GOVERNANCE IN COVALENT

 GOVERNANCE IN BLOCKCHAIN 

According to investopedia, governance is a system for managing and implementing changes to cryptocurrency blockchains. In this type of governance, rules for instituting changes are encoded into the blockchain protocol. Developers propose changes through code updates and each node votes on whether to accept or reject the proposed change. A blockchain network is a system that contains a distributed ledger similar to a shared database. Transactions are recorded on the blockchain and shared with all of the participants. Whenever a new transaction is conducted, a new block needs to be added to the blockchain. However, there are consensus protocols, which need to be followed for the transaction to be considered valid. Miners, who are also called

nodes, verify the data to make sure it's accurate and that the parameters regarding the transaction have been satisfied.

Once miners have completed their verification process, the results are submitted to the network. After review by other nodes or participants and consensus has been achieved, a new block is added to the network. Miners usually receive some type of compensation for their efforts, which is called a Proof of Work system or process.

WHO ARE MINERS IN ON-CHAIN GOVERNANCE?

Cryptocurrency mining is painstaking, costly, and only sporadically rewarding. Nonetheless, mining has a magnetic appeal for many investors interested in cryptocurrency because of the fact that miners are rewarded for their work with crypto tokens. This may be because entrepreneurial types see mining as pennies

from heaven, like California gold prospectors in 1849. And if you are technologically inclined, why not do it?

However, before you invest the time and equipment, read this explainer to see whether mining is really for you.

RISKS OF MINING

The risks of mining are often that of financial risk and a regulatory one. As mentioned, Bitcoin mining, and mining in general, is a financial risk. One could go through all the effort of purchasing hundreds or thousands of dollars worth of mining equipment only to have no return on their investment. That said, this risk can be mitigated by joining mining pools. If you are considering mining and live in an area that it is prohibited you should reconsider. It may also be a good idea to research your countries regulation and overall sentiment towards cryptocurrency before investing in mining equipment.

COVALENT QUERY TOKEN (CQT)

CQT is the platform utility token and is primarily a proof-of-stake governance token powering Covalent’s rich and robust network. Additionally, the token facilitates the democratization of the multichain solution and enables the creation of blockchain data apps in Covalent’s vast marketplace.

CQT will primarily serve as a governance token, giving voting rights to holders concerning the system’s parameters such as new data sources, specific geolocations, and data modeling requirements. CQT will also be used as a staking asset within the multichain API.

IMPORTANT OF GOVERNANCE IN CRYPTOCURRENCY

Equity markets have clearly defined stakeholder structures for investor recourse. These structures have resulted in governance systems that protect investor interests and prevent rogue executives from running amok with the company. But cryptocurrencies have largely been shielded from similar oversight. The DAO hack is just one example of governance gone wrong within cryptocurrencies. Similar situations abound.

“At an individual level, real monetary value is at stake, which in turn gives rise to investor and payment protection concerns,” says Philipp Hacker, a researcher who has authored a paper on corporate governance systems in cryptocurrencies. According to him, cryptocurrency investors have rights similar to those for company shareholders because they are directly affected by protocol changes in a blockchain.

RECOMMENDED GOVERNANCE TOOL FOR COVALENT

SNAPSHOT : In cryptocurrencies, a snapshot is often describing the act of recording the state of a blockchain on a particular block height. In this case, the snapshot records the contents of the entire blockchain ledger, which includes all existing addresses and their associated data (transactions, fees, balance, metadata, and so on). Snapshots are commonly used during airdrops events before each round takes place. During an airdrop, tokens are distributed based on the balance of each blockchain address. In this case, snapshots are taken to record the balance of each token holder, at a specific point in time (i.e., block height). In most cases, users can move their funds after the snapshot is taken, without compromising their eligibility to participate in that round of distribution.

Snapshots are also important during blockchain hard forks, as they mark the block height in which the main chain will be recorded before giving birth to the new chain.

When it comes to specific timing of the initiation of the fork, one might want to be aware of the ‘snapshot’. If an investor is looking to transact in time to snap up some free coins, the snapshot date is vital to know. This is the point at which the developers take a snapshot of the ledger in order to duplicate and modify it and this happens at a specific block number.

For the forking process, the snapshot block number is the critical information to note and the calendar date only holds importance in understanding the block number. If an investor wants to join after the fork (or after the occurrence of the snapshot) they will not have the possibility of receiving free coins, or in cryptojargon they won’t “be in for the fork”.

Forks might have the table in cryptoconversation, but the need to drop in the air of marketing tactics at times is equally important.