- The Covalent Recovery Plan presents an alternative to Nomad's Recovery plan and aims to make operators and all delegators of the Covalent Network 100% whole following the hack.
- The Covalent Network will move away from Nomad to Wormhole as the bridge of choice.
- As a result, the Covalent Network will be secured by WholeCQT on Moonbeam, which will be fully backed on Ethereum by Covalent Foundation.
- Anyone with madCQT on Moonbeam, either staked or unstaked, has a path to fully recover their CQT with minimum action required.
Covalent is happy to announce the Covalent Recovery Plan, a solution that makes operators and all delegators of the Covalent Network who were affected by the Nomad Hack 100% whole.
The Nomad Bridge hack was an unfortunate event of 2022, affecting a few hundred members of the Covalent Network operator and delegator community and 11.3% of the CQT supply. However, the Covalent Recovery Plan is the conclusion to this chapter as the community moves into 2023.
Wormhole Bridge and Whole CQT
The Covalent Recovery Plan involves migrating the staking module of the Covalent Network that is currently running on Nomad CQT (madCQT on Moonbeam - which is only partially backed by CQT on Ethereum) to WormholeCQT (WholeCQT on Moonbeam, which will be fully backed on Ethereum by Covalent Foundation). This requires a move away from Nomad to Wormhole, the best alternative to Moonbeam at this time.
Once the migration is complete, Whole CQT will be the asset securing the Covalent Network, and staking and rewards will continue as normal using WholeCQT. If anyone wishes to unstake at this point, they can do so pending the cooldown period, and the unstaked Whole CQT can be redeemed 1:1 for CQT once moved back to Ethereum.
Top of mind when making this decision was making the Covalent community whole. With this migration, Covalent can achieve just that. This solution makes whole the victims of the hack while keeping the Network running on Moonbeam and presents a new offramp to Ethereum.
To confirm, even though only approximately 1/3rd of the CQT hacked from the Nomad bridge is recovered, the balance of the hacked CQT will effectively be underwritten by Covalent Foundation through a network migration from madCQT to WholeCQT.
The target date for the migration is on or around December 15; as audits can take longer than expected, there could be a delay of a few weeks.
Migrating To WholeCQT
To claim WholeCQT, there are two possible scenarios.
First, no action is required for staked madCQT and unredeemed rewards on the Covalent Network. Leave the madCQT in the Covalent Network contract till the migration date on or around December 15. Following the migration, your account will show the same amount of CQT (staked and unredeemed rewards) as before - except it will now be WholeCQT and not madCQT. You will continue to earn WholeCQT on the Covalent Network following the migration as a reward for helping to secure the Network. If you wish to unstake and/or redeem your rewards, you will be able to do so as normal and if you wish to bridge back your WholeCQT to Ethereum you can do so via Wormhole with each Whole CQT fully backed by CQT on Ethereum.
If there are any objections, each delegator with madCQT staked with a Covalent Network Operator has full agency to unstake their CQT and redeem their rewards before the migration date (on or around December 15) and bridge their madCQT back via Nomad, complete KYC/KYB and recover approx. ⅓ of their CQT via Nomad’s NFT-based recovery process.
For those with unstaked madCQT on Moonbeam, the process is similar to the above with one exception. If you wish to benefit from the Covalent Network Recovery plan, you can do so by staking your madCQT before the migration date, December 15th. To accommodate this demand, the Covalent Network will increase its capacity for staking madCQT. Once staked, the process is the same as the above, with the participant receiving WholeCQT instead of madCQT via the Covalent Network migration and being able to claim 100% of their original CQT once the Whole CQT is bridged back via Wormhole.
Please note an operator nor a delegator cannot do both. If you claim back madCQT via Nomad, you cannot benefit from Covalent’s proposed solution. Similarly, if you accept Covalent’s proposed solution by keeping your madCQT in the staking contract, once you receive WholeCQT, you will transfer any claim to recovered CQT from the Nomad Hack to Covalent, and you will forfeit all further claims with regards to recovered funds from the Hack.
A Thanks to the Covalent Community
Covalent Foundation thanks the Community for their steadfast support of the long-term vision of Covalent to empower the pioneers of tomorrow with robust data infrastructure and the richest datasets. As we move into 2023, let's continue to build and realise the vision of Web3.