summary
Covalent Network (CXT) has recovered its staked CQT percentage to over 20% after migrating its stake from Moonbeam to Ethereum.
Covalent Network (CXT) added five new network operators in Q2, growing the BSP set by 36%, increasing the potential for the protocol’s staking supply.
Covalent Network (CXT) rewarded operators a total of $990,000 in the second quarter, an increase of 83% from the previous quarter.
In Q2, Covalent Network (CXT) launched a rebranding campaign to focus more on AI and long-term data availability on Ethereum. In addition, the company raised $5 million to expand operations in the Asia-Pacific region and successfully transitioned its CQT token to the newly launched CXT token (addressing the potential threat of Nomad hacker CQT holdings).
Covalent Network (CXT) successfully migrated staking operations from Moonbeam to Ethereum in Q2.
Introduction
Covalent Network (CXT) is a long-term data availability protocol for structured data. It solves the long-term data availability problem that was prevalent after the Ethereum Dencun upgrade, which deleted rollup history due to the state expiration function. This specific solution is called Ethereum Time Machine (EWM); it is used as a modular verifiable data infrastructure to solve challenges in the field of AI, especially those related to enhancing decentralized AI training and reasoning.
In its recent rebrand, Covalent Network (CXT) implemented a series of upgrades focused on accelerating its commitment in two core areas: data availability and decentralized AI. At the same time, it also raised $5 million in strategic funding to expand its presence in the Asia-Pacific region. After the rebrand, Covalent Network (CXT) converted the original CQT token to the new CXT token.
Covalent Network (CXT) builds billions of Web3 data points for AI, leading dApps, and protocol ecosystems
Covalent Network (CXT) currently has over 3,000 API clients and ecosystems using its structured data protocol. Some notable profitable clients include Fidelity, EY, Consensys, Matcha, Rainbow Wallet, and CoinLedger. Covalent Network (CXT) focuses on artificial intelligence and is committed to long-term data availability on Ethereum. Its clients also include Laika AI, Entendre Finance, and SmartWhales AI. In order to provide the data required by these entities, the protocol must extract, transform, and enrich the raw blockchain data so that it can be accessed and used.
The number of block samples produced in Q2 increased by 20% from the previous quarter and 32% from the same period last year. As the number of blockchains covered increases, the number of block samples produced by a protocol will also increase accordingly. Last quarter, Covalent Network (CXT) provided support for Blast, Gnosis Chain, Movement, and several other blockchains, which may have contributed to the increase in block sample production.
Q2 CQT staking status (now CXT)
The total number of CQT staked on the Covalent Network (CXT) grew by 5.4% as the circulating supply of CQT increased by 27%. By the end of the quarter, the Covalent Network (CXT) had successfully migrated its staking contracts, added five new operators, and increased the staking multiple from 27x to 40x, resulting in staked CQT (now CXT) accounting for 24% of the circulating supply at the end of the second quarter.
Since CXT will not be launched until mid-July 2024, the following analysis will use CQT as an example.
Network Operators
Covalent Network (CXT) expanded its set of network operators in Q2 by adding five new BSP roles. Adding network operators helps expand the amount of stake that the protocol can absorb and increases its workload capacity in terms of block samples and block result production. Increasing the potential staked amount enhances the absorption capacity of the staked supply, reduces the tradable supply, and may put upward pressure on the token price (depending on the issuance amount).
Financial incentives
Currently, BSPs and BRPs roles receive subsidies of up to 20 million CXT (previously CQT) tokens per year. In this model, query revenue paid by customers in fiat currency will be used to buy back CXT tokens and reward node operators. Currently, 20% of all query revenue will be automatically used to buy back CXT weekly and held in a multi-signature wallet for later distribution.
Since CXT will not be launched until mid-July 2024, the following analysis will use CQT as an example.
Rewards to network operators (in USD) grew 83% to $900,000 this quarter. The increase in rewards was primarily due to a 184% surge in the number of CQT rewards issued, despite a 27% drop in the average CQT price. Covalent Network (CXT) has an annual rewards budget of approximately 20 million CQT, but only about 10 million CQT was used each year in 2022 and 2023, so 24 million CXT is planned to be used in 2024.
Market Cap
In the future, the Covalent Network (CXT) buyback program will be directly tied to the demand for the network and the buying pressure on CXT. As the demand for API queries increases, the revenue of the Covalent Network (CXT) will grow accordingly, enabling the use of additional revenue to further buy back CXT. Adding more ways to utilize CXT may serve as a catalyst for decentralized AI protocols to obtain structured historical on-chain data, which will benefit the Covalent Network (CXT) and CXT holders when integrating AI with cryptocurrency.
Governance Updates
Covalent Network (CXT) launched a major governance update, including migrating all token activity to Ethereum and phasing out activity on Moonbeam. New proposals were made, such as increasing the maximum multiple for staking operators from 27x to 34x, and eventually to 40x. In addition, the launch of a new CXT token was approved that more closely aligns with Covalent Network (CXT)'s focus on AI and Ethereum data availability.
Major progress and ecosystem support updates
Covalent Network (CXT) integrated with multiple new protocols in the second quarter, including ZetaChain, Mode Network, and Guild. In addition, five new operators, ThunderHead, DappLooker, Corthos Capital, Allnodes, and Restake, joined the Covalent Network (CXT) network. The protocol also pledged to provide $2.5 million in funding to projects in the Arbitrum and Consensys ecosystems. BitMEX co-founder Arthur Hayes joined Covalent Network (CXT) as a strategic advisor. In addition, Covalent Network (CXT) raised $5 million in a strategic financing round led by RockTree Capital to expand its operations in the Asia-Pacific region.
About Covalent Network (CXT)
Covalent Network (CXT) is a leading modular data infrastructure layer dedicated to solving major challenges in the blockchain and AI fields, including verifiability, decentralized AI reasoning, and long-term data availability. Its massive structured, verifiable data enhances decentralized training and reasoning, reducing the risk of AI models being manipulated or biased. In addition, the Ethereum Time Machine of the Covalent Network (CXT) network ensures secure, decentralized access to Ethereum transaction data. Trusted by more than 3,000 leading organizations, Covalent Network (CXT) provides unlimited access to on-chain data on more than 230 blockchains for AI, DeFi, GameFi, and more.
