What is Covalent (CXT): advancing the data infrastructure space

In the rapidly evolving landscape of blockchain technology, data accessibility and long-term data availability have become paramount for unlocking the full potential of this transformative tool. Covalent Network has emerged as a leading data infrastructure layer by addressing these challenges. Following its strategic partnership and integration with the Sei ecosystem, Covalent has solidified its position as a leading data availability and indexing solution in the crypto space. By aggregating, processing, and standardizing data from multiple blockchains, Covalent empowers developers and businesses to build innovative applications and make data-driven decisions.

Keen to learn more about the excitement behind Covalent Network? From uncovering its impressive data infrastructure flow to understanding the role of the CXT token, here’s everything you need to know about Covalent and the waves it’s making in the data infrastructure space.

TL;DR

• Covalent is a leading modular data infrastructure and decentralized network that aims to simplify Web3 development and increase the overall accessibility of blockchain data.

• Covalent's data infrastructure, featuring Block Specimens, optimizes data storage and retrieval, ensuring efficient performance and scalability.

• By supporting a wide range of blockchains, Covalent offers comprehensive data coverage and flexibility for developers.

• The recent migration from the CQT token to CXT plays a crucial role in Covalent Network's governance, staking, and accessing platform services, creating a robust ecosystem.

• By simplifying data access and providing a range of tools and features, Covalent empowers developers to build innovative blockchain applications, contributing to the growth of the broader crypto ecosystem.

What is Covalent?

Pegged as a leading modular data infrastructure layer, Covalent is a blockchain data platform that simplifies access to complex blockchain information. By consolidating data from multiple blockchains, processing it for accuracy, and delivering it through a unified application programming interface (API), Covalent empowers developers to build innovative applications with ease. This streamlined approach saves time and resources while ensuring data reliability, making Covalent a popular choice for developers seeking a robust and efficient solution for accessing and utilizing blockchain data.

What does Covalent solve?

Blockchain data can be complex and challenging to access. It often requires technical expertise and significant resources. With protocol upgrades to Ethereum like Dencun, the issue of long-term data availability has emerged, as accessing historical data for Ethereum and other base layers becomes increasingly difficult and expensive.

Covalent aims to simplify this process by providing a unified multi-chain platform to access and analyze blockchain data. By aggregating data from multiple blockchains and standardizing it into a user-friendly format, Covalent empowers developers and analysts to extract valuable insights without the complexities of raw data.

How does Covalent work?

By acting as a bridge between raw blockchain data and actionable insights, Covalent is a data aggregator that standardizes data from various blockchains into a unified API. This empowers developers to easily integrate blockchain data into their applications. Covalent collects information about transactions, block data, log events, state transitions, trace events, and other relevant data points. The tool then processes and cleans this data, making it accessible and easy to understand. This consistent data structure simplifies the complex process of Web3 development and allows for the generation of actionable insights, saving developers time and resources.

Here’s a three-pronged breakdown of how Covalent works.

Data aggregation: Covalent gathers crucial data points across different blockchains. This includes information on transactions, token balances, NFT metadata, and other relevant metrics.

Standardization and processing: Covalent doesn’t just collect data — it also processes and cleans it. This makes sure the data is consistent and easy to understand, regardless of the specific blockchain it originated from.

GoldRush API: Formerly known as Unified API, the processed data is then presented through the GoldRush API, which allows developers to easily integrate blockchain data into their applications, eliminating the need to deal with the complexities of individual blockchains.

Breaking down Covalent's data infrastructure flow

Source: Covalent

Covalent's data infrastructure is designed to efficiently collect, process, and deliver blockchain data to applications. The system comprises key components including remote procedure call nodes for data retrieval, a block specimen producer for data optimization, a query node operator for managing data requests, and a block result producer for generating query outputs.

This architecture enables Covalent to aggregate data from multiple blockchains, process it into a standardized format (Block Specimens), and provide swift access through Covalent's GoldRush API. By streamlining data handling and reducing reliance on individual blockchain nodes, Covalent offers developers a robust, efficient, and scalable solution for building applications on top of blockchain technology.

Why is Covalent so popular?

