The Delphi Podcast Host and GP of Delphi Ventures Tom Shaughnessy hosts Ganesh Swami the CEO and Founder of Covalent.
The Delphi Podcast Host and GP of Delphi Ventures Tom Shaughnessy hosts Ganesh Swami the CEO and Founder of Covalent. The two discuss how Covalent is enabling traditional and crypto developers to leverage data from any blockchain through a no code implementation that plans to decentralize over time.
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(1:52) – First Question: Ganesh’s Background.
(3:18) – Covalent Elevator Pitch.
(10:35) – How easy is it to use Covalent.
(14:13) – Thoughts on Traditional Companies / Fin Tech creating apps to integrate with Crypto.
(15:47) – Covalent’s technical capabilities.
(20:45) – How does Covalent differentiate The Graph.
(29:18) – Thoughts on Attack Factors.
(31:58) – Covalent’s end goal on the decentralization side.
(35:50) – How much traction does Covalent have right now / Projects / Metrics.
(38:00) – The long-term plans for the Covalent query token.
(41:27) – Where to find Covalent.
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Hey everyone. Welcome back to the podcast. I’m your host, Tom Shaughnessy, and I helped run a Delphi Ventures. Today, I’m extremely excited to have on a portfolio company, Founder and CEO, Ganesh of Covalent. Ganesh, how’s it going?
I’m doing great, Tom. Thanks for having me here.
Yeah. Really excited to have you on. It’s been a crazy day. We’re recording on a Wednesday, May 19th and the cell office is kind of distracting, but I’m glad we have you on to discuss a real project here.
So Ganesh, give us a bit of your background.
Sure. I’m a physicist by training and I worked in the cancer research pace for about half my career, mostly building pharmaceutical drugs. The challenge I had with that industry is that things move really, really slow. So to build a minimum viable product, it takes about five years and then phase one, phase two and phase three clinical trials. And so I pivoted my career into something faster like internet technologies because most of my peers were starting companies and getting funded and going through an exit or an acquisition in two years or less. And I wanted that fast-paced.
So for the past decade I’ve been cutting my teeth on big data technologies and database engineering. So that’s really my background. So I’ll go into some of the bits about how we came up with the idea, but I would like to call myself like a seal entrepreneur, a data scientist, and I’m very, very passionate about bringing transparency and visibility to blockchain data.
Every time I talk to you, you’re extremely dedicated and everything you say. So I love it. I mean, the peer pressure of having friends going through an exit in one to two years when you’re on building drugs with such large timelines, that definitely is kind of taxing. So I definitely understand why you made the change.
But we’d love to learn more about Covalent. Let’s definitely dive in.
Sure. So I’m now ashamed to admit this, but I had written off blockchains for a very long time. I knew about Bitcoin. I knew about Ethereum. I knew about the ICO. But I just wrote it off because in the database world I’m used to, hundreds of thousands of transactions per second and when I saw something which is like 15 transactions per second, I thought it was a joke. And that’s because I missed the whole ethos of what de-centralization brings in.
Anyway, so one of our friends recommended that we go check out this database hackathon put out by a blockchain company. And so a couple of my friends, we just attended this hackathon over the weekend. And so what I built at that hackathon was a way to pull out data from the Ethereum mainnet using Excel. That was the idea because the data is all on the blockchain, but it’s very hard to pull it out. So we built this super simple MVP, just two days straight and ended up building that hackathon.
And then we realized that maybe there’s a commercial angle to this. Maybe this is actually a need that other people have. And so we decided to commercialize this technology. So this was late 2017, probably not the best time to start a crypto project, but hindsight is 2020. So the core idea behind Covalent is that for blockchains to have enterprise adoption, it needs to speak to existing investments. And investments can be in the people and the talent. You’re not going to retrain new people, the processes, it’s too difficult and too brutal to change the existing enterprise processes. And of course the systems and the software. Because there’s always one Oracle or COBOL system in the backroom, which has been running for the last couple of decades, and there’s no reason to fix it if it’s not broken. So that is the genesis idea started Covalent to bridge the centralized and decentralized worlds. In fact, the word Covalent comes from Covalent bonds in chemistry, because we had this binding agent between databases and blockchains, or whatever analogy you want to think of.
