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About Covalent (CQT)
Covalent is a blockchain-based data infrastructure that works to aggregate data from leading layer-1 and layer-2 networks like Ethereum, BSC Smart Chain and Polygon.
The platform’s native token is CQT. It’s used to facilitate governance, provide access to Covalent’s unified API and reward various actors for operating on the network. CQT can also be staked on the protocol for an annual yield.
In terms of functionality, Covalent actively aggregates pertinent on-chain data – transactions, wallets balances, pricing info, NFT data – from more than 30 independent blockchain networks. This data is made accessible through Covalent’s unified API, a custom application programming interface that allows individual users and application developers to query data from integrated ecosystems.
All data stored on the network, regardless of the blockchain from which it came, is first exported and normalized into a standard format known as a Block Specimen. Per platform’s whitepaper, any blockchain network adhering to the Block Specimen specification can have their data queried via Covalent’s unified API. This standardization process is said to create a single polymorphic representation of the data such that information from two fundamentally different blockchains can be accessed via the same query.
These block specimens, which are said to provide a cryptographically secure representation of a block and its “constituent elements,” are procured by “block specimen producers” who operate live nodes across independent blockchain networks like Ethereum. Together, these independent specimens work to create an archival representation of historical blockchain data, Messari explained.
According to Covalent’s whitepaper, producer nodes run a so-called “extract and normalize worker” that works to transform the data into a specimen which is subsequently published to a network storage node. Within this framework, the block producer is also required to submit a cryptographic proof to verify the data produced by the block specimen is both honest and secure.
For their efforts, block specimen producers are provided with a CQT-denominated reward.
Once a specimen is published to a Covalent storage node, the platform’s network of indexing nodes wore to index, enrich and decode the data such that it can be queried, via Covalent’s unified API, by application developers and analysts. Individual queries are executed by Covalent’s query nodes who earn a tokenized reward – put forth by the end user - for retrieving the information.
For DeFi protocols, independent data providers, tax reporting services, and even legacy Web2 applications, Covalent represents a powerful solution that allows these actors to access myriad cross-chain data streams via a singular point of entry: the unified API.
Per Nichanan Kesonpat, Covalent’s unified API features various endpoints that allow applications, developers, and analysts, among others to access different types of data. The API’s “Class A” endpoints provide access to basic information like wallet balances and individual transactions, while “Class B” endpoints provide access to data from specific blockchain-based protocols, such as AAVE and Uniswap. Likewise, “Class C” endpoints are custom endpoints written by independent members of the Covalent community.
Looking towards the future, Covalent’s mainnet is set to be released via a three-pronged rollout over the latter half of 2022.
Covalent’s unified API is currently leveraged by a series of leading DeFi protocols and independent data providers including AAVE, Balancer, and CoinGecko.
When was CQT created and how much was it worth?
Covalent is the brainchild of two veteran data engineers, Ganesh Swami and Levi Aul, who launched the project in 2017. Swami, a physicist, cut his teeth developing algorithms for cancer drug research, while Aul first gained recognition as the founder of Canadian Bitcoin exchange Bex.io. As of July 2022, both Swami and Aul remain heavily involved in Covalent’s development serving as CEO and CTO, respectively.
To date, Covalent has managed to raise at least $5 million in funding from a series of leading industry backers, including Alameda Research.
Covalent’s native token, CQT, was first disseminated to the public via an April 2021 token sale at a per-token price of $0.32.
According to CoinGecko, CQT rose following its April 2021 but lost roughly 80% of its value that June. This downside momentum was short lived however, as the token gained steam throughout July and August, culminating in CQT hitting an all-time-high of $2.08 in mid-August of 2001. The token’s price has since been impacted by downside volatility.
How is the price of CQT determined?
CQT is a deflationary asset with a hard cap of 1 billion tokens. According to project documentation, roughly 23.5% of CQT’s supply was released through two private token sales in 2020 and 2021, while another 10% of supply was distributed during the protocol’s early seed funding round. Some 3.4% of supply was disseminated via a public token sale in March of 2021, and additional 14.4% went to Covalent’s core development team.
As of late July 2022, there were about 380 million CQT tokens in circulation.
Why does CQT have value?
“Consumers of blockchain data want fast and easy access to data without the pain of dealing with individual blockchain data structure idiosyncrasies,” said Graham Jenkin, CEO of CoinList, per CoinDesk. “The Covalent team gets this.”
Given CQT’s role in providing access to the platform, demand for the token could rise should network usage increase.
Is CQT secure?
Covalent requires that all data imported onto the platform is first normalized into a standard format (Block Specimen). Within this framework, specimen producers are required to submit a cryptographic proof to the network verifying that the data produced by the specimen is both honest and secure. Likewise, the protocol’s incentive structure actively punishes operators who submit dishonest work to the network.
Covalent has been audited by both Certik and Quantstamp.
What are the main benefits of CQT?
- Covalent actively aggregates and indexes data from some 32 independent blockchain networks, including Etehreum, BSC Smart Chain and Polygon.
- Covalent’s unified API works as an information hub from which application developers and analysts, among others, can access data stored by the network.
- Users can earn Covalent’s native token, CQT, by performing work, such as importing data, indexing information, and executing queries, on the platform.
What do the critics say about CQT?
That it’s too centralized, and still very much only a work in progress. Covalent’s mainnet is yet to be released. A three-pronged rollout is said to be in the works for the second half of 2022. As far as the platform being overly centralized, likewise, there are plans underway to address this, transforming Covalent into a more decentralized entity.
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