CXT, the native token of the Covalent Network, serves as a settlement mechanism rather than a traditional payment token. When users make API queries, they pay in stablecoins like USDC, which are then swapped for CXT through a market buy, creating demand for the token. The purchased CXT is distributed to node operators as rewards for fulfilling API requests.
This process ensures that enterprise customers can budget more easily using stablecoins, while avoiding token volatility. As API usage increases, so does the demand for CXT, driving its value within the network.
Staking is also critical for network security. Operators must stake a minimum amount of CXT to participate, and any malicious behavior could result in slashing of their staked tokens. Stakers can earn more CXT by providing utility, further incentivizing participation and maintaining network integrity.