I love the background. Let’s dive into a couple of parts there when you did the hackathon. What data exactly were you pulling into Excel?
So this was blocks transactions. Low-level information like how many transactions there were in a block and who was mining these transactions. Network level statistics like that. And at that point, I believe there was a couple of exchanges that were live, the precursor to the [0x 00:04:45] was live. So very, very primitive applications. So we were able to build some of the log events that were there. Very, very basic stuff. Definitely not the vibrant ecosystem that we have today, but it’s mostly network level statistics back in 2017. Mostly around the ICO craze.
Makes a lot of sense. You mentioned that there’s no way for a real legacy systems to interact with blockchain data. It’s funny you bring up COBOL systems. I remember reading, was only like a couple of devs in the world. There was just a handful that even know how to still work on those systems. What exactly is the framing there? Is this that your view is that like all traditional legacy government systems and businesses will need to adopt blockchain tech and they just need a way to do that without changing their systems? Or is that the right kind of summation there?
That’s exactly right. So it’s the Lindy effect in motion. If you look at what has happened in the database world over the last decade, even though the language that… there might be a proprietary language that you can speak to these databases. They’ve all ended up adopting SQL as the standard. It doesn’t matter if you go buy a database from Apple or Google or Microsoft, they all speak SQL. So that is that unifying language, which is used to speak to databases.
And that is the same kind of idea that we brought to blockchains. So we provide a SQL-like database-like experience to the blockchain. At least that was the core initial idea. It’s a question about adoption. For an enterprise they’re not going to move away from existing systems. They’re not going to retrain the people. SQL has been around for 40 plus years and I guarantee you it’s going to be around for the next 40 plus years. So this is like a language and if you’re trying to fasten the pace of adoption, I think it’s simpler to talk to people in a language that they already understand and that they know and that they recruit for. So I think that’s where this idea comes in from.
I really like the analogies there. I’m just thinking through this, it seems like you guys are obviously the middleware connecting two very different worlds that have their own issues. On one side, you guys have to track the data and make it available for an insane number of layer ones layer twos, Ethereum, DeFi apps. And then on the flip side, you need to offer that up in a way that traditional companies can actually use it and build products around it unlike two… the both sides that are very different issues. I’d like to kind of start on the traditional side. Could you kind of give an example of maybe a product or service from a traditional company that they could offer using Covalent API? I know it’s kind of a vague question, but just to contextualize it a bit.
So when we got started late 2017 and 2018, the security token offerings, real estate on the blockchain, all of those use cases, enterprise blockchains, commission blockchains, those are the buzzwords of the day. Unfortunately or fortunately, depends on your perspective, none of those things really panned out. It’s still too early. We don’t see a lot of security tokens yet on the blockchain. So, in the traditional world, the idea was that your reporting or your compliance analyst needs to build these reports using the Oracle database, their SAP systems, maybe their Oracle Financials, any of those backend systems. And now the blockchain just looks like another data source. So they are able to create their reports in Tableau or Excel, and they don’t have to download the blockchain. They don’t have to learn a new language. They don’t have to understand hard folks, consensus algorithms, none of those things. They don’t even have to run a blockchain node.
So that was the idea with the traditional space. That use case didn’t really pan out. I mean, we built a lot of proof of concepts back in 2018 even in 2019. None of that really panned out. I think what really, really caught fire was this crypto native Greenfield deployment. Which is a standalone shadow or pedal infrastructure that was being built in the decentralized apps and the decentralized protocols. So I would say it’s still going to take a couple of years before traditional financial systems adopt blockchains, but if that would happen, we are ready, because that’s the world that we’re building towards.
That’s incredible. From the traditional developer perspective, let’s say a traditional company, FinTech company, e-commerce enterprise, what have you. If I want to access the blockchain’s data, how easy is it to use Covalent?
