This business in the blockchain space has created a separate market category for itself with its data analytics solution in blockchain.
Over the last two years, the rate of innovation in the DLT space has considerably sped up. While decentralized finance was always a discussion point in making a case for blockchain, it truly came into its own in early 2019. The same is happening with NFTs now.
The DLT space, all of a sudden started generating a tremendous amount of data. The Ethereum blockchain, for instance, went from 0 to 4 TB in less than five years, and is growing exponentially because of the millions of users interacting with DeFi and NFT products. This is only going to compound as these ecosystems emerge on other chains.
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Furthermore, the emergence of popular base chains also meant the emergence of these ecosystems outside of Ethereum. This makes the need for data analysis all the more important.
Covalent, a Vancouver-based blockchain data infrastructure company provides a unified API to bring full transparency and visibility to assets across all blockchain networks.
Cryptocurrencies were treated with suspicion when Bitcoin first came in 2009, but over time, cryptocurrency has managed to gain popularity and was able to maintain its presence. As of 2021, there are 8000+ cryptocurrencies in existence, according to Forbes. Given the daily transfer of digital assets and transactions on different crypto exchanges, one can only imagine the amount of data generated.
The Tech Panda spoke to the Ganesh Swami, Founder and CEO of Covalent, about how access to data in blockchains can create ease for cryptocurrency users.
Ganesh Swami
Access to data, in all its form, is a highly effective and efficient feature that will increase the transparency of various blockchain and DeFi protocols
“Despite the proliferation of digital assets on the blockchain, granular and historical blockchain data is impossible to access by anyone but the most sophisticated and technically talented. Querying blockchains directly is time-consuming and compute-intensive, while additionally refining and manipulating the data adds another layer of complexity,” he says, explaining the problem.
He further explains that current solutions require developer hours to write additional code to query granular and historical blockchain data. Developers need to be retrained and understand the complex tools (for example, how to write a subgraph), which can take weeks or months to implement.
“This is expensive to adopt and slows down the mainstream adoption of blockchain technologies,” he adds.
Covalent is committed to creating the simplest solution possible for developers, no extra code needed, just one API call.
“Access to data, in all its form, is a highly effective and efficient feature that will increase the transparency of various blockchain and DeFi protocols. With such a vast case of in-depth accessibility, Covalent aims to facilitate mainstream adoption of crypto-based products effectively,” he says.
What They Do
Blockchain and crypto data can provide valuable insights into a business and its operations.
“As all the transactions are recorded in real-time, they are 100% reliable, and businesses can derive valuable insights from accessing the data and calculating their desirable metrics,” says Swami.
The most expected use case of blockchain and crypto data would be in predictive analysis.
“Enterprises can monitor behaviours, trends, customer preferences, changes in the business environment, etc., by accessing this data and using it diligently rather than letting it go to waste,” he adds.
This is where the Covalent API comes in.
“Our aim is to help our users analyze available data to derive results that will further enable them to formulate useful strategies. We are the richest blockchain data hub having 25 billion transactions indexed including every transaction since genesis for six blockchains,” he says proudly.
Recently, the company has launched their decentralized Data Query Network, which will now enable any user, token-holder or not, to query data across Ethereum, Polygon, Binance, etc., to gain insights for their ecosystem.
Enterprises can monitor behaviours, trends, customer preferences, changes in the business environment, etc., by accessing this data and using it diligently rather than letting it go to waste
Covalent makes mainstream blockchain-based product adoption easier by enabling users to analyze blockchain data without having to invest considerable resources in trying to make sense of highly unstructured and unstandardized data.
As it stands today, Covalent has over 100 customers and has indexed eight full blockchains. A project that started as a hackathon participant with a team of two today is a formidable force of 25 members, who are experts from the traditional database technologies, crypto startup veterans, marketing, and community leaders.
Crypto Data as a Break-Out Category
Blockchain technology has been applauded as a major breakthrough in the fintech space. With its innovations, it has already found use in global industries such as shipping, finance, healthcare, etc. Cryptocurrencies based on blockchain technology have the potential to revolutionize how financing works in the coming years. In April of 2021, cryptocurrency market value had surged to an all-time high of US$2 trillion, driven by a rally in Ether.
“Even though cryptocurrencies are infamous for their volatility, people are becoming more open to them as blockchain is becoming increasingly accessible. With this in mind, we are moving towards keeping the accessibility alive and useful to enable people who have already invested a greater hand in utilizing the data that has garnered the attention of big businesses and governments,” says Swami.
The Right Access to Data
As the Covalent API can be integrated by wallets and exchange platforms, users can easily access historical as well as current data and analyze it. With this kind of access to data, Swami says Covalent plans to help navigate the uncertainties in crypto regulations.
“Given that we have already indexed eight public blockchains and hope to end 2021 with the number being 12, we can become a one-stop data hub for individuals, institutions, and enterprises to extract data. This may change the perspective regarding the crypto market. But it would be difficult to say if the uncertainty regarding cryptocurrencies may be solved completely by us,”
Innovations Galore
Cryptocurrencies are considered exceptionally volatile as they are traded on various exchanges rather than a central exchange. Nevertheless, the market is saturated with the first ten highest currencies, Bitcoin, Ethereum, Ripple, Tether, etc., holding nearly 88% of the total cryptocurrency market value. As the popularity and usability of cryptocurrencies increase, we can expect the market to become less volatile.
The potential of this technology is immense, and we have seen how in a matter of months, innovations like Web3, NFTs, and DeFi have taken the world by storm. With the world changing as it is, it would be prudent to encourage innovations to optimize our operations globally
Many central authorities are still on the fence regarding these currencies, but we have examples like Singapore and Japan who have realized the potential of these and have formulated policies to integrate them into their functioning.
“The potential of this technology is immense, and we have seen how in a matter of months, innovations like Web3, NFTs, and DeFi have taken the world by storm. With the world changing as it is, it would be prudent to encourage innovations to optimize our operations globally,” Swami says.
India as a Market for Blockchain Adoption
The fintech landscape globally and in India has seen a massive disruption with the emergence of innovative technology such as digital payments, UPIs, and blockchain technology. This revolution has mostly been borne by tech startups that have been welcomed more in the past few years.
“They have been the frontrunners of the blockchain ecosystem in India and with such talent present, the Indian market has been the frontrunner for blockchain growth with companies looking for investing in Indian startups,” Swami says.
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India has become a hub for blockchain enthusiasts, encouraged by the government bodies that have shown keen interest to understand the implications of this technology to build a more decentralized ecosystem. There have already been significant advancements with regards to blockchain technology in India with southern states like Andhra Pradesh and Kerala encouraging the ecosystem.
“The Indian fintech ecosystem has started to integrate blockchain in many of its projects related to finance where tech startups bring in fresh perspectives. The startup ecosystem has seen a great jump in recent years and many of them have decided to capitalize on the potential of blockchain tech,” he concludes.
