What is Covalent (CQT) – A Beginner’s Guide

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What is Covalent (CQT) - A Beginner's Guide
What is Covalent (CQT) - A Beginner's Guide

As we already know, the world of cryptocurrencies is constantly changing and evolving. Blockchain technology facilitates the development of new networks and decentralised projects. Covalent represents one of these developments. Covalent is an API (application programming interface) that unites various blockchain projects and allows developers to use the network to extract information from all compatible blockchains.

You may have heard of Covalent (CQT), a project that aims to provide users with a service called REST API that aims to simplify developing applications on the blockchain. Everything the project offers is based on the operation of a decentralised network that uses the power of blockchain to ensure regular operation without failure or accident. 

In this article, we will be discussing what Covalent (CQT) is and how it works

What is Covalent?

Covalent is a multichain unified application programming interface (API) that exposes billions of data points across multiple blockchains. As an index query solution for blockchain, the platform provides a variety of actionable insights that enable developers to optimise resource allocation and bring more value to decentralised applications (dApps) using a single, unified API.

Covalent has curated millions of data points from over 100 organisations. Rather than looking for data from multiple locations across multiple blockchains, the network provides a single point of entry for high-quality, multi-chain data.

Aggregating different data achieve these feeds from nodes on different blockchains. The Covalent API then facilitates the distribution of customised data feeds to meet users’ unique needs. This data can be general or specific depending on the application. For example, APIs can provide the historical and current performance of digital assets. This can apply to a few assets or analyse the entire crypto market. In addition, when data is requested, it is returned quickly and in a uniform, consistent manner. Regardless of how many blockchains are queried, all relevant data is presented in an API. The benefits of this should not be underestimated. The more time blockchain developers can save, the more time they can devote to blockchain and Web3 development and innovation.

The Covalent API is mainly used for decentralised finance (DeFi) and identity management. However, as the network expands and enterprise adoption of blockchain continues to increase, the utility of the Covalent API may emerge across the industry.

In addition, the platform allows developers to create API endpoints that they can sell on the data marketplace. With the Covalent API, developers can develop new applications and extend existing applications without configuring or changing the existing infrastructure.

History

The history of Covalent can be traced back to 2018 when its creators, Ganesh Swami and Levi Aul, decided to found the company and make the project a reality. Its first version was unveiled at a hackathon in 2017. The idea was to create a REST API (a programming interface that allows access to data via web technologies) that would connect the major blockchains in the crypto world.

This allows developers to have a powerful tool to access the data of all these blockchains through a single API. To get information about BTC or Ethereum, for example, you do not have to program interfaces for each of these networks, but the same platform can provide the necessary data.

Covalent Tokenomics

It is a staking asset. Like other DeFi governance tokens, it allows stakeholders to vote on development proposals and decide the direction of other network parameters.

When validators respond to requests with accurate answers, they receive CQT rewards as a fee. CQT tokens are capped at 1 billion, with a circulating supply of approximately 49,665,076 CQT. The overall allocation of tokens is as follows:

Token Sale – 36.5%

Ecosystem – 20%

Reserves – 19.1%

Team – 14.4%

Staking Reward – 8%

Consultant – 2%

How Does covalent work?

The covalent software package retrieves blockchain data at a granular level, including smart contracts, transactions, and wallet addresses.

Covalent’s Blockchain Data API allows users to query this data in a single interface. When extracting these data points, regardless of the origin of the blockchain, Covalent formats them into so-called block samples.

To facilitate the process of querying, retrieving, and storing data, Covalent uses six types of tools:

  • Directory Service Node: It is easier to attribute a user’s query to a specific blockchain node based on the user’s price point.
  • Validators: Like other blockchains, validators ensure data integrity through a slashing mechanism (removal of CQT tokens) that encourages honest behaviour and penalises malicious behaviour.
  • Indexers: Responsible for accurately retrieving data and publishing it on the Covalent network.
  • Block Specimen Producers: To earn CQT rewards, they operate data collection nodes in the data aggregation chain. After the data is collected, they publish it on storage nodes operated by block specimen producers.
  • Storage Request Responders: They work with other nodes to retrieve data requested by Covalent queries and send requests to the Covalent network.
  • Query Request Responder: Response to off-chain query requests from the Covalent API.

Unique Features of Covalent

Compared to other products, some key elements make this project unique on the market:

  • Data availability: Covalent is the only project that can index the entire blockchain, i.e. H. every contract, every wallet and every transaction. While other projects provide only a fraction of the data, Covalent can index billions of rows and terabytes of data.
  • Composability: This allows developers to easily and quickly build financial solutions from blocks from multiple projects. The unified API will enable developers to build applications without querying code fast.
  • Multi-Blockchain Support: Covalent has indexed more than 10 blockchains, with more to be announced soon.
  • No-code solution: The project offers a no-code solution without complex SQL queries, subgraph development and maintenance. Developers only need to fetch blockchain data to reduce development time.

What is a CQT token?

CQT is Covalent Network’s native token. It has three primary purposes:

  • Governance: Token holders vote on proposals to change system parameters such as new data sources, specific geographic locations, and data modelling requirements
  • Staking and Verification: CQT is a pledged asset. Validators receive fees for responding to requests. Token holders can delegate their voting rights to validators.
  • Network access: CQT can be used to complete data queries for API users.

Where to Buy CQT Tokens

The token is available on several cryptocurrency exchanges and brokers. The exchange includes Binance, Kraken, Coinlist, UniSwap, e.t.c.