So we’ve made a couple of changes to our core product offering. We initially went out with a product where you can run SQL against the blockchain and pull out data. So that was the initial idea. What we quickly found out is that the builders in the DAP space, in the protocol space did not really know SQL, don’t really come from that background. They wanted a simple, like a REST API or a graph QL API. So this is why in a couple of years ago, we bolted on a API on top of the Covalent database so that developers can integrate with the API for the applications. And as a product philosophy, our goal was to minimize time to value. So today you can use the product from the browser. Literally you go to the Covalent API docs. It’s a live application. You just put in your wallet address, put in the blockchain that you need. And then boom, you can use the product. It’s really that simple.
So usually the time to ship a feature, let’s say a portfolio balance indicator or a wallet balance, the staff. Or ROI of your positions is usually between 20 to 50 minutes. That’s what it takes. There’s nothing to learn. Everything just works exactly as you’d expect. What is even more magical here is because we are multi chain. You literally only have to change one character to support Binance Smart Chain or Polygon or Avalanche or Phantom or any of the other dozens of blockchains that we index and support. So developers really love [crosstalk 00:11:21]
That’s insane. One characteristic to change any chain that had to have been a lot of work. Yeah, that’s incredible. I didn’t know that offhand. So it sounds like those in the traditional space could basically build any app they want, leveraging Covalent. I mean, if I want to go to FinTech app but I want to check if somebody sent a token to another address or an escrow or anything like that, I can basically build on top of Covalent in a similar way to devs building on [Eths 00:11:51] today. Obviously way different ecosystems but is that a good way to summarize it?
That’s exactly right. So in our thesis, we have an internal thesis. Of course investors have a different thesis, but our internal thesis is that the FinTech and the DeFi worlds are going to merge. Because I guarantee you today, every single FinTech company in the world is figuring out a crypto strategy. And the first thing to start is probably just holding Bitcoin, holding Ethereum, maybe holding some NFTs. And then some of these newer Bluechip DeFi tokens like Aave or Maker and so on.
What is happening under the hood is a wallet, a crypto wallet. And what are the use cases that they want? They want to figure out the token balances. They want to give you the portfolio value. They want to give you a chart of how your portfolio has changed over time. They want to understand what are the transactions that have changed these positions. They want to get alerts of notifications and all of those features one-to-one, there’s an equivalent API. So any traditional FinTech application that wants to add a crypto experience, Covalent is an amazing fit. And suddenly the total addressable market for Covalent is not just DeFi and NFTs and these crypto native projects, but all of FinTech, which is very exciting to build to.
Yeah. That’s super exciting. I know we’re stuck on the traditional world and we’re down the crypto rabbit hole every day, but obviously the world’s users are traditional companies are massive, so we have to make it work. Are you bullish though on this traditional companies, traditional FinTech creating apps to integrate with crypto? I feel like not to go into the Ethereum versus private blockchain kind of discussion of past years, but I feel like the definitive native apps generally win, but granted we’re all kind of early.
I think there’s room for multiple plays here. The traditional FinTech world, what’s happening is that the millennials and the younger generations are starting with a crypto wallet first. In our community, we have teenagers, 13, 14, 15 having crypto wallets, playing with NFTs, and minting NFTs, and having a lot of fun. In fact, even making a lot of money and they’re just completely locked out of the traditional banking system. So, I think for FinTech companies to figure out how to tap into the market, they will have to add crypto. You’re starting to see early signs of that with PayPal accepting crypto, this is happening more and more. [Chrissy 00:14:24] is accepting NFTs now, that’s like a traditional world that is opening up to the digital asset space. So I think it’s happening. Everything has to go through s-curve. It’s just a matter of how fast can we make that s-curve run.
That makes a lot of sense. So let’s switch over to the other side of this, which is the actual technical capability of supporting all these blockchains to bring all of this data to developers. You guys are having an ambitious project. You already support Ethereum, buying a Smart Chain, Polygon, Avalanche, Phantom. There’s a lot more that you aim to support in the next six, 12 months. How do you handle all this? Because it seems hard enough to index and query one chain, let alone support multiple different ones. And to your point, make it as easy as just changing one character for developer to kind of access that.