Covalent's popularity stems from its ability to simplify a common pain point faced by most blockchain and Web3 developers. By providing a unified platform for accessing and analyzing blockchain data, it saves developers and analysts countless hours of time and effort. Here’s a breakdown of its key strengths.

Multi-chain compatibility

Unlike many data platforms limited to a single blockchain, Covalent aggregates data from a wide range of blockchains. A quick glance at Covalent Network’s ecosystem reveals blockchain support for Ethereum, Solana, Base, Avalanche, and many other popular options in today’s crypto space. This comprehensive approach offers developers a holistic view of the crypto ecosystem, eliminating the need to manage multiple data sources for different chains.

Storage and network efficiency thanks to block specimens

Traditional blockchain data storage can be cumbersome and resource-intensive. This is further exacerbated by Ethereum’s introduction of state expiry, where the states from individual nodes are removed if they haven’t been recently accessed. To address these issues, Covalent employs a novel data storage method called “block specimens”. By capturing and storing specific data points from each block, block specimens significantly reduce storage requirements without compromising data integrity. This approach ensures efficient data retrieval and analysis, making Covalent a cost-effective solution for developers.

Leveraging Covalent’s verifiable data infrastructure to deal with biased AI models

The increasing sophistication of AI models has coincided with growing concerns about bias in their outputs. High-profile incidents like Google’s Gemini controversy underscore the critical role of data quality in AI development. Biased training data can lead to AI models that make erroneous decisions and fabricate solutions. Covalent’s verifiable data infrastructure offers a potential solution. By providing access to a vast, clean, and unbiased dataset through its “Ethereum Wayback Machine”, Covalent enables developers to build AI models that are considered more reliable. The platform’s focus on data accuracy and completeness can help mitigate the risks associated with biased training data, ultimately leading to more responsible and beneficial AI applications.

These combined strengths make Covalent a valuable asset for anyone working with blockchain data. By simplifying data access, efficiency, and compatibility, Covalent empowers developers and analysts to innovate and build powerful applications faster.

The CQT to CXT migration: what this means for Covalent

With the team calling this Covalent Network’s Day Zero of The New Dawn, the migration from CQT to CXT marks a significant milestone in the project’s evolution. Rather than just being a name change from the usual CQT crypto token, this transition signifies a strategic shift aimed at enhancing the platform’s capabilities and unlocking new opportunities for growth.

The decision to migrate from CQT to CXT was driven by several factors.

• Enhanced tokenomics: The CXT token is designed with improved tokenomics to better incentivize network participation and support long-term value creation.

• Expanded utility: CXT offers expanded utility within the Covalent ecosystem, enabling it to play a more integral role in various platform functionalities.

• Community alignment: The migration process involved extensive community engagement, to make sure the transition aligns with the interests of token holders.

How the migration impacts users

The CQT to CXT token migration process was designed to be seamless for users. Existing CQT holders had their tokens automatically converted to CXT at a 1:1 ratio. The primary change for users is the transition to using CXT for all Covalent Network interactions, including staking, governance, and accessing data.

The future of Covalent with CXT

The CXT migration paves the way for a more robust and scalable Covalent Network. With the foundation of the new token in place, the team can focus on developing new features and expanding partnerships. This includes the following.

• Accelerated development: The migration provides a solid base for accelerating the development of new products and services within the Covalent ecosystem.

• Strengthened ecosystem: The enhanced tokenomics and expanded utility of CXT are expected to attract new developers and users to the platform.

• Increased value: The long-term goal of the migration is to increase the overall value of the Covalent Network and its token.

Diving deeper into the CQT to CXT migration

The CQT to CXT migration was a complex technical undertaking that required careful planning and execution. Key technical aspects of the migration include those listed below.

• Token contract upgrade: The core Covalent smart contract was upgraded to accommodate the CXT token and its new functionalities.

• Token distribution: A precise mechanism was implemented to distribute CXT tokens to CQT holders at a 1:1 ratio, providing fairness and accuracy.

• Wallet integration: Existing cryptocurrency wallets and exchanges needed to be updated to recognize and support the CXT token.

