue share. In this model, query revenue (paid in fiat) would be used to buy back CQT, which would then be used to reward node operators. Currently, 20% of all query revenue is used to execute automatic weekly buys of CQT, which are stored in a multisig wallet for later distribution.

In late January, Covalent implemented a CQT buyback program. Although only 219,000 CQT were bought back by the end of Q1, this program lays the foundation for linking network demand directly to increased buying pressure on CQT. Essentially, as API query demand rises, Covalent's revenue will increase, enabling further buybacks of CQT with the additional revenue."

Utility

• The token is not out yet, neither is any information about it (30-3-2021).

Technology

• Whitepaper can be found [insert here].
• Code can be viewed [insert here].
• Built on: Polkadot, will be using MoonBeam (30-4-2021). Moving to ETH (4-2024).

How it works

• From a commissioned Messari report (25-4-2024):

"Covalent standardizes data from various blockchains and makes it accessible for developers of applications like crypto wallets and AI. It offers three core products supporting over 225 networks across mainnets and testnets: the Unified API, Covalent SDK, and GoldRush Frontend Kit. The Unified API enables developers to query and use any blockchain’s data points in a standardized way. This feature is also available through the Covalent SDK. The GoldRush Kit contains a set of React components that application developers can utilize to build their user interfaces.

The Covalent protocol extracts data from various blockchains, uploads that data to a storage instance, indexes and transforms the stored data object, and loads the data into local data warehouses queried by API users. Throughout the process, it sends proofs of completed work to a contract authenticating the proofs (called ProofChain). In short, Covalent cryptographically secures and standardizes all of the extracted blockchain data so developers can query from any chain in a unified way, hence, the Unified API.

Covalent has three core network operators: BSPs, Refiners, and Query Operators. BSPs extract data from various blockchains and upload it to storage instances as block specimens. Refiners structure and transform block specimens into block results (queryable data) and upload them to storage instances. Query Operators load block results into local data warehouses and serve API queries. Currently, this role is operated by Covalent Labs but will be decentralized in the future.

Covalent increased its network operator set by decentralizing the Refiner role and adding two new BSPs in Q3 2023. Though Covalent appears to have 31 total operators, only 8 operators produce both block specimens and block results. Considering that Covalent Labs continues to run the Query Operator role, opening block result production to a set of Refiners added an additional layer of decentralization to the network, lowering single-point-of-failure risks and adding redundancy."

• From their Discord (30-3-2021):

"Covalent is a Unified REST API service which gives visibility to Billions of Blockchain data. To query this API, you need an API KEY. When you sign up and create an account, you're assigned an API KEY."

Staking

• From a commissioned Messari report (25-4-2024):

"Covalent uses a Stake-for-Access model where network operators (BSPs and Refiners) stake CQT to perform work on the network. Covalent employs staking parameters, such as max/min values and a delegation ratio to ensure staked CQT remains distributed among the operator sets. BSPs must stake a minimum of 175,000 CQT and are restricted to 350,000 CQT. They also have a max delegation ratio of 27:1 (i.e., individual BSPs can only be allocated a maximum delegation of 9.45 million CQT). Alternatively, Refiners must stake a minimum of 35,000 CQT, are restricted to 70,000 CQT, and do not receive delegation. Covalent plans to migrate the staking contract from Moonbeam to Ethereum in the coming quarters."

Validator Stats

• From Our Network (12-7-2024):

"Covalent currently has 32 operators, which include 18 Block Specimen Producers, 14 Block Result Producers, and 1 Query Node Operator. The total network stake stands at 188,931,763.89 CXT out of a total supply of 1,000,000,000 CXT — 22.06% of the current circulating CQT supply is staked."

Roadmap

• Can be found [Insert link here]
• Covalent said (26-3-2021) the team is expecting to index a total of 12 blockchains by the end of the year.

Usage

• From CoinDesk (26-3-2021):

"The data provider reports the number of customers using its data has increased to over 100 customers, and the number of blockchains indexed has increased from one to six."

Projects that use or built on it

• From a commissioned Messari report (25-4-2024):

"Covalent has over 150 paid API customers using its structured data and indexing protocol. These data consumers range from traditional finance and consulting companies to DeFi applications and investment tools. A few notable users include Fidelity, EY, Consensys, Matcha, Rainbow Wallet, and CoinLedger."

• Will be a data / explorer provider for Skale (10-8-2020).

Competition

• The Graph and Unmarshal.
• Covalent is a company which offers users accounts with access to blockchain data and APIs.
• Their own website has a comparison between them and The Graph in which they highlight the following differences (30-3-2021):

1. Covalent indexes every single block and tx. Whereas with The Graph users tap into created subgraphs or have to make them themselves.
2. Covalent caters to wallets and companies, and The Graph to DApps.
3. Covalent has paying companies and revenue, The Graph "hasn't started commercialization yet".
4. Covalent has support for 7 blockchains, The Graph is only starting to become multichain.

Pros and Cons

Cons

• Had investment from Alameda Research/FTX, which came out (11-11-2022) during the FTX crash. This could mean fall-out risk.

Team, Funding, Partnerships, etc.

Team

• Full team can be found here (30-3-2021) "We are a 25-person distributed team".
• Ganesh Swami; co-founder & CEO
• Levi Aul; co-founder & CTO
• Adrian Jonklaas; CFO
• Arthur Hayes joined Covalent as an advisor on June 11 2024

Funding

• Covalent raised $5 million in strategic funding (26-6-2024) led by Rock Tree Capital. Additional investors include CMCC Global, Moonrock Capital and Double Peak Group. In total, Covalent raised over $20 million from token sales.
• From CoinDesk (26-3-2021):

"Covalent has closed a $2 million funding round, led by South Korea’s Hashed. Other participating investors included Binance Labs, Coinbase Ventures, Delphi Ventures, Hypersphere Ventures, as well as blockchain protocol firms including Moonbeam, Avalanche, Near and Elrond, Covalent said Wednesday. Last year, Covalent closed a $3.1 million funding round.

• Matter Labs; took part in the $50M Series B raise, aimed for zkSync (8-11-2021).