Introduction
UK Mathematician Clive Humby said, “Data is the new oil. It’s valuable, but if unrefined, it cannot really be used.” Yes, in the context of the 4.0 technology revolution, data is the fuel source for new technologies such as artificial intelligence or machine learning, and blockchain is no exception.
However, like the above technologies, acquiring, processing, and especially approaching the data deep inside the blockchain is always a big challenge for eminent scientists. For example, going deep historical data on Ethereum is cumbersome and expensive. It requires a blockchain node running in a special configuration known as a full archive node, which takes up hundreds of gigabytes of storage. Therefore, it costs a lot, to say nothing of the requirements for other special hardware. The problem of slow and incomplete data access are also other issues that need to be mentioned.
In that situation, Covalent offers a unified Application Programming Interface (API) that gives visibility to billions of on-chain data points and assets across all blockchain networks. It creates full transparency, provides useful insights to consultants, and allows developers to add resources. In short, Covalent is an API that allows users to get detailed transaction data, granular, historical, and blockchain metadata from multiple blockchains without coding.
Market Analysis
According to a report by Grand View Research in 2020, the global blockchain technology market size was valued at USD 3.67 billion in 2020. It is expected to expand at a compound annual growth rate (CAGR) of 82.4% from 2021 to 2028. The blockchain analytics sector is promised explosive growth as more and more users of blockchain-related products lead to an increased demand for data analytics.
Similar projects:
Companies that enter the market early, such as Coin Metrics, Dune Analytics, andGlassnode, have provided institutional-grade data collection and processing systems of blockchain data across exchanges, assets, and markets for analytical queries. Among them, the most similar to Covalent is The Graph and Flipside Crypto
The Graph (GRT) has $1.4B market cap on 12/7/2021. The Graph is an indexing protocol for querying networks such as Ethereum and IPFS. Users can build and publish open APIs, known as subgraphs, which help them access data easily.
Flipside Crypto is an early-stage project raising successfully $11.5M from some well-known VCs. Flipside Crypto puts pre-modeled and labeled blockchain data in the hands of communities. Users can easily create queries that answer any question through dashboard and visualization tools and auto-generated API endpoints.
This is a potential market with small-scale projects at the moment, so it could be a good opportunity for Covalent to develop strongly.
Product Highlight
The stages of Covalent works
1. The Covalent retrieves data and aggregates information from dozens of sources, including nodes, chains, and different data feeds.
2. The Covalent API then provides the end-user with wallet-personalized data, including current and historical investment performance across all types of digital assets.
3. The Covalent returns this data quickly and consistently, combining all relevant data in an API interface.
Two classes of endpoints
Class A endpoints: The endpoint that returns rich blockchain data applicable to all blockchain networks, such as balances, transactions, log events, profit & loss, taxes, and more.
Class B endpoint: The endpoint for a specific protocol on a blockchain. For instance, Uniswap or Balancer is only for Ethereum and does not apply to other blockchain networks.
Github: Public and regularly updated. The last update was just a few hours ago. Details can be found at Covalent · GitHub.
The product status: The product is relatively complete. But it is an API; we need to integrate it into one or some software to bring the best experience. So it will be incomplete and challenging if users just want to try it right on the website. You can experience it at Covalent Blockchain Data API Reference.
Token Economy
Token Distribution
Token name: Covalent
Ticker: CQT
Blockchain: Ethereum
Token Standard: ERC-20
Circulating supply at issue: 80,379,902 CQT
Total Initialization Supply: 1,000,000,000 CQT
The distribution of tokens to the team only accounts for 14%, but the reserve is up to 20%, proving that Covalent is trying to build a sustainable project, not just focusing on profit from the project.
Token Utility
Covalent Query Token (CQT) is the primary utility and network access token of the Covalent Network that plays the main role in the functioning of the ecosystem on the Network. The Token usage will be as follows:
Infrastructure Currency: CQT is the platform currency that powers interactions between users on the Covalent Network. The validator delivering the data will be rewarded in CQT when each time a query is responded to.
Rewards for indexing, hosting and serving query requests: Users will be received CQT for providing data sets that are niche and hard to find.
Staking and Validators: In order to process queries, users need to interact with one of the query nodes of the decentralized Covalent Network, providing payment in stablecoins or CQT tokens.
Governance: Covalent creates an ecosystem of multiple data- providers who can also make decisions about fee models, the nature of the interaction between buyers and sellers, and the variety of data sold on the network without a single party deciding on it.
Those are just the main functions of CQT; this token has many other additional functions. If you are interested, you can see them in detail on the whitepaper at the top of the Deep Dive.
The unlocking process for seed and private rounds is quarterly and happens in order, resulting in the price of CQT tokens not experiencing an uncontrollable price crash during the initial period from issuance to about 15 months later.
From the 15th to the 30th month after the project releases tokens, there will be a relatively large amount of coins due to Private sale rounds or the team sell tokens for profit, which will make it difficult for the price to increase sharply at that time.
