We are currently undertaking a large-scale research effort to create better frameworks for token mechanics especially for web3 protocols in the hardware resource provisioning sector.
We have recently published part one, where we have compared emission schedules of various web3 networks, including of course Covalent. You can find the report here.
We wanted to share some additional data with the Covalent community though, that is not in the report.
First off, we have classified Covalent’s token rewards to be in the category of KPI-driven and constant emissions. The rewards program is still in the ramp up phase, but from what we know so far, the total rewards paid are depending on the number and type of node operators (so far it is just Block-specimen producers) as well as the amount of work, which makes it KPI-driven. If all those aspects are constant, so are the reward emissions.
Within that category there are currently also the following projects we analyzed:
In comparison to the other projects in this category, Covalent’s token reward emissions relative to the total supply are quite low (<0.1%) and rather flat (the spikes reflecting the claim events after the issues related to the Nomad hack).
Below chart shows the average (blue line) and the interquartile range (blue shaded) of the monthly token rewards of all Web3 infrastructure networks together with the projects of the KPI-driven and constant emissions category highlighted:
In line with the token rewards, those converted into dollar-values are also at the lower end of the category spectrum, averaging around 50k $ / month over the past year - see the chart here (could only upload one chart, so all other in that folder - sorry, new user here:).
Those trajectories were highly impacted by the 2021 bull market for most of the Web3 networks, but since rewards just started in May ‘22, Covalent is one of the few exceptions.
For Covalent it might actually be more relevant to compare it to the networks providing similar services versus comparing it to projects with similar token emissions - see the token rewards and the chart with dollar-values of Covalent and The Graph in the repo as well (see link at the bottom)
The Graph emits a constant rate of 3% annual inflation on total supply as rewards for node operators (Indexers) and delegates. The resulting level relative to an estimated total supply is ~0.2% per month, which is similar to the maximum Covalent envisions, i.e. 2% of total supply per year, which translates to ~0.17% / month.
The repo also has a chart showing the dollar-amounts per node of those rewards, but one needs to keep in mind that The Graph doesn’t include rewards for delegates vs. Covalent numbers do (would be great if an increment-pro could help separating those)
More information and links to the data are available in this repo that also contains the paper with further details on the published report. We hope this information yields some insightful information for the Covalent community and are open to your feedback. What would be some additional data you would want to see / topics to dive into deeper?