Absolutely. We are product focused and market focused engineers. So, our focus 100% is on the developer experience. That is our et al focused. So what we’ve built is a vertically integrated solution from the API to the query layer, to the indexing layer, to even the blockchain nodes. So we actually host our own blockchain nodes for all of these things. So we have a fleet of dozens of blockchain nodes. Because today I don’t think there are any professional teams that’s able to handle the scale of these newer blockchain nodes like the Binance Smart Chain and so on. So we’ve taken a vertical integration approach to build this whole thing. Yes, it was a lot of work, but I think in hindsight 2018-2019, was just for us to build tech build, build, build. All we did was ship product, ship product, ship product refined, refined, refined.
So what we’ve been able to do over the last couple of years is build a very, very polished experience. Something that just works. And so once we hit that milestone, then it’s time to open up, go to market, open up the possibilities. So we are not going to lose that ethos of having that super slick experience. And this is why all of the community members, all the validators, in fact, all of the the nodes that we cohost they all have to go through a due diligence check because we never want to lose that experience that developers have. So it is a lot of work but it’s definitely gotten easier now that we have a lot of automation in place.
Makes sense. I mean, as their ecosystems grow, is there a level of technical debt that becomes… I guess, how do you stay ahead of it? You have something like a Salona. I don’t think you guys support Solana yet. Correct me if I’m wrong there. But if you have something like a Polygon or an Avalanche or another chain, and let’s say they have a flourishing DeFi ecosystem built on top of it, or some new unforeseen Oak ecosystem, how do you stay on top of all of that? I’m not sure what goes into it, but I’m sure there’s a lot of technical work that goes into supporting everything built on top of them.
So one of the magical things and one of the unique features of the Covalent technology is that we make an exact replica of the underlying blockchain. Which means for an EVN based chain, it’s literally a turnkey solution. So it takes us less than half a day to support any EBN based chain. It’s really that simple. So the world is now starting to segregate into EVN based chains and non-EVM based chains. And so on the EVN side, you have obviously Ethereum and Binance Smart Chain and Phantom and Avalanche, the sea chain, and FA and Optimism and Scale. The list just goes on. Those are all EVN based chains.
On the non-EBN base chains, this will be Solana. This will be Near. This would be Elrond. This would be some of the other more purpose-built products like Tezos and so on. So our focus has been on the EVN base chains because it’s literally just a turnkey solution. We just have to configure a couple of variables and then let it run. So it’s really that simple. This is why we’ve been able to get massive traction on the EVN based change.
The challenge on the non-EVN base chain is that every single blockchain is a unique snowflake, which means you need to recruit someone from their community who understands the data structures on the blockchain. On the EVN side, on the Ethereum side, they’ve already put in our $10,000. So we know this like the back of our hand. We have the expertise in-house. We know all of the failure points, but for the non-EVN base chains, we don’t really have the expertise. And that is really what our scaling problem is. We have a lot of customer demand for Solana. The Solana foundation itself is very interested in working with Covalent, but the end of the day, the talent is what the limiting factor is. They’re just not able to find people who know the Solana data structures and the Solana ecosystems really, really well in order to index their chain.
Makes sense. It’s cool that you guys could support new EVM chains so fast. I like that you have specific people specialize on a per chain basis. That’s awesome. So you really have people kind of digging in. I guess switching gears a little bit. I mean, the main competitor I see in this space for you guys is kind of the graph. How do you guys differentiate first the graph. I know in past conversations, it’s more of a pretty big difference on the vision. But I guess what are the main differences there?
Sure. There’s a high level philosophical question which is, I think, the main difference. Let me explain the use case with an analogy. So the graph is like an Excel sheet for every single protocol out there. So they have an Excel sheet which they call as a sub graph for UniSwap. They have a Excel sheet for balancer. They have a Excel sheet for one inch. And all of these sub graphs or these Excel sheets are all formatted differently. They don’t really talk to each other. And it’s very difficult to do the cross protocol, cross chain kind of queries.
