EP28: Covalent: Fueling AI & DA with Our Specialty
WEB3 Mint To Be
Deep Dive
What is the core idea behind Covalent and how does it differentiate from traditional databases?
Covalent binds centralized systems and decentralized systems, treating blockchains like databases that can be queried and indexed. Unlike traditional databases, Covalent focuses on making blockchain data accessible in a decentralized fashion, acting as middleware that bridges the gap between blockchain infrastructure and existing workflows like Excel.
What were the major challenges Covalent faced during its early years?
Covalent faced significant market and financing risks during its early years, especially during the bear market of 2018-2019. The team bootstrapped without external capital and struggled to find product-market fit. Additionally, there was technology risk, but they benefited from the dominance of EVM (Ethereum Virtual Machine) in the blockchain space.
How does Covalent's unified API simplify blockchain data access for developers?
Covalent's unified API allows developers to access data from over 200 blockchains with minimal changes. For example, switching from Ethereum to Solana or Polygon requires just one character change in the API call. This eliminates the need to rebuild the stack for different chains, making it highly efficient for developers.
What role does Covalent play in the AI and data availability (DA) narratives?
Covalent provides structured data, which is essential for training large language models (LLMs) and AI applications. Its extensive historical and real-time Web3 datasets enable use cases like on-chain copy trading, fraud detection, and predictive analytics. Covalent's data is foundational for AI models in the Web3 space.
What is the significance of the CQT token in Covalent's ecosystem?
CQT (Covalent Query Token) is a staking and governance token that underpins Covalent's decentralized economy. Revenue from developers using Covalent's API is used to buy back CQT, which is then distributed to node operators. This creates a flywheel effect, incentivizing long-term data availability and participation in the ecosystem.
How does Covalent's decentralized indexing compare to centralized alternatives?
Covalent's decentralized indexing offers cryptographic security, ensuring that every data mutation is auditable. This level of trust is crucial for advanced use cases in crypto. Centralized indexers, while they may gain some traction, lack the same security guarantees and often fail to sustain long-term viability in the Web3 space.
What notable trends is Covalent observing in the current market cycle?
Covalent is seeing significant trends in data availability (DA) and AI, with a growing focus on structured data for training models. Additionally, liquid staking tokens (LST) and restaking mechanisms are gaining attention. Covalent remains focused on its core expertise in data and AI, avoiding speculative trends.
What is Covalent's strategic plan for revenue generation?
Covalent aims to drive revenue through its unified API, Gold Rush block explorer, and Increment dashboarding product. The company is also capitalizing on the growing demand for historical blockchain data, with partnerships like Infura driving traffic to Covalent. The focus is on expanding use cases and improving data accessibility.
- Ganesh's background in cancer research and database infrastructure.
- Covalent's founding story during a hackathon in 2017.
- Covalent's core function: making blockchain data more accessible through a unified interface.
Shownotes Transcript