Modular data infrastructure provider Covalent unveiled that its governance proposal to raise the staking Max Multiplier and include new operators has received unanimous approval. With extra delegation capacity and more operators joining, it intends to achieve the 35% staking target to bolster network strength.
At present, Covalent is encountering a challenge with the fast filling of delegation space for CXT holders. This situation is attributed to the growing number of CXT holders who are keen to stake their tokens and generate yield by securing the protocol.
As the number of CXT holders looking to delegate grows, the available delegation space is approaching its capacity, creating a potential bottleneck that may restrict further participation. Additionally, the process of onboarding new Block Specimen Producers (BSPs) is not progressing quickly enough to meet the rising demand, leading to a mismatch that limits the opportunity for additional delegations.
The proposal offered the expansion of maximum delegation capacity for token holders to 40X, which would cover nearly 35% of the circulating supply, equating to approximately 297 million CXT. This includes onboarding 5 new BSPs, with an average of 300,000 CXT staked per BSP. Additionally, the proposal suggests modifying the emitted rewards to maintain a target annual percentage yield (APY) of 11%. To reach this APY, the reward requirement per day would be 89,657.53 CXT, translating to about 32.5 million CXT emissions annually.
The new plan is designed to address the rising demand for CXT delegation. By raising the Max Multiplier to 40X, it sought to enlarge the available delegation space, guaranteeing the network is capable of accommodating growth avoiding creating bottlenecks or restricting the involvement of CXT holders.
At the same time, onboarding additional BSPs will contribute to the network’s expansion and security. With 20 BSPs currently active, each is anticipated to stake an average of 300,000 CXT. This increase will substantially bolster the network’s capacity and security. By adding more BSPs, Covalent seeks to more evenly distribute the staking load along with creating extra opportunities for CXT holders to delegate their funds effectively.
Covalent Integrates With Cronos zkEVM To Advance Blockchain Capabilities
Covalent functions as a modular data infrastructure layer aimed at tackling issues in blockchain and AI. It focuses on enhancing verifiability, enabling decentralized AI inference, and ensuring long-term data availability. Moreover, its Ethereum Wayback Machine (EWM) facilitates secure access to Ethereum transaction data.
Recently, Covalent announced its integration with the Layer 2 zero-knowledge blockchain Cronos zkEVM to advance blockchain scalability, security, and long-term data availability.
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