Covalent (CQT) reduces data availability costs and accelerates Layer2's expansion into Web3

Covalent Network (CQT) is powering the EVM Layer2 ecosystem through its single API and reducing the need for developers to deal with multiple data vendors. This initiative solves the fragmentation challenge in multi-chain environments, thereby significantly improving developer productivity.

Supporting 225 blockchains and over 240 million wallets through its unified API, Covalent Network (CQT) stands out as the premier decentralized data network in the blockchain space, used for DeFi, artificial intelligence and in many data-based applications. Covalent Network (CQT) actively indexes the entire state history of the Ethereum blockchain and 225 other chains, transforming this huge data into a standardized, interoperable format for developers to use through an enterprise-level unified API and multiple different formats .

The Ethereum blockchain is currently the second largest value chain in the world. As it continues to grow and develop, it faces increasingly severe scalability challenges. Ethereum has taken steps to address these issues in recent years through Rollups and other Layer 2 solutions, but new scalability challenges remain.

As the Ethereum ecosystem continues to expand, so does the need for faster and more economical transactions. The popularity of DeFi protocols and cross-chain bridges has made Ethereum face a certain level of challenges at its fundamental level. Let’s take a deeper look at some of the key challenges:

Key Challenges for Ethereum Blockchain Scalability

The decentralization of liquidity comes with its own set of challenges, including efficiency reduction, increased slippage, and limited liquidity pool depth. For users looking to make trades or transfers, they may face difficulties accessing the liquidity they need when liquidity is spread across multiple platforms. Especially when it comes to obtaining sufficient liquidity, users may encounter obstacles.

User experience bottlenecks often occur when using necessary layer 2 bridging protocols. These protocols can adversely affect overall ease of use by adding additional transaction steps, confirmation delays, and user learning curves.

As network usage increases, there may be some centralization tendencies, where a few large entities or nodes have significant influence or control in the network. In general, Rollups' orderers run the risk of centralization, which goes against the idea of ​​decentralization that Ethereum aims to maintain. Therefore, network security issues are particularly important and measures need to be taken to ensure that the decentralized nature of the network is not compromised.

High Gas Fees: With the emergence of more Layer2, a large amount of data will be added to the Ethereum network. When the network is congested, transaction fees—often called “gas fees”—can rise significantly. This high cost can impact users participating in Ethereum applications, especially during peak periods.

Covalent Network (CQT): Decentralized blockchain database and API

In response to the emergence of more and more Layer 2 solutions, Covalent Network (CQT) has taken proactive steps to ensure scalability within the EVM Layer2 ecosystem. The launch of its unified API effectively solves these inter-chain fragmentation challenges by eliminating the need for developers to switch between multiple providers. With the emergence of hyperlink structures formed by networks such as Optimism and Base, Covalent Network (CQT) maintains a state of readiness for this evolutionary stage.

In order to cope with the rising gas costs during the expansion of Ethereum, Ethereum plans to introduce Blob storage to reduce gas costs by temporarily publishing L2 Rollup data on the beacon chain. However, Covalent Network (CQT), through its “Ethereum Time Machine”, has strategically positioned itself to permanently index and provide a platform to access this critical data, providing a more sustainable and cost-effective solution for the Ethereum and Web3 ecosystems higher environment.

Covalent Network (CQT) is designed to ultimately provide self-service, enterprise-grade indexing and access options, and its scalability inherently holds unlimited opportunities to expand supply and demand across the network. This unique approach maintains the model of instant access to data by querying the unified Covalent Network (CQT) API, emphasizing Covalent Network (CQT)’s commitment to creating a decentralized and accessible ecosystem, as well as solving the problems of Ethereum and The promise of scalability issues in the blockchain’s impossible triangle for the broader ecosystem.

About Covalent Network (CQT)

Covalent Network (CQT) focuses on blockchain data availability and supports millions of users to build a new economy. Since its establishment, Covalent Network (CQT) continues to help developers, analysts, etc. provide comprehensive, real-time data on more than 200 chains.

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