Covalents approach is very different. Covalent, what we’ve done is we’ve copied out, we’ve made an exact replica of the underlying blockchain and put it into one giant Excel sheet. So we have this one sheet that has every single balance, every single transaction, every single log event, every single storage. Everything that is on the underlying blockchain. And then we ask our developers to make simple pivot tables basically using drag and drop tools, to create pivot tables in order to consume that data. So I think from a high level analogy perspective that’s the core difference.
Philosophically, we believe in a no code solution. Which means this goes back to the product vision. We want developers to get value from the browser. So if you want to pull out the the balances from your wallet across eight different blockchains, it’s literally, you can use it from the browser. You can try it out. It takes less than a minute. It’s really that simple.
With the sub graph approach, you require an engineer to write a sub graph, which are all these transformations, and they need to understand the nuances of what’s going on with a blockchain. So we’ve automated all of that away. So I think philosophically that’s where the difference is. I think they’re empowering developers. We are empowering people to build better experiences, richer dabs. So I think that’s where the core difference is. There are lots of other differences in the token and the technology in the stack and the team. But those two bullet points with the highlight highlights.
No. That’s awesome. And I mean, I’m a non-dev here, so correct me if I’m totally off on this one. But I guess the graph incentivizes experts for each app to create a sub graph. Meanwhile, you guys internally hire say an expert who is solely focused on that. Is there a difference in the way that you guys incentivize or provide coverage for different ecosystems? Or am I thinking about that the wrong way?
It’s kind of right. We’re evolving our model as we speak. So we have three classes of endpoints that are interesting to builders. So class C endpoints are generic endpoints that are just supported out of the box. So these would give me historical granular transactions. This is useful for taxation for example. Give me all of the ERC-20 transfers for any token. Give me the token balances. Gave me the NFTs and their historical pricing. So these endpoints are the class C endpoints that is supported across the eight or so different blockchains that we index today. That’s a class C endpoint. Of course those are maintained by Covalent. The class B endpoints are app specific endpoints. So for example, if you go to the CoinGecko or the CoinMarketCap, PancakeSwap page, all of that is powered by Covalent.
And so that’s app specific PancakeSwap lives on Binance Smart Chain. So this is an app specific endpoint that’s useful for pulling out the pools, the tokens that are on the total liquidity and so on. So far, we’ve been building these class P endpoints. So I believe we have UniSwap, PancakeSwab, SushiSwap, [Avei 00:23:58], all the major protocols. And when we started out in 2019, there were probably just a dozen protocols. It was easy for us to build all of that in-house. Now the space is completely exploded. There’s just no way for us to maintain it. So what we’ve done is we are just supporting the top, maybe 15 protocols, and these are like high quality integrations.
So we’ve now opened up what is known as a class C endpoint, which is essentially a marketplace. So anyone can go in and build their own app specific endpoint. So, for example, today we got a request for QuickSwap, which is the UniSwap clone on Polygon. We don’t have a class V endpoint for that. But they can go build their own class class C endpoint. and I think that’s really where we’re going to maximize the utility of Covalent. That’s still being built. It’s in private beta, there’s a few dozen people who have access to this tool and you can now contribute your own endpoints and essentially get a cut of the query fees if people use your endpoints.
That’s pretty cool. A couple other high level questions on the comparisons here. In the traditional market, there’s obviously a lot of middleware plays that go… people don’t really know about. That are powering apps they love, experiences they love. Obviously we live in a multi chain world. Do you have any comparisons to the traditional world on having multiple providers say you and the graph thrive? is there like a corollary in the traditional world?
Yeah. So the best example we like to use is Twilio and WhatsApp. Twilio is a telephony middleware product. It’s an API, there’s no real front-end and it’s a multi-billion dollar public company. So it’s one of the biggest successes of the last decade. So that’s an example of a middleware API, specifically focused on telephony applications. And WhatsApp is built a top Twilio. So WhatsApp is all of the telephony features like SMS and voice calls and all that is part by Twilio, but WhatsApp has a retail consumer bed. It’s not really meant for developers. That’s an example where there’s really like an ecosystem there where you can have multibillion-dollar companies on the middleware layer and then on the application layer. So I think the same thing is going to happen here with the index inquiry layer and the applications on top.
