Research Summary
The report discusses Covalent’s role in enhancing blockchain data accessibility and reliability, its growth, and its competition with The Graph. It also covers the company’s migration from Moonbeam to Ethereum, the addition of Arthur Hayes to the team, and its recent funding round aimed at expanding into the APAC market. The report concludes with Covalent’s upcoming changes, including the introduction of a new token, CXT.
Key Takeaways
Covalent’s Role and Growth in Blockchain Data Accessibility
- Enhancing Blockchain Data Accessibility: Covalent plays a crucial role in improving blockchain data accessibility and reliability, which is vital for developers and users in the Web3 ecosystem. The company’s business model revolves around indexing blockchain data and providing access to applications via a developer API.
- Significant Growth: Covalent has experienced substantial growth, expanding from one blockchain in 2020 to over 200, and aims to reach 1,000 blockchains in the coming years. This demonstrates the company’s scalability and broadening service range.
Covalent’s Competition with The Graph
- Major Indexer: Covalent competes with The Graph as a significant indexer, offering a no-code solution with tools like the Gold Rush API, Block Explorer, and dashboarding tools. Covalent supports over 220 blockchains, significantly more than The Graph’s 35–40, and generates five times more on-chain protocol revenue, indicating strong customer adoption.
Covalent’s Migration from Moonbeam to Ethereum
- Migration to Ethereum: Following the Nomad Bridge hack in 2022, which led to the loss of 10% of Covalent’s CQT token supply, the company migrated from Moonbeam to Ethereum. This migration resulted in 22% of CQT’s circulating supply being staked and an increase in operators to 32, indicating strong community support and ease of use without bridges.
Arthur Hayes Joins Covalent
- Strategic Addition: Arthur Hayes, co-founder of BitMEX, joined Covalent after six months of discussions. His addition to the team is seen as a strategic move, providing insights into market development and token economics, and highlighting the importance of historical blockchain data for maintaining an immutable ledger.
Covalent’s Recent Funding Round and Expansion into APAC Market
- Funding Round: Covalent’s recent 5 million dollar funding round is aimed at expanding into the APAC market, with strategic partners like Rock Tree Capital and CMCC providing regional expertise and support.
- Expansion into APAC Market: The strategic funding round is designed to ensure Covalent’s successful entry and growth in differentiated markets like China, with platforms like WuBlockchain helping to spread their message.
Actionable Insights
- Monitor Covalent’s Growth: Given Covalent’s significant growth and plans to reach 1,000 blockchains in the coming years, it would be beneficial to keep an eye on the company’s progress and scalability.
- Assess the Impact of Arthur Hayes’ Addition: Arthur Hayes’ addition to Covalent’s team could have significant implications for the company’s strategic direction and growth. It would be worthwhile to assess the impact of his expertise on the company’s market development and token economics.
- Track Covalent’s Expansion into APAC Market: With Covalent’s recent funding round aimed at expanding into the APAC market, it would be insightful to track the company’s entry and growth in this region, particularly in differentiated markets like China.
- Understand the Implications of Covalent’s New Token: Covalent’s introduction of a new token, CXT, could have significant implications for the company’s liquidity and narratives. It would be beneficial to understand the potential impact of this new token on the company’s growth and market value.
