AMA Recap with Covalent HQ

On Nov 26, we had the pleasure of having the CEO of Covalent HQ, Ganesh Swami, along with our CEO, Denko Mancheski, join the Reef community for an insightful and informative AMA.

The AMA focused on Covalent’s partnership with Reef Finance, their work and plans ahead, DeFi, our tokens and much more.

SUMMARY

Reef Finance had started working in collaboration with Covalent, one of the richest blockchain data on the internet, a month back.

Covalent currently provides 25 billion rich transactions indexed including every transaction since genesis and 30,000+ price feeds for fiat and crypto pairs.

Covalent provides a unified API to bring full transparency and visibility to assets across all blockchain networks and we will use this API to provide Reef users with more advanced portfolio analytics.

INTRODUCTION

Admin — Hello Ganesh and Denko

Happy to have you both for this AMA session, very excited about it

Denko Mancheski — Happy to do an AMA with Ganesh from Covalent!

Ganesh Swami — Same here! Reef is an exciting project.

Admin — (To Ganesh) Before we start the AMA, could you please introduce yourself and tell us a little about yourself, how did you get into Crypto, how you started with Covalent?

Ganesh Swami — I’m a physicist by training and have been in the data space for over a decade. My entry into crypto was quite accidental, to be honest. I participated in a hackathon and left with the winning prize and decided to start a company around that. That hack is today Covalent.

Covalent starts with the foresight that transparency is crucial for this industry to reach mass adoption and fully realize the potential of crypto. That clarity and futuristic outlook gave us the strength to continue grinding through the bear market.

Admin — (To Ganesh) Covalent is described as the data powering the DeFi economy. How would you simplify and describe this for the Reef Community?

Ganesh Swami — Covalent provides a unified API to pull out critical DeFi data locked up on the Blockchain. Blockchain data is completely open and public (everything can be seen on Etherscan, for example) — but we pull out data that’s not even visible on Etherscan.

This data can then be used as raw materials to return balances, positions, transaction activity with a wide variety of use-cases: wallets, exchanges, custodians, validators, etc.

Admin — (To Ganesh) Could you enlighten a little about the milestones you’ve reach so far with Covalent?

Ganesh Swami — We reached an inflection point in 2020. We started the year with 0 customers, no traction and just 2 team members. Then DeFi summer hit — we now have over 40 projects building on Covalent, became profitable and raised a sizable private round to build the future of data analytics. We have also been able to attract stellar talent to the project and we are now 15 people strong.

We have some exciting, exciting announcements to make in the coming weeks. Let’s say “cross-chain” and I’ll leave it at that.

Admin — Covalent aims to provide the richest and most robust data infrastructure for the entire blockchain ecosystem. What is your plan to achieve this?

Ganesh Swami — We have a fundamentally different architecture and philosophy when it comes to extract data from Blockchains.

First, most projects just scrape Blockchain data and show you blocks/transactions and other high-level stuff. That IMHO is not very useful.

Second, other projects also require an engineer to write custom code for extract. That again IMHO is not very scalable.

Covalent is the only project to my knowledge to re-execute every single blockchain transaction for the genesis block and capture all internal state data. This took a long time — about 8 months. As a result of this approach, our data is terabytes and billions of rows. Totally in the realm of BIG DATA.

Also, we have a sophisticated “no-code” approach of automatically understanding Blockchain data. As a result, most of our customers are non-technical and are still able to accomplish their data related tasks.

OUR PARTNERSHIP

Admin — (To Ganesh and Denko) It’s been over a month that Covalent and Reef have been partners. How has that been going so far and what else are you planning to ease user experience? Is there any plan to expand this partnership further?

Denko Mancheski — Reef is using certain data feed that Covalent provides. As you know we are further processing this data to extract metrics which we combine in order to derive risk levels for certain DeFi activities. Then the users get a proposed basket through the smart management component

So, Covalent is an important infrastructural component that we are utilizing in the background. We also have plans to expand this partnership even further and host different competitions to attract more data scientists in the crypto landscape

Ganesh Swami — Covalent is delighted to partner with Reef. From day one, we’ve been impressed by the caliber of their talent. There are only 3 teams that share a Slack channel with Covalent and Reef is one of them. Shows you how important this partnership is to us.

We see Reef as a critical, strategic partner in 2021 and beyond. On the marketing side, as data focused companies, we will be launching competitions in the future.

