Covalent: Bridging the Gap in Blockchain Data

In the ever-evolving world of blockchain and decentralized finance, data is paramount. However, accessing deep, granular, and historical blockchain data remains a significant challenge. Enter Covalent, a project dedicated to solving this issue by providing a unified API to access blockchain data seamlessly. This article delves into what Covalent is, how it works, its advantages, and the tokenomics of its native token, CXT.

What is Covalent?

Covalent is a blockchain data provider that offers a unified API to access detailed and historical blockchain data. It aims to make blockchain data accessible and useful to traditional institutions and applications that require this data for various purposes, including taxation, auditing, AI models, and regulatory compliance. Covalent addresses the issues of querying blockchain data and long-term data availability, ensuring that this data is always accessible, reliable, and decentralized.

Covalent's unified API provides access to deep, granular, and historical blockchain data. By indexing data from over 100 blockchains, Covalent ensures comprehensive and reliable data availability. The API normalizes this data into a single format, making it easy to query and integrate across various applications. Covalent's enterprise-grade infrastructure guarantees accuracy and robustness, supporting applications in need of extensive blockchain data.

How it Works

Data Extraction and Export

The Covalent network begins with data extraction and export. Block Specimen Producers (BSPs) play a crucial role in this phase. They extract and export block specimens from various blockchains. These block specimens are 1-to-1 secure representations of blocks and their constituent elements, forming a canonical representation of a blockchain's full historical state. This process ensures that Covalent captures a comprehensive and accurate snapshot of blockchain data, making it available for further processing and querying.

Data Refinement

Following extraction, the next phase involves data refinement. Refiners take the extracted block specimens and apply transformational rules to them. This transformation process involves validated data processing according to predefined blueprints broadcasted across the network. The refined data objects generated from this process are then stored in a decentralized manner using services like IPFS. This refined data is essential for ensuring that the data remains accurate, up-to-date, and accessible for various applications.

Indexing and Query

The indexing and query phase is where the refined data is made available for use. Query Operators run local data warehouses and observe on-chain announcements to pull data objects from storage. They then apply additional indexing on top of this data to efficiently respond to API queries. This process allows Query Operators to provide timely and accurate responses to data queries, leveraging the comprehensive data stored within the network.

Decentralized Storage and Proofs

Decentralized storage and proof mechanisms are critical to Covalent's operation. Data produced and refined within the network is stored in a decentralized manner, allowing network operators to fetch and verify the data using cryptographic proofs. Auditing proofs ensure data verifiability and network integrity, with penalties for inaccurate or malicious data submissions. This decentralized storage approach, combined with robust proof mechanisms, ensures that the data provided by Covalent is both reliable and secure.

Covalent's Advantages

Covalent offers several advantages that make it a valuable tool in the blockchain ecosystem:

• Comprehensive Data Access: Covalent’s unified API provides access to detailed and historical blockchain data across multiple blockchains.
• Decentralization: The network operates in a decentralized manner, ensuring reliability, uptime, and community participation.
• Data Verifiability: Covalent employs cryptographic proofs to ensure the accuracy and verifiability of the data provided.
• Enterprise-Grade: With an enterprise background, Covalent builds robust and reliable products trusted by significant partners in the blockchain ecosystem.

CXT Tokenomics

Token Utilities

The Covalent Query Token (CXT) serves multiple essential functions within the Covalent network:

• Network Access: CXT tokens are used to access the network's data services. Query operators are compensated in CXT tokens for delivering accurate and verifiable data.
• Staking: To participate as a network operator, users must stake CXT tokens. This staking mechanism promotes correct behavior and enhances network security by penalizing malicious activities.
• Rewards: Network participants, including data providers and validators, are rewarded with CXT tokens for their contributions. This incentive structure encourages active participation and helps maintain the quality and reliability of the network.
• Governance: CXT token holders have the ability to participate in network governance, influencing key decisions and future developments. This decentralized governance model ensures that the network evolves in a way that aligns with the interests of its community.

Token Allocation

• Seed: (10%, 100,000,000 CXT) Tokens were sold at a price of $0.005, raising $500,000. The vesting schedule involves releasing 25% of the tokens after 6 months, 25% after 12 months, 25% at 15 months, and the final 25% at 18 months. There is a 6-month cliff before the initial release.
• Private Sale: (20.4%, 203,846,154 CXT) Tokens were priced at $0.013, raising $2,650,000. The vesting schedule releases 25% of the tokens at the Token Generation Event (TGE), 25% at 3 months, 25% at 6 months, and the final 25% at 9 months. There is no cliff for the private sale tokens.
• Private Sale 2: (2.9%, 29,305,142 CXT) Tokens were sold at $0.085, raising $2,490,937. The vesting period ranges from 9 to 24 months, with 25% of tokens released at intervals ranging from 3 to 6 months. There is a 0-6 month cliff depending on the specific tranche.
• Public Sale: (3.4%, 34,314,063 CXT) Tokens were sold at prices ranging from $0.125 to $0.35, raising $9,925,809. For Tier 1, there is no vesting period. Tier 2 and Tier 3 have 12-month and 24-month vesting periods with 1-month cliffs respectively. The VIP Tier has 25% of tokens released every 6 months with a 6-month cliff.
• Team: (14.4%, 143,636,035 CXT) Team tokens are subject to a 48-month vesting schedule, with 25% earned after a 1-year cliff and the remaining tokens vested monthly over the next 36 months.
• Advisors: (2.0%, 20,000,000 CXT) Advisor tokens vest over a 24-month period, with vesting starting between months 13 and 24. There is a 13-month cliff before the initial release.
• Reserve: (18.9%, 188,898,607.10 CXT) Tokens from the reserve are released gradually, with 6.25% released at the TGE, another 6.25% at 3 months, 6.25% at 6 months, 6.25% at 9 months, and 6.25% every 3 months thereafter through month 45. There is no initial cliff for these tokens.
• Staking: (8.0%, 80,000,000 CXT) Staking tokens have a 53-month vesting period, with a 48-month vest and a 6-month cliff before the initial release.
• Ecosystem: (20.0%, 200,000,000 CXT) Ecosystem tokens have a 47-month vesting period, with a full vesting schedule starting from the TGE and no initial cliff.
• Total: (100%, 1,000,000,000 CXT) The total amount raised from the token allocations is $15,711,746.

Team and Investor

Covalent is led by co-founders Ganesh Swami and Levi Aul, who started the project in 2017 at a hackathon. Ganesh Swami has a deep background in data engineering and blockchain technologies, while Levi Aul is an experienced data engineer and entrepreneur. The team includes data scientists, software engineers, and database engineers with extensive experience in the crypto industry.

Covalent has successfully raised significant funds through multiple funding rounds. The most recent strategic round occurred on June 26, 2024, raising $5 million from investors including RockTree Capital, Double Peak, Moonrock Capital, and CMCC Global. Another strategic round on March 24, 2021, raised $2.59 million, with participation from Hashed Fund, Coinbase Ventures, Binance Labs, Delphi Ventures, Hypersphere Ventures, and Near Foundation. Additionally, a private token sale on October 7, 2020, raised $3.10 million, led by Mechanism Capital and 1kx, with contributions from Woodstock Fund, AU21 Capital, TRGC, and CoinGecko Ventures.

Conclusion

Covalent is addressing a critical need in the blockchain space by providing a reliable, detailed, and accessible data infrastructure. As the demand for blockchain data continues to grow, Covalent's solutions offer a robust foundation for applications and institutions to build upon, ensuring transparency and visibility in the decentralized world.

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