That’s awesome. Yeah in the past life, I loved Twilio. I wasn’t able to cover it, but loved following it. Used to cover the telco side, but that’s an awesome comparison. I guess the other question is, the graph is solely focused, I guess, today on Ethereum. I’m not going to say I know their plans because I don’t offhand that I’m not really too up to speed there. But do you think that they have plans to expand beyond Ethereum and even if they do, would that impact anything?
They have expanded to other ecosystems. If you see their pancake swap analytics site, that is using the sub graph under the hood. But they’re having some challenges. I’m not here to dish on the graph. They have their own app and they’re charting their own course. So the multi chain future is a reality. I’m not talking about what’s going on in this space.
Let’s go back to the traditional world. My experience comes from the database world. And in the database world, you literally have over 600 databases for different use cases. There’s a site called dbdb.io. So it’s a database of databases and it literally has 600 databases. Yo you have databases for five CS? You have databases for graphs, you have key value stores. You have just regular relational databases. You have a no SQL databases.
The world is very diverse and you cannot have a one size fits all kind of solution for a tool out there. And I think blockchains are the same. So the multi chain future is a given. we are perfectly positioned for that because our unified API, you literally just change one channel, one character, and it supports all of the other blockchains. So with the graph going multi chain would that impact us? I would say, not really because you still have to write those sub grabs. You still have to sync the sub graph. You still have all of those core issues that you have with Ethereum. Yeah, it doesn’t really come into play for us.
Makes sense. Totally does. I guess the other questions we generally have, whenever we look at a project I have to play the dumb play coaster, even though we know the story. It’s just like on attack factors. How hard would it be to hack Covalent to mess up the data, because that has second order implications for anybody trying to mess with any applications that use or leverage Covalent. How is the architecture of Covalent built to protect against, I guess, economically incentivized attackers or those that have unlimited money, anybody can add anything, but what are the plans there or what is the current architecture to prevent against that?
This is where the decentralized network comes into play. So for the past couple of years, Covalent has been a simpler solution. We started as a SAS product and we became profitable as a firm because we were bootstrapped. It was important for us to focus on revenue generating activities. And that’s just the reality of the bare market and not having access to venture capital. So that is the path that we took and once the company became profitable and then the market turn and people started to understand products like Covalent. We were able to scale using venture capital.
Now, there are definitely limits to how big Covalent can become as a centralized player. If you want to make a Covalent as a public good, if you want to make it completely… like make it usable by everyone in the ecosystem, become a mainstay of the crypto blockchain ecosystem, it has to be decentralized. And so we’ve been building a decentralized version of Covalent over the last year. So we have a mainnet that’s running. We have the proofs that are being built.
So essentially what we’ve done, is we’ve taken this architecture of the indexing nodes, the storage layer, which is the Covalent database, and then the query API, the Covalent API, we’ve taken that and we are starting to decentralize that with our partners. So we’ve recruited four validators to be our initial set. We’re working closely with them to make sure it works and it scales.
So from a customer standpoint, nothing is going to change. They’ll continue to use the REST API. They’ll continue to see the benefits of that unified API. Just magically now the APIs are going to be though cheap and they’re going to be super fast. From our technology standpoint, every single data that’s being written to the Covalent database is going to be snapshotted because it’s going to be a proof of stake and they have to put up a stake in order to participate in the network.
Makes sense. What’s the end goal for you on the decentralization side? I guess of Covalent.
I would say Covalent should be a public good. It should be something that anyone can go in and participate, can query data out of it without talking to Covalent, the company, the founders, the Genesis team, the community, it should be as simple as UniSwap. You don’t have to ask anyone’s permission to list your token. I mean, that’s really where this gets very exciting. If you want to get your token listed on Binance or Coinbase there is this huge process that you have to go through. You have to go through all the legal stuff. You have to go through all the compliance stuff. There’s a lot of work that you have to do. Sometimes you even have a pretty crazy exchange listing fees. With UniSwap literally you need to just go out there and list your token and create an exchange it’s truly permissionless. So I think that’s one of the core things that we’re going after.
