Governance Proposal: Extend the Security Budget with Updated Buyback Stats of $1.4M of CXT in Q1
Along with aggressive buybacks in Q1, the Covalent Network proposes adjusting CXT reward emissions to execute a proactive network strategy that reflects the current market dynamics.
Covalent has executed $1.4M in CXT buybacks in Q1, increasing the runway for the security budget and replenishing its reserves. On top of this, this update is a proposal for critical steps to ensure the long-term sustainability of the protocol’s security budget. Updates include changes to the operator's list and airdrop news for EWM Light Client testnet participants.
Q1 2025 Buybacks: US$1.4M worth of CXT Purchased from the Market
In Q1 2025, Covalent used the revenue it generated to successfully execute US$1.4 million worth of CXT buybacks from the open market. This initiative is part of a larger change to the buyback model to strengthen the reserve strategy that underpins the broader Covalent ecosystem intent on powering AI Agent systems and LLMs with verifiable onchain data.
As a reminder, these buybacks are not a one-time event but part of an ongoing commitment to periodic CXT repurchases, aligned with protocol health and market dynamics.
Current Context
The Covalent Network is a living organism that grows and shrinks over time. In 2024, Covalent scaled up rewards with operator changes, max multiplier changes, and more, but the Covalent Network is now reaching a steady state before the next leg of growth; therefore, rewards need to be adjusted.
By adjusting emissions now, the Covalent Network is positioned to remain adaptable while preserving core incentives for staking participation.
Emissions Tuning Proposal
Covalent proposes reducing emissions to 65,753.4 CXT per Epoch (~8% APY for 300M CXT staked) to extend the security budget to potential future initiatives like the light client rewards. This adjustment reflects recent operator consolidation and supports long-term validator incentives. The APY is a floating rate, i.e., if less than 300M CXT staked, the APY will be higher.
Operator Updates
Chorus One is completing its offboarding process. Users staking with Chorus One should unstake from Chorus One and stake to any other operator of their choice. There will not be an unbonding period delay for restaking to another operator.
Bware Labs has been acquired and now operates under the Alchemy brand.
Testnet EWM Light Client Participant Airdrop Updates
Covalent is finalizing airdrop allocations for participants in the EWM Light Client testnet. This initiative recognizes the valuable contributions of early testers who helped validate the protocol’s potential light client infrastructure.
Eligible participants can expect rewards to be distributed in the second half of 2025.
Voting Process
Eligibility: All CXT token holders, including those staking, delegating, or holding CXT on Base, are eligible to vote.
How to Vote:
Navigate to the Snapshot page.
Connect your Ethereum wallet containing CXT.
Vote by signing a meta-transaction.
Quorum:
A minimum of 10M CXT voting weight is required to reach a quorum.
Duration:
Voting will be open for 3 days upon proposal launch.