• Network uptime: The migration process was designed to minimize disruptions to the Covalent Network, maintaining continuous data availability.

For a smooth transition, the Covalent team worked closely with various technical partners and audited the migration process to identify and address potential vulnerabilities.

Community response to the migration

The CQT to CXT migration attracted significant attention from the Covalent community. Overall, the community’s response was positive, with many members expressing support for the project’s vision and the benefits of the new token.

While there were some initial concerns and questions regarding the migration’s impact on CQT holders' existing assets, the Covalent team’s proactive communication and support helped to maintain a positive community sentiment throughout the migration process. By emphasizing the importance of community involvement in the project’s development, many community members participated in governance discussions related to the migration.

CXT tokenomics

As the native token of the Covalent Network, let’s look at the official tokenomics of the Covalent X Token that are worth noting if you’re intending to trade CXT.

Total supply: 1,000,000,000 CXT

Circulating supply: 850,000,000 CXT

Token distribution:

• Team: 14.4%

• Private sales and seed funding: 33.3%

• Public sale: 3.4%

• Advisors: 2%

• Staking rewards: 8%

• Reserve: 18.9%

• Ecosystem: 20%

Interestingly, CXT has no inflationary or deflationary mechanics in place. As a result, CXT holders can expect the total supply to stay constant at one billion.

CXT utility

Governance

CXT token holders are allowed to vote on proposals to change system parameters such as new data sources, specific geolocations, and data modeling requirements for Covalent Network. This decentralized governance structure makes sure the platform evolves in line with the needs and preferences of its community.

Staking and validation

CXT is a staking asset, allowing holders to contribute to network security and earn rewards. Validators secure the data integrity of the network and receive staking rewards in CXT. Token holders can delegate their CXT to validators, participating in the security mechanism and earning a share of the staking rewards. The staking rewards, expressed as an annual percentage rate (APR), are variable and influenced by the total amount staked in the network and the reward emissions rate. Typically, the APR ranges from 8% to 18%.

Network access and payments

CXT is essential for accessing and utilizing Covalent's data services. CXT is used to pay for data queries, API calls, and other platform interactions. This creates a direct link between the token's utility and the value generated by the Covalent Network.

Incentivization

CXT is used to incentivize various participants in the Covalent ecosystem. Beyond staking rewards, the token can be used to reward developers, data providers, and other contributors to the network's growth. This incentivization structure fosters a thriving and collaborative community around the Covalent platform.

By combining governance, staking, network access, and incentivization mechanisms, CXT plays a pivotal role in the functioning and growth of the Covalent Network.

The future of Covalent Network

With its strong foundation built on data excellence, developer focus, and a thriving community, Covalent is well-positioned to influence the evolution of blockchain data infrastructure and drive innovation across the industry. When it comes to Covalent’s roadmap, the team has specifically noted a focus on two key areas, namely their product roadshow and upcoming exchange listings.

Product-wise, Covalent plans to showcase new AI features that involve integrating advanced AI capabilities to train large language models and build efficient data pipelines. This could help Covalent align with its vision of leading the charge in decentralized AI training and reducing aspects of bias among AI models.

As for exchange listings, this is done with the hopes of bringing Covalent's CXT token to the masses so more crypto enthusiasts are aware of the innovations the team is trying to introduce to the crypto space.

Final words and next steps

Thanks to innovations like the Ethereum Wayback Machine and Block Specimen, Covalent has emerged as a key player in the blockchain data infrastructure landscape. By addressing the challenges of data accessibility, reliability, and utility, Covalent empowers developers and businesses to harness the full potential of blockchain technology. Through its innovative approach to data aggregation, processing, and delivery, Covalent has become a popular platform for those seeking to build robust and scalable applications.

Meanwhile, the CXT token acts as an integral part of the Covalent ecosystem and plays a crucial role in governance, network security, and incentivizing network participation. As Covalent continues to expand its reach and capabilities, the CXT token is poised to play an even more significant role in the platform’s future growth and success.

Interested in reading up about other popular data infrastructure crypto projects? If so, check out our guide to Filecoin. And, you can also learn about decentralized AI with our insightful article on Bittensor.