TokenInsight Report Showcases Covalent’s SDK, Network & Leading Long-Term Data Availability Solution for Scaling Ecosystems 

TokenInsight Report Showcases Covalent’s SDK, Network & Leading Long-Term Data Availability Solution for Scaling Ecosystems 

Executive Summary

Covalent is a blockchain long-term data availability solution offering APIs of structured onchain data that allows developers to access comprehensive structured onchain data for over 225 blockchains. TokenInsight has evaluated Covalent from 6 dimensions based on our standardized rating methodology.

Technology & Security 

• Started in 2018, Covalent launched mainnet in April 2021, the platform has captured data from over 225 blockchains using a network of operators then structured into API endpoints. 
• Both the token smart contract and staking contract have been audited multiple times with all high-level vulnerabilities resolved or acknowledged as design choice. 

Roadmap & Progress

• Covalent has a clear roadmap consisting of major achievements since the project started with development plans until 2024 Q4. 

Token Economics 

• Native token $CQT plays a crucial role in the Covalent ecosystem, it has governance and staking functionalities and serves as rewards for operators within the Covalent Network.

Token Performance 

• $CQT has been listed in many CEX including OKX and KuCoin and over 15 DEX, however the trading activities are not very active. 

Team, Partners & Investors 

• Core team members have comprehensive education backgrounds with work experiences in Blockchain and Internet industries. 
• Covalent has strong investors including Binance Labs, Hashed, 1kx. 

Ecosystem Development

• The community of Covalent is relatively active based on posts’ status and posting frequency.
• Covalent has started decentralized governance, token holders can vote on proposals that involve changing system parameters, such as migrating staking back to Ethereum.

Technology & Security 

Covalent is an enterprise grade long-term data availability solution serving structured onchain data to companies, startups, and paying API end-users. Blockchain data is captured from over 225 blockchains using a network of operators then indexed into API endpoints. Users can access data through the Covalent SDK or directly through the Unified API.

The data pipeline structure of Covalent comprises three layers: Extraction and Export, Refinement and Storage, and Structuring and Query. These layers are supported by operators who carry out different responsibilities, including Block Specimen Producer Operators (BSPs), Block Result Producer Operators, Query Operators, and soon Olympic Light Client Operators,  collectively forming the core data system of Covalent and the Ethereum Wayback Machine.

• Covalent Data Pipeline

Source: Covalent

The network is supported by three different type of operators: 

• Block Specimen Producers (BSPs) are responsible for data extraction and export. BSPs extract raw blockchain data and formulate it into a structured data object, called Block Specimen. 

• Block Results Producers (Refiners/BRPs) access Block Specimens and transform raw data into queryable data objects, Block Results. 

• Query Operators are responsible for pulling out data objects from storage based on API user demand. 

Roadmap & Progress

Covalent was started in March 2018, the mainnet was launched in April 2021. The disclosed roadmap consists of major progress and achievements since the project started and its development plans until 2024 Q4. According to the roadmap and recent news about the New Dawn initiative, Covalent recently migrated staking to Ethereum, and the following plan is to ship the initial infrastructure of the EWM starting in Q3. 

The overall project roadmap is relatively comprehensive.

• Covalent Roadmap

Source: TokenInsight

Covalent recently launched its token buyback program via business revenue. This is revenue generated from the use of Covalent’s API and is the first step to bring off-chain revenue onchain. The token buyback mechanism will be discussed in detail in the Token Economics section.

Currently, the staking of $CQT is live on the Ethereum network having recently migrated staking away from Moonbeam. Following the staking migration, the next milestone will be the migration of the ProofChain contract and the deployment of initial infrastructure for the EWM, which is expected by Q4.

Token Economics

Covalent Token $CQT 

$CQT is the native token of Covalent and the core element of the Covalent ecosystem. It plays a crucial role in supporting the operation of Covalent’s long-term data availability infrastructure. $CQT also has governance and staking functionalities and serves as rewards for operators within the Covalent Network.

Token Distribution 

$CQT is an ERC20 token on the Ethereum blockchain, the total supply of $CQT 1,000,000,000. 33% of the $CQT is allocated to seed and private rounds investors, while 16.4% is allocated to the team and advisors.

• $CQT Token Allocation Plan 

Source: Covalent, TokenInsight

Tokens Use Cases

• Staking: To join the Covalent Network, operators need to meet the minimum staking requirement. After fulfilling their roles such as producing Block Specimens or responding to API queries, operators are compensated in $CQT. In the case of malicious or dishonest behaviors, a percentage of the staked amount will be slashed.
• Delegating: Token holders who wish to contribute and secure the network but don’t wish to run node infrastructure, can delegate to a Network Operator and earn staking rewards in $CQT.
• Governance: Token holders can vote on proposals affecting the system parameters, such as integrating new data sources, network upgrades, adapting to specific geographic requirements, and evolving data modeling techniques.

Tokens Buyback Mechanism

In Q1 2024, Covalent launched its token buyback program using business revenue. Within the Covalent ecosystem, customers pay stablecoins for data queries, and Covalent utilizes the revenue in stablecoins to purchase $CQT tokens from the open market. The repurchased tokens are subsequently used as rewards for network operators, recognizing their efforts in performing operational tasks.

This mechanism of bringing off-chain revenue to buyback $CQT is a move toward a sustainable revenue-driven ecosystem for Covalent.

Check out the full report from TokenInsight here. 

About Covalent

Covalent (CQT) is shipping data infrastructure for the decentralized ecosystem, solving Long-Term Data Availability for Ethereum—infrastructure that can re-execute blobs and shape AI. With CQT staking now back on Ethereum, The New Dawn of network expansion towards the Ethereum Wayback Machine commences. Today, this means AI, DeFi, and other use cases have unfettered access to structured onchain data from over +225 blockchains and growing. 

Learn about the EWM: Technical | Non-Technical

For more information, check out Covalent’s: Official Website | Twitter/X | Linktree