Covalent is the leading modular data infrastructure layer that’s dedicated to solving the Long-Term Data Availability and the verifiability problem in AI. It has continued its mission of decentralization with the introduction of the Covalent X Token (CXT) on the BitMart exchange. CXT is at the heart of Covalent's vision for a community-driven protocol, empowering token holders and validators to play an active role in shaping the future of data verifiability and accessibility in Web3. Here’s a closer look at how CXT operates within Covalent’s ecosystem and the critical role it plays.
CXT: The Foundation of Covalent’s Decentralized Ecosystem
As Covalent progresses toward becoming a community-owned protocol, CXT functions as its native token, enabling governance, staking, and network access. Built on Ethereum as an ERC20 token, CXT empowers users to actively participate in decision-making, secure the network, and facilitate data queries.
Key Functions of CXT in the Covalent Network
Governance: CXT holders are integral to Covalent’s governance model. They can vote on proposals that influence system parameters, including the addition of new data sources, changes to data modeling requirements, and optimizations for specific geolocations.
Staking and Validation: Staking is at the core of Covalent’s security model. Validators, who are tasked with ensuring data accuracy and integrity, stake CXT to secure the network and, in return, earn fees for their services. Token holders can delegate their CXT to validators, allowing them to earn rewards for supporting the network’s security. Staking rewards are dynamic, historically ranging between 8% and 18%, depending on the amount staked and the network’s reward emissions rate. This incentive structure not only fosters security but also encourages long-term engagement with the platform.
Supply and Token Distribution: With a fixed supply of 1 billion CXT tokens minted at genesis, Covalent ensures stability by adopting a non-inflationary model. Covalent’s initial token distribution plan was carefully designed to incentivize both the supply and demand sides, with a gradual vesting schedule aimed at fostering sustainability.
Earning and Fees: Querying the Covalent Network incurs fees, which users pay in CXT to access data services. This fee structure allows the network to generate revenue that supports its stakers and node operators. Additionally, validators may set a commission rate for users delegating their CXT, offering another avenue for earnings within the ecosystem.
Security: CXT’s Robust Framework
Security is paramount in the Covalent ecosystem. CXT has undergone thorough audits by Quantstamp and Hacken, ensuring any high-level issues have been addressed.
Incentives and Network Rewards
The Covalent Network rewards its operators who perform essential functions, such as producing data and re-executing blocks. Rewards are calculated based on two factors: the operator's stake and their actual contribution to the network. With a fixed reward pool that emits CXT every 24 hours, operators are consistently incentivized to contribute to the network’s data integrity and availability.
Becoming Self-Sustainable
Ultimately, the aim is for the Covalent Network to become economically self-sustainable. Users will eventually be paying Query Operators to query the Covalent API. Query Operators will then “pay into” a network fund (proportionate to the amount of data they’ve fetched from the network) that pays out in turn to the production operators (i.e. Block Specimen Producers) as network rewards.
In Summary
The Covalent Network, powered by the CXT token, represents a forward-thinking approach to decentralized data management and accessibility in Web3. CXT serves as the backbone of Covalent’s governance, staking, and network services, aligning the interests of token holders, validators, and data consumers. By empowering the community to participate in governance and rewarding those who help secure and operate the network, Covalent is setting the stage for a sustainable and inclusive data infrastructure.
As Covalent continues to expand its services across over 230 blockchains, CXT’s listing on BitMart opens the door for more users to join its decentralized ecosystem. With a robust incentive model, a strong commitment to security, and a clear path to economic sustainability, Covalent’s CXT token is poised to become a cornerstone in the future of Web3 data infrastructure.
