State of Covalent Q2 2024

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Key Insights

Performance Analysis

Block specimens produced in Q2 grew 20% QoQ and 32% YoY. Because block specimens represent data that could be reconstructed to form a blockchain’s history, the number of block specimens produced by a protocol increases as more chains are covered. Last quarter

Covalent Labs was the only Block Result Producer for the protocol until mid-Q3 2023 when it decentralized the role to shortlisted operators. The number of block results produced in Q2 stayed relatively steady QoQ despite a rise in block specimens. This could indicate a need for Covalent to scale the number of Block Result Producers, given that five BSPs were added as one BRP became inactive in Q3.

With a 27% increase in the CQT circulating supply, Covalent saw the raw number of staked CQT grow by 5.4%. At the start of Q2, the percentage of CQT staked compared to the circulating supply dropped to roughly 10%. This drop was likely a result of both CQT emissions and the start of Covalent’s incentivization initiative to encourage users to stake on Ethereum as opposed to Moonbeam. By the end of the quarter, Covalent had successfully migrated

Covalent increased its network operator set by adding

Network operator rewards in USD grew 83% QoQ to $990,000. Despite a 27% drop in the average CQT price, this growth was largely driven by the 184% jump in reward emissions in CQT terms. Though Covalent has a yearly reward budget

The CQT market cap fell 34% QoQ despite circulating supply rising 27% QoQ. This fall in market cap is largely due to CQT’s 48% QoQ price decline. CQT likely experienced more sell pressure from a number of factors including the increase in circulating supply and additional operator rewards, uncertainty in the rebrand and token migration, and/or general market decline in Q2.

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