There’s a lot going on behind the scenes on the product side, so will definitely share that publically when the time’s right.

PROJECTS

Q by Telegram User @tuntun112 — Can Covalent be adopted by other crypto projects and by projects outside of Blockchain space as well? What kind of advantages does it offer, for example, financial institutions adopting the protocol?

Ganesh Swami — Yes, absolutely. Our eyes are set on the broader fintech landscape. We have some projects in the works to support crypto use-cases with zkProofs and such. Stay tuned for updated.

Q by Telegram User @Corrie_Dorf — According to crypto market capitalization aggregators, there are more than 5000 cryptocurrencies in existence today. And I feel 70% of them have no utility. So, can you tell me 3 good reasons that your project is here for the long run and has real utility that will increase demand of token in future?

Ganesh Swami — Yes, definitely. We are probably one of the few projects out there with actual paying customers and revenue. So, Covalent is already live and providing value TODAY. That will continue to the future.

Q by Telegram User @gunki2 — How Covalent successfully carries out a Transfer bridge conversion that enables me to transfer tokens across two different blockchains? What mechanisms do you utilize?

Ganesh Swami — We will publish a report on this. The bridge is on a spectrum of fully non-custodial and trustless to custodial and middle-party. Our solution will start somewhere in the middle and then progressively decentralize.

LIQUIDITY

Q by Telegram User @therowlingk2 — How do you get access to the liquidity of CEX and DEX, are there any negatives and positives in fixing the price of a token?

Denko Mancheski — I am not sure what do you mean by fixing the price of the token.

Regarding CEX liquidity, we believe that they will still have a big role hence why we want to integrate with them through integrations such as Binance Access and prime brokers

Q by Telegram User @lontoto — What exactly is impermanent loss? How does a liquidity provider encounter impermanent loss? What are the major factors that can influence the impermanent loss that a liquidity provider may experience?

Ganesh Swami — Complicated answer for a AMA. Please see https://coinmarketcap.com/alexandria/glossary/impermanent-loss

Q by Telegram User @jakithanthiien — What in particular can lead to a rise or fall of the APY? Is it just the big picture of the bull or bear market or are there other influencing factors?

Denko Mancheski — Depends about which DeFi activity we are talking about. Certain activities offer APY which is backed by utility (such as trading fees or in Reef’s case — providing utility to the user through our analytics + basket engine). Certain DeFi activities are definitely correlated with the market

RISK MANAGEMENT

Q by Telegram User @kemmy320 — Isn’t it a risk to manage many DeFi projects on a single platform and on a single blockchain? How to manage multiple DeFi features at the same time?

Denko Mancheski — We have a modular infrastructure which can be deployed separately. Currently, the multi-ecosystem access happens with direct integrations since the bridging mechanisms are still not at a point where we can unite everything on-chain.

Q by Telegram User @tuhayco — How will you prevent “copies” of tokens from being included for the purpose of defrauding users? Do you have a system to remove these tokens from the pool?

Ganesh Swami — Great question, and unfortunately no clear answer right now. I think the entire crypto ecosystem is grappling with this right now.

Q by Telegram User @sanjaymohit — If regulations change tomorrow, how to incorporate them into a tokenized security? How to comply with regulatory authorities in terms of KYC, DD and AML? How to enable dispute resolution mechanisms and enforce a transaction or reverse it?

Ganesh Swami — We are a data analytics provider and do not touch or move funds. So, I don’t think this applies to us specifically.

MARKET GROWTH

Q by Telegram User @kemmy320 — I see that Covalent website shows podcast which provides insights on various Cryptocurrency related topics. How do you decide which topics will be covered and how will you relate this to your token economics and build a big user base?

Ganesh Swami — Our focus is only on data — so all marketing related stuff is just on data. Our podcast, our competitions, etc. are only focused on this. If there’s anything data-related, that’s fair game

Q by Telegram User @gunki2 — How to become a validator in Covalent? What are the requirements to be eligible as validator? What are the benefits of being a validator in Covalent?

Ganesh Swami — We haven’t publically shared anything on this front. Please stay tuned.

Q by Telegram User @rahulamitt — Tell us about your plans for 2021, what are you currently working on, and are you going to expand the list of big exchanges?

Ganesh Swami — The big theme for 2021 is “cross-chain”.

We’ve reached the end of this AMA. We would like to thank everyone who participated in our AMA with Covalent. Please stay tuned for more such AMAs.

The first cross-chain DeFi operating system