Covalent, Empowering the Pioneers of Tomorrow

What is Covalent?

In chemistry, a covalent bond is an interatomic linkage that results from a shared electron pair between two atoms. In a similar nature, Covalent, a technology company started by Ganesh Swami and Levi Aul, acts as the binding agent between growing blockchain data and existing data infrastructures.

Covalent’s underpinning database aggregates information from 17 different blockchains into a format that is fully indexed and standardized, adding up to hundreds of billions of live data points from every contract, balance, and transaction on each blockchain. Covalent makes this valuable data freely accessible to everyone through its single, unified API, positioning itself as an all-in-one service for anyone who wants to query and use the richest blockchain datasets on the internet.

Why is Covalent a Game-Changer? 

Although there is a goldmine of useful data on public blockchains, it is difficult and expensive to both process and store the data so it can be easily used. This is precisely the pain point that Covalent solves. Covalent takes the raw, disorganized, and meaningless data and gives it context, structure, and meaning so that we can analyze it to gain insights or use it to build projects.

• Users: In a society where most data analysis has been outsourced, we often have to rely on the press to tell us what the data means, leading to biased narratives and stories. With Covalent, users can easily do their own data analysis and come to their own conclusions.

• Developers: With its ready-to-use API, developers can build with Covalent directly from their browsers by integrating it into their applications. Covalent recognizes that the more time it can save developers, the more time developers can allocate to innovating in the crypto ecosystem.

• Enterprises: Enterprises will not move away from existing systems like Oracle, COBOL, and SQL. As such, Covalent not only speaks to enterprises in a language that they already understand, it also lowers the barrier for adoption given that there is no prerequisite for technical knowledge of blockchain data structures.

Covalent’s Diverse Use-Cases

• Blockchain Analytics: Blockchains use the Covalent API to check their fundamental health metrics on a dashboard; such metrics can include transaction volume per day, the number of new addresses created, and the number of exchange pairs created. All of which helps them understand where they currently are and their growth projections.

• Dapps: Developers use the Covalent API to access more data at better quality. This effectively allows them to build entirely new Dapps with better services and value for end-users. 

• Multichain DeFi: DeFi protocols with multichain strategies, such as Sushiswap and Balancer, use the same API from Covalent to get both real-time and wallet-specific blockchain data from multiple blockchains without having to change anything, significantly enhancing their product offering.

• Taxes: Crypto funds use the Covalent API to help them calculate their liabilities and be compliant. Additionally, everyday crypto traders use the Covalent API to find their trade data, liquidities, and profits on exchanges like Coinbase and decentralized exchanges like 1inch.

• GameFi: GameFi projects, including ChainGuardians, use Covalent’s API to power specific features like dashboards to show how many NFTs are in a wallet, how an NFT is valued and priced, and what the average floor of a basket of NFTs is. All of which gives customers a better user experience.

• DAOs: DAOs use the Covalent API to pull reliable data to make informed decisions and examine proposal interactions. By doing so, they can understand if members of the DAO are actively creating proposals and voting for or against them.

Covalent’s Journey Towards Decentralization

Covalent used to be a centralized SaaS solution that reached product/market fit by powering big customers, such as Codefi Activate. However, as a centralized SaaS solution, similar to Snowflake, Covalent realized that there were limits to how big it could become, and that if its systems were to go down, a significant portion of the industry would go dark. Thus, Covalent rebuilt itself to be a decentralized network that anyone can participate in, onboarding top validators in the space like StakeWith.Us and Figment to help run parts of it.

Covalent’s goal is to elevate itself to a community-owned public good operated by users who are completely unknown to each other and that anyone can query data from. The Covalent network is powered by the Covalent Query Token (CQT) that can be used as a governance token to vote on proposals, a staking asset to earn fees for answering queries, and a network access token to fulfill data queries for the Covalent network. As Covalent gets more and more decentralized, it will become as simple as Uniswap, where it is truly permissionless and permanent.

For an infrastructure provider like Covalent, decentralization solves its natural scaling bottleneck, removes single points of failure, and makes the network more resilient. Although this means giving up control, speed, and the rapid development of features, from a purely technological standpoint, decentralization allows Covalent to become something that will live forever. The Covalent Network is already taking on a life of its own through the Covalent Alchemist Ambassador Program, developing both growth and learning opportunities to help other users succeed.

What Does Covalent’s Future Hold?

Recently, the Covalent Network moved onto the Moonbeam chain in the Polkadot ecosystem. Compared with Ethereum, Moonbeam is a much faster and cheaper blockchain for settlements. A customer can easily request a certain number of queries, indicate how much they are paying, and compensate the people in the network who provide indexing and querying services.

In the future, I anticipate more FinTech companies leveraging Covalent to tap into millennials who are using crypto wallets and are leaving the traditional financial system behind. Many FinTech companies today, such as Venmo, are already figuring out a crypto strategy and are trying to add a crypto experience. As FinTech and DeFi eventually cross paths, Covalent is ready to emerge as a perfect fit by easily providing charts of how a portfolio has changed over time, what transactions have changed these positions, and alerts of said changes through its API. This expands Covalent’s Total Addressable Market to not just DeFi, NFTs, and crypto native projects, but all of FinTech.

In the crypto ecosystem, there are startups that are here to make a quick buck, and there are startups like Covalent that are forward-thinking and push the entire ecosystem’s development. The team at Covalent is clearly building one of the most important tools in the space and is undoubtedly here to stay.