The second thing, a second question I’d like to ask projects is why do you want to decentralize? And usually it comes down to taking out the red seekers or removing a single point of failure or making it like censorship residents are permissionless. For us, the resiliency is extremely, extremely important.
One of the challenges with Covalent architecture is that we have this giant database, which is terabytes and billions of rows of data. And that’s going to be a natural scaling bottleneck for us. So by de-centralizing it, it’s no longer a single point of failure, it’s actually going to be truly resilient. It’s almost going to be as good as Ethereum itself. Ethereum has had no downtime in the last, I would say four or five years. And we want Covalent to be as robust and as resilient as that. And that means removing that single point of failure, which is Covalent in the company. So that’s really what our end goal is with the project.
That’s pretty cool. I haven’t seen, I mean, they’re out there. But it’s really hard for me to find an example of like a traditional company that went to SAS route and is now decentralizing. One of our portfolio companies that I’m a huge fan of, Tokemak and Fractal, they had a traditional market making business that they’re decentralizing over time. That switch is just so different in the mind of a founder and the focus, just the internal culture and everything. How hard has that change been for you, or is that something that was always part of the plan?
It has been a very difficult change. But the advantage we have is we scale the company to profitability as just two people. Literally, this time last year, we were two people, just the two founders. So my other co-founder built the first Bitcoin exchange in Canada, a long time ago. So we’ve been in the space and the database and the blockchain space for awhile. And so I think it was easy for us to switch because we didn’t have any of the baggage. We literally just had these enterprise clients who paid us money, and then there’s this just this contractual agreement. We didn’t really have this ocean of DAPs using us for free or any of that stuff.
So for us, we were able to build from the ground up with this new vision in place. And so this is why we have all of the community engagement programs and we’ve been rebuilding some of the portions of the stack within the ethos of a decentralized networks.
I would say it’s still not clear if you can build something completely in the open from day one. And an example of business UniSwap. UniSwap just works behind the scenes for six months to a year. And then they drop something magical after that period. Unlike SushiSwap where they do all of the development in the open. So I think there’s approaches… both approaches can work. This is the route that we’ve taken because that’s just how we started the project.
That’s awesome. No. It’s not easy internally to make that switch. Kudos to you guys. I guess just switching gears a little bit and just to close out, how much traction does Covalent have right now? How many projects, are there any metrics you can share on the amount of Inez transaction you guys have or price fees? Or… Anything you can share on the indexing or uptake side, it’d be great to kind of drive this home for people that are thinking of using Covalent.
Sure. So we have over 150 projects building on Covalent. So all the big players, if you were to use a coin gecko, a lot of their pages are powered by Covalent. CoinMarketCap, it’s the same. Zarian, lot of their Binance marching and Polygon data comes from Covalent. 0x, the macho product, a lot of their stuff comes from Covalent. Balancer. The list goes on. In the NFT space where again, pretty big chain guardians, ether mourn, Tara Virtua, so on. Yeah, I think at this point it’s just very hard to keep up. We literally get 50 or 60 new sign-ups every day by developers. We also run these massive hackathons that engages developers.
We are able to push upwards of 500 requests per second sustained. That’s like billions of queries every month. We don’t really keep track of the query volume per se, because I think that’s just… I think it’s a bad metric. All of this is going to be on chain. So anyone can pull up the traction metrics with due course of time. But I would say the product is completely free to use. You can literally go sign up for an API key and start using the product. Usually we the tutorials and the onboarding guides, and you can ship like a wallet application within 60 minutes. That’s really what our goal is.
So yeah. We have some amazing players. Lots of projects are now starting to include Covalent as part of their building roadmap rather than bolting on Covalent towards the end. So that’s pretty exciting to see. So we have some pretty major projects that are going live with us, which we’ll announce in due course
That’s awesome, Ganesh. I’d be remiss not to ask about the token a bit more. I know we covered it a little bit, but you guys had your sale on CoinList. What are the long-term plans for the Covalent query token? And I guess, has that play into your vision of a more decentralized version of Covalent?