Network Valuation & Asset Pricing
Covalent’s market cap is $17.4M with 113,586,890 CQT Circulating Supply in 1,000,000,000 CQT Total Supply. The top exchanges for trading in Covalent are currently OKEx, FTX, Gate.io, KuCoin, and BKEX.
The price of CQT has dropped by 64% since listing, from 0.9774 on June 23rd to 0.3516 on July 20th. In general, because the project was just ICO on Coinlist in April, there is not much data or hints to predict the short-term price trend. In addition, CQT appeared on the market when the sharp decline of the crypto market lasted until now. So this devaluation may be temporary; maybe after the market grows again and CQT is listed on more reputable exchanges like Coinbase or Binance, its price will increase strongly again.
(Source: NystockCryptoman2020, Tradingview.com)
Some investors expect CQT to have an uptrend in the short and mid-term if everything follows the technical chart.
Unique Selling Point (USP)
Data Availability
Covalent is the only project that has indexed and decrypted the entire blockchain, making the project available to developers through a unified API. Visibility to billions of blockchain data points for every single wallet.
Compatibility
Today, compatibility is an important part of DeFi applications. Covalent’s API provides granular, multi-chain flexibility, which gives developers the ability to easily and quickly create scalable and data-rich applications without querying code.
Multi-blockchain support
Multichain is Covalent’s heart, so the project provides the richest data for the Ethereum blockchain and Binance Smart Chain, Avalanche, Fantom, and Polygon. In addition, Covalent has been indexed and has clients on various blockchain networks. The Covalent API is one of the easiest ways for a developer to access on-chain data from different chains – change the chainId in the API endpoint.
No code
Covalent brings ‘no code’ solutions to users. No more complicated SQL queries and no need to waste time and money investing in highly skilled technical teams just to retrieve blockchain data. Only one API and users can do it all. This brings the ability to reach the mass market more effectively, not just limited to the customer base of programmers or developers.
Proven Customer
Over 100 projects are building with the Covalent API, including well-known projects in the crypto market such as Consensys, Zerion, 0x, NFTX, and more. The above numbers have shown that Covalent really satisfies their target customers, and the demand for the product is not small.
Marketing & RoadMap
PR & Marketing
Telegram (@CovalentHQ) – There are more than 13,400 active members.
Twitter (@Covalent_HQ) – Has more than 32,300 followers.
Discord (Covalent) – Has nearly 6,400 active members.
The Covalent Blog – Regularly post updates on the progress of the project and guide to use services.
News: Information about the Covalent project has appeared on some big news channels such as Nasdaq, Yahoo Finance, Cointelegraph, Coin Desk… You can read all of them at Press & Media
Even though Covalent has a medium-sized support community, the project still attracts many major newspapers around the world. This thing speaks to the prestige and recognition of the project and the high performance of the marketing executive team.
RoadMap
Covalent’s Roadmap is neither made public on the website nor search engines. However, in an article published in March by Coin Desk, a Covalent representative said they expect to index a total of 12 blockchains by the end of the year.
Backer
After 3 rounds of fundraising and 1 round of public sale, Covalent has successfully raised $14,435,937 from famous investment funds and Venture Capital.
Investor
Covalent is backed by a range of well-known funds, including Spark Digital Capital, Harshed, Binance Labs, Coinbase Ventures,… Covalent closed a $3.1M and $2M funding round led in turn by South Korea’s Hashed and 1kx, Woodstock Fund.
Partners
Most of Covalent’s partners are also their customers, so Covalent has created huge networking, helping the project access the latest technologies and support when in trouble.
Team
According to the Covalent website, they are a 30-person distributed team with 100 years of cumulative crypto experience. The Covalent team includes alumni from some startups in the blockchain industry, including Bex.io, Wallter.ai, and more. The genesis for Covalent came out of a hackathon in which two co-founders participated and won. The founding team includes:
CEO & Co-Founder
Besides being CEO of Covalent, Ganesh Swami is also the founder of Silota. The company gives data and business teams tools to create charts and dashboards via the power of in-database analytics and SQL.
CTO & Co-founder
With over 15 years of global business and entrepreneurial experience, Levi Aul helps scale early-stage teams and companies.
Former CTO of Bex.io – A safe, efficient, and highly accessible global digital assets and derivatives trading platform based in Singapore.
Conclusion
Covalent is a project that leverages big-data technology to create a meaningful large data set from hundreds of billions of small data points, providing useful insights to investors and allowing developers to analyze data. Covalent returns this data very quickly and consistently, combining both relevant data in one API interface. This is a large market, but there is no dominant competitor, so Covalent will be a potential project to make a name for itself. With the advantage of a large customer file of more than 100 projects and strong backing investment funds, Covalent has the ability to develop brilliantly in the next 2-3 years.
This deep dive is for informational purposes, not investment advice. Readers will be responsible for all their actions.
