Covalent Network is a decentralized platform that provides a single unified API for applications to query blockchain data. The network's native token is called the Covalent Query Token, which you'll often see shortened to CQT on exchanges. CQT is a standard ERC-20 token and, as such, is interoperable with much of the existing decentralized finance ecosystem.
Those behind Covalent Network observed that although a great deal of blockchain data is publicly available, it is difficult to reference quickly and efficiently. Covalent Network seeks to change that by indexing entire networks, such as Ethereum, Polkadot and Avalanche. An example of an application that might benefit from such a service is a DeFi accountancy app seeking to calculate a user's tax obligations.
The Covalent Network uses CQT in governance and to incentivize participation. CQT stakers receive rewards for performing duties reliably and are penalized for untimely or poor data retrieval. Importantly, those making data queries can pay for the service using stablecoins and are not obligated to use CQT. The team's reasoning for this is that Covalent's target market of enterprise users may not want to be exposed to volatile crypto assets, particularly when budgeting for data query expenses. Once a user has paid for a query, the stablecoins used are instantly converted to CQT. The native token then incentivizes honest and efficient data retrieval.
Having launched following a more centralized database model, Covalent had already attracted significant interest before beginning to transition to a more decentralized system. Prominent existing partners from the blockchain industry include Balancer, 0x and Loopring.
Although users seeking blockchain data retrieval do not need to hold or transact CQT itself, the token is vital to the Covalent Network. If the Covalent service proves popular, its function within the ecosystem should encourage demand, pushing the CQT price up.
The Covalent Network uses CQT as a staking asset to incentivize participation in a decentralized fashion. Those CQT holders wishing to contribute to the network but do not want to burden themselves with the responsibility of running a node can also delegate their tokens to professional validators, earning a share of rewards for doing so. CQT will also serve as a governance token for the ecosystem as the project transitions toward greater decentralization.
At the project's genesis, the team created 1 billion CQT tokens. These are gradually unlocked over a 50 month period. The initial token distribution saw 38% of the total supply awarded to seed, private and public investors; 14% to the team; and the remaining 48% split between the project's reserve, ecosystem funds and staking rewards.
As well as the name of the network itself, Covalent is also the Vancouver-based blockchain data firm that designed it. The project's documentation credits Ganesh Swami and Levi Aul as co-founders. They continue to serve as CEO and CTO, respectively. The pair draw on considerable entrepreneurial experience and are joined by a team of more than 30 professionals from a range of industries.
In describing the reasoning for Covalent's name, Swami stated that it refers to covalent bonds in chemistry. Similar to its scientific namesake, Covalent Network aims to connect blockchain data to applications requiring it.
Founded in 2018, the company quickly attracted significant investment from several important names in the blockchain industry. They include Hashed, Delphi Digital, Hypersphere, CoinGecko and others.