Absolutely. We’ve taken a unique approach to the Covalent token. So what they’ve done is, the Covalent token is not a payment token, which means that customers do not require the token to utilize the system. I think the payment token use case is a 2017 era hangover, which doesn’t really work. Because you don’t want to have these customers exposed to the volatility to the token itself a day like today where there was a 40% drop and they find that they can consume only 40% less of the service is just a bummer. So we don’t want to have that. Enterprises definitely want to budget the use of their service so all the payment is going to be done in stable coin. So that’s on the customer usage side.
And what happens in the smart contract is that there’s going to be a market buy off the stable coin into the Covalent token and in the Covalent token is going to be distributed to the network based on the amount of work that they do for indexing and query. So that’s really how the token is going to circulate. Because the token is fixed supply, there’s no inflation, which means that as more and more query volume picks up, more and more revenue accrues to the system. That’s how token value accrues to the network itself.
[crosstalk 00:39:10] That’s awesome.
In terms of the settlement, [crosstalk 00:39:14] I just want to say something about the settlement. So the token itself is a regular ERC-20 contract, so there’s nothing special about it, and it’s going to live on the Ethereum minute. Again, nothing magical there. But the settlement is we’ve picked Moonbeam, which is a Polkadot Pair Chain to do the settlement. So these queries are micro-transactions. So they’re going to be paying per query, just like how they would play per API call. But Ethereum is too slow to settle these micro-transactions. So after a pretty comprehensive due diligence, we’ve even written a blog post about it, talking to 12 different blockchains. Getting the pros and cons, not just from a technical perspective, but also from a go to market perspective. We’ve chosen upon Moonbeam from the Polkadot ecosystem. So the Covalent network is going to settle onto the Moonbeam network, but the balances will be snapshotted to the Ethereum mainnet. Almost like how you have like a Matic token on the mainnet, and then it’s snapshotted it to the side chain and then it’s snapshotted back every epoch as a checkpoint. So it’s almost the same kind of technology.
Awesome. And what are the security concerns, I guess, with using Moonbeam essentially as a side chain? Are there any risks or economic attack factors there?
So definitely it relies on the security of Moonbeam to keep the Covalent network secure. But this is not a payment network it’s a query network. It’s a data network. In theory what you can do is you can hack the Moonbeam network and then make sure that the answers that you get from the Covalent network are falsified, but that’s the attack vector here.
Awesome. No. It’s a interesting architecture. Ganesh, where can people learn more about Covalent? And I guess where’s the best place to send developers from the traditional world for the crypto world to use a Covalent hopefully ran up to listen to this pod?
Absolutely. So we have two paths to engage with the community and the project. Covalenthq.com is the primary website. So C-O-V-A-L-E-N-T-H-Q.com. And the two paths is one for developers. So you can go sign up for a free API key, user product from the browser, and then build your wallet, build your taxation tool, whatever that use case is. So this is one way to engage with a product. The second way to engage is what is known as the Alchemists program. So this is our growth and leadership program.
We have a few thousand people who are Alchemists as part of the Covalent community. And so these Alchemists they do developer augmentation, they do global expansion. So every piece of content that we put out is translated into part, a dozen languages within half a day, that’s an example. And they help with all of our hackathons. So they’re part of our community. And so there’s a very vibrant ecosystem of these guys and participating in that. So definitely take a look at the Alchemist program that’s also available from the website, but those are the two major paths. And then the Alchemist is where you can become like a node holster and node staker. You have that dashboards for picking out once the token is live, the token is not live yet. Your yield and all that stuff. So these are the two major paths.
That’s awesome. Ganesh, I’ll definitely share all the links to that in the show notes and super excited to have you on again, we could go into a bunch of different routes here, really great that we have this kind of foundational episode down. We’re super amped to be investors with you guys, cap that as a disclosure here. We’ll definitely have you on again soon.
Thanks, Tom. Really enjoyed this.