The Middleware Space & Covalent
Applications that do not provide value to the users and are located between business-oriented application software and system software called middleware.
The overall role of middleware is to provide an environment for the operation and development of the application software at its upper level and to help users develop and integrate complex application software flexibly and efficiently.
Traditional middleware Web2 is a large category in basic software and a concept of traditional distributed systems. It is not strictly defined, and there is no consensus reached on which middleware belongs to the blockchain. Therefore, we define the application that provides functions and services for DApp as the middleware of the blockchain.
Blockchains are increasingly becoming data-rich environments and most DeFi applications are driven by data through data generation activities on-chain (smart contract events and calls) and through dApps bringing external data on-chain via oracles. All DApps that show blockchain data in their UIs require indexed data to reference the information they need and create good user experiences.
We have already seen the creation of several stand-alone applications that either function completely on-chain, or use oracles to enhance their ability to produce value for users. In my opinion, smart contract technology has only scratched the surface of its potential due to a lack of decentralized middleware infrastructure. This is rapidly changing, as the tools available to developers outside of the base layer are growing, including The Covalent for indexing and querying data, Chainlink for oracles, Ceramic for storing data, LivePeer for video streaming and many more. Together, these middleware protocols will make developing a smart contract substantially easier, while providing access to more functionality.
There are the competitive advantages of Covalent protocol in the middleware space against peers like The Graph are:
Covalent continuously indexes every single block, transaction, wallet balance and position. Billions of rows of data are immediately available for your project via an API without having to write any code:
Built for Enterprises available to All
Covalent’s APIs are built from the ground up to support a diverse, sophisticated and demanding customer-base with billions of dollars at stake. Covalent powers all the major wallets for taxes, forensics and other emergent use cases.
Covalent already indexes and has customers on 7 different blockchain networks, including Matic and others (to be announced soon). One unified API for all blockchains.
Covalent has multiple paying customers and reached profitability in 2020. As the industry starts to understand the value of Covalent, revenue will also scale to support the token economics.
The bulk of the use-cases are as-of-yet unknown, and we are constantly surprised at the multitude of ways developers and our partners use the data.
- Taxes: Every single DeFi action is a taxable event and having access to this data helps firms be compliant. If a trader uses Coinbase, they can quickly download a CSV of their trade data — besides Covalent, there is no such thing for a decentralized exchange like Uniswap or 1inch.
- Wallets: There are over 200,000 ERC20 tokens on Ethereum and this number is growing exponentially due to the composability of DeFi protocols. Wallets such as Zerion use Covalent to show real-time and historical balances, positions and portfolio value for all of their assets.
- NFT Dashboards: Investor tools to show price trends, liquidity and ROI of collectibles. Products like NFTX and Chainguardians use these Covalent features heavily to educate their users better.
Covalent leverages big-data technologies to create meaning from hundreds of billions of data points, delivering actionable insights to investors and allowing developers to allocate resources to higher-utility goals within their organization. Instead of pain-stakingly sourcing data from a small handful of chains, Covalent aggregates information from across dozens of sources including nodes, chains, and data feed. The Covalent API then sources end-users with individualized data by wallet, including current and historical investment performance across all types of digital assets. Most importantly, Covalent returns this data in a rapid and consistent manner, incorporating all relevant data within one API interface.
To learn more about Covalent, visit covalenthq.com