New Dawn: Staking Migration Progress Report
Quick Recap
As part of Covalent Network’s strategic initiative, "The New Dawn," a significant milestone has been reached with 75% of the network upgrades and prep work completed to unlock the deployment of the Ethereum Wayback Machine (EWM). The newly deployed staking contract on Ethereum is now operational and open for both delegators and operators. This migration back to Ethereum represents a pivotal moment as the network continues to scale and decentralize with the onboarding of more operators that later form the bedrock of EWM Long-Term Data Availability Infrastructure. For a deeper dive into the migration rationale and the process called The New Dawn, please revisit this detailed blog on the subject.
Why Migrate Back to Ethereum?
For context, the decision to use Moonbeam pre-dated the existence of today’s rollup ecosystem and as such it was state-of-the-art, however, this unexpectedly introduced a disincentive to stake or run any of the node operator infrastructure. As such, the decision to migrate staking from Moonbeam back to Ethereum was driven by several reasons, each helping to create better-aligned network incentives:
Removes the Need for Two Gas Tokens: The migration of staking operations to Ethereum eliminates the requirement for both GLMR and ETH for gas operations, which were necessary across Moonbeam and Ethereum platforms. This simplifies the overall user experience for CQT holders and network operators.
Improved User Experience (UX): By consolidating staking operations on Ethereum, it significantly reduce the interaction complexity for new and existing stakers.
Enables Liquid Staking: The migration leverages Ethereum’s mature ecosystem, which supports a variety of liquid staking opportunities currently unavailable on Moonbeam.
Infrastructure Expansion for Rollups: By migrating to Ethereum, Covalent enhances the ability to support rollups, crucial for scaling Ethereum's infrastructure. This transition facilitates the adoption of block specimen infrastructure, which is vital for demand-side use cases that require structured, Long-Term Data Availability, such as AI. Ultimately, this positions the Ethereum Wayback Machine to serve as a robust and performant structured data infrastructure for rollups.
Security Audits
Covalent would like to extend a warm thank you to the network’s audit providers. Also to share that what was deployed was what was covered within the audit scope.
Quantstamp: Completed a thorough audit, all high-severity vulnerabilities are resolved, and medium-severity vulnerabilities are fully addressed.
Sherlock: Confirmed the absence of high-severity vulnerabilities, and medium-severity vulnerabilities are fully addressed.
Incentivizing Stakers & Delegators
The objective beyond a successful migration is to achieve a 20% staking ratio of the CQT supply, which translates to 200M CQT staked. This is to target a stabilized APY for stakers at a healthy rate of 12%, while almost doubling network decentralization. This corresponds to a daily emission rate of approximately 65,750 CQT. Notably, pre-migration there remained a substantial reserve from the security budget—from a more conservative emissions schedule relative to the budget—ensuring that the Covalent Network’s emission spending had room for growth and to remain sustainable within the 8% total supply initially allocated for the four-year bootstrapping period.
Progress Update
Current Staking Levels: Approximately 9% of the CQT supply is currently staked, yielding an APY of about 30%. Covalent has lots of strategies to reach the target of 20% CQT staked, The New Dawn is only the beginning.
Expanding Operators on the Covalent Network
Covalent is committed to increasing the robustness and decentralization of the Covalent Network. The current target is to expand the number of Covalent operators—including Block Specimen Producers, Block Result Producers and the Covalent Foundation’s Query Node Operator—to 40. This expansion not only enhances network security but also distributes governance and operational responsibilities across a broader spectrum of participants. By enlarging the operator base, Covalent ensures that the network and later the EWM remains resilient against centralization risks and is better positioned to handle increased blob data as more and more rollups come online and the demand for Long-Term Data Availability infrastructure rises—Ethereum’s push towards the Purge isn’t far away. Each new operator brings unique strengths and regional diversity, contributing to a more robust and inclusive Covalent Network.
Progress Update
Decentralization Efforts: Covalent has increased network decentralization by 23%, with 26 existing operators having successfully migrated and 5 new operators joining. The addition of Thunderhead, Corthos, Dapp Looker, Restake, and All Nodes signifies the commitment to expanding the security of the Covalent Network.
Moonbeam Unstaking Progress
As part of this transition, Covalent continues to assist CQT token holders through the unstaking process from Moonbeam. Currently on Moonbeam, approximately 14.2M CQT remains staked by delegators, and 1.2M CQT remains staked by 4 operators, 2 of which are now deprecated. These figures are expected to steadily decline to zero as more stakers complete their migration to stake on Ethereum. Covalent is providing guidance with this process. The aim is to ensure that every participant can smoothly transition without disruption to their operational capabilities or staking returns.
Reminder, that staking or delegating your stake on Moonbeam yields 0% APY, there is no incentive to continue to stake on Moonbeam. Details below.
Progress Towards The Ethereum Wayback Machine
These initiatives are all geared towards the upcoming test-net launch of the Ethereum Wayback Machine, slated for later in Q4. Following the recent successful migration of staking operations, Covalent plans to transition the ProofChain Contract from Moonbeam to a new, highly concurrent event streaming system within the Ethereum Wayback Machine (EWM). This move will effectively scale the aggregation of proofs derived from offchain operator computations. This is essential for providing performant, verified, structured historical on-chain data and infrastructure.
Encourage Others to Migrate
Please help spread the word by sharing the following image and information:
Action Steps for the Community
“If you have not yet transferred your CQT from Moonbeam to Ethereum, there is no incentive to remain staked on Moonbeam and now is the ideal time to migrate your stake to take advantage of the temporarily high APY.”
Go to the Staking Dashboard
Connect your wallet
Click “Migrate Now”
Follow the onscreen instructions
Important Notes
Premature Unstakers: Delegators who prematurely attempted to unstake before the migration was reported successful—where the cooldown period on Moonbeam wasn't yet set to zero—can now unstake, bridge and stake their delegated CQT on Ethereum.
Stake the CQT that got flagged with a cooldown period into the Covalent Foundation Operator on Moonbeam—which accepts delegation but yields 0 CQT emissions.
Then, unstake the CQT from the Covalent Foundation Operator on Moonbeam where the cooldown period should now show 0.
Continue with the bridging and staking process explained above and in the onscreen instructions outlined in the Staking Dashboard shown after you connect your wallet.
Daily Bridge Limit: The Wormhole bridge has a daily transfer limit of $5M for all assets bridged through Wormhole to Moonbeam. More information is available on the Wormhole Dashboard.
Opportunities for New Stakers: The delegation ceiling has not been reached, offering new stakers ample opportunity to join and benefit from the projected APY.
This migration marks a crucial step in strengthening the Covalent Network by leveraging Ethereum’s proven capabilities, ensuring a more secure, efficient, and scalable infrastructure for users. Covalent appreciates your continued support and active participation in this transformative phase.
About Covalent:
Covalent provides the industry-leading Unified API bringing visibility to billions of Web3 data points. Developers and analysts use Covalent to build exciting multi-chain applications like crypto wallets, NFT galleries, and investor dashboard tools utilizing data from 232+ blockchains. Covalent is trusted by a community of 40,000+ developers and powers data for 5,000+ applications, including 0x, Rainbow Wallet, NFTX, Guild.xyz, StakeKit many others.