Ganesh Swami on Covalent’s blockchain data solutions

0:00i'm ashton addison from block west capital for investmentpitch media and today on the cryptocoin show we have ganesh swami co-founder and ceo of covalent ganesh welcome to the show and thank you for taking the time out of your busy schedule to to join us today ashton the pleasure is all mine amazing well let's dive straight into it a lot's going on in the industry even in

0:22the bear market i feel like i i know you guys are working heads down uh super hard on the future of d5 connecting all these projects together um in a super important way let's just break open the conversation uh with just a high level overview of the solutions you and your team have built at covalent and what you're working on and then we'll dive into everything else

0:45sure ashton so before i jump into covalent i think bear markets are a gift for builders because you know exactly what did not work during the previous bull market and you sit down and fix those issues now this is not our first time through a bear market this is our second time to the bear market so the code that most of the uh the industry work uses today on covalent is code that

1:08we wrote in the previous bear market so it's definitely an opportunity i think it's a gift and these gifts don't come that often in in an industry so with that as a pretext uh covalent is an indexing solution for blockchain data so what we offer today is a unified api that enables developers to pull out uh balances positions uh historical granular transaction activity for any

1:34kind of like upstream use case so we power about 3000 apps in the space about 30 000 devs use this api and all kinds of uh products like um wallet uh products so if you use rainbow wallet that uses covalent all kinds of like nft products like ledger uh all kinds of taxation products so yeah there's just uh one billion possibilities that you can enable with

1:57the covalent api so that's a chromium nutshell very cool and obviously with with blockchain there's a lot of information that's on chain a lot of numbers and and data that sort of needs to be turned information turned into inter information and to be analyzed i'm curious on you mentioned there building your solutions in the previous bear market how did you first come about building

2:24solutions for data and sort of what got you interested in data on the blockchain great question so even before covalent i've always been in the data space in my career so i know at least from experience from just what i've seen in the industry is that products like covalent were are critical infrastructure pieces before you can enable or adopt any technology cycle so

2:48this is just a given i lived through that initial on-prem workloads moving to the cloud so this is about a decade ago so i'm just bringing that perspective into these crypto networks so yes we did build ahead of time when we started building covalent out in 2018 uh there was no nfts i mean there was cryptokitties but it wasn't really a thing there's no d5

3:08there's no game fire there's no like social tokens none of these things existed and this is why we decided to build a horizontal platform and really be an indexed solution on all of the applications of blockchain rather than being a defy analytics tool or a game fi analytics tool so here you know we it's a lot harder to pull off uh but we had all the

3:29time in the bear market uh to to build a a technology that scales across the use cases very cool and with all of this information most of it if not all of it is like already publicly available information whether it's on the blockchain or somewhere else how do you utilize covalence technology to to bring a competitive advantage and something unique over others that could

3:55also use the same information so our target audience is a developer or an analyst who doesn't really care about how data got onto the blockchain in the first place they just want to live in their favorite tools like excel or tableau any kind of bi tool and just analyze and you know go through their work without the retooling of the retraining so that's our target audience

4:19and so with that as a as a context as a pretext uh if you need to extract data from a blockchain today you have to go through the tedious task of running these blockchain nodes extracting the data putting the data into a database uh cleaning that data gathering other kinds of external information pieces because not everything is on the blockchain for

4:40example crypto prices a lot of the price discovery happens on centralized exchanges so you need those crypto prices so they can price the assets uh things like logos things like you know what these contracts mean what these contract names mean a lot of the semantic information so all of that is off-chain so this is a you know a sequence of steps you can do before

5:00you have something that's usable now for a company that just wants to uh you know perform a job and they want to hire someone to perform that job taking on the risk of building the solution in-house and hiring and training the people the bill versus by equation uh goes more along the buy rather than the build situation so that's really where we're going with uh with the covalent

5:25solution yeah definitely it's it's a lot of work and even just trying to run your own node i feel like is most uh too much work for for most people so so thank you for creating a solution like this and now as you mentioned when you started developing the solutions initially there wasn't all of these uh different industries and even now uh you know like nfts

5:51have really expanded out social tokens and even now i feel like there's more use cases that are popping up and sort of becoming their own standalone niche industries inside of crypto and will continue to gain more use cases as it continues to grow it's such an emerging industry how can people utilize this data or why is it valuable to have data like the

6:14information that's in covalent in an emerging industry that's growing this quickly so the big unlock that data does is that it backs your gut it's almost like you know if you look at a like a flight controller panel like the cockpit you see that a pilot has probably uh over two dozen dials with all kinds of readings that comes in and so the pilot is able to assess all of that

6:42information in real time and use that in their decision making process today most industries move so fast that you can't really wait around and you know come up with a gut feeling and then go after it investing your time and resources without getting the feedback loops without understanding if your thing is working so this is where data becomes crucial especially

7:07real-time data so we extract and scrape the data from the blockchain as soon as it lands on the blockchain so you get fresh you know hot off the oven data that helps in your decision making process a lot of the enterprises will just not adopt technologies if you don't have the reporting in the compliance layer and all of that is data because they need to they need to ensure that

7:29their stakeholders are kept uh kept satisfied um great point ganesh and i feel that's especially important with price data you know as uh as a news account we've posted anything about bitcoin or cryptocurrency prices and if it's even one day old there's backlash from the community i'm like that was yesterday's news you know we need like minute by minute analysis

7:53so i feel like having real time data is most important especially in an emerging industry and one moving as quickly as cryptocurrency absolutely now speaking of sort of price trends and real-time data surrounding that is there a way that end users or companies are using covalent for for pricing or to follow market trends

8:21and and um market analysis in the movement of of bitcoin cryptocurrencies and their prices so we haven't seen too much of that just yet but i think this is going to be a major unlock going forward so if you think about the uh the industry reports that companies are expected to publish every quarter if they're public and they're these are called 10qs where they

8:44talk about the business they talk about a lot of the core like performance indicators they talk about management's overview of the business now you can have these reports up and running on the blockchain literally every 15 seconds because that's how fast these blockchains are so imagine in a you know a report which is like a balance sheet or a income statement or a cash flow

9:08statement that is produced every 15 seconds and it's always fresh and the data can be can be trusted now that is a whole new world of the world of business so now what you can do is you can connect that utility to the actual price of that asset because you can build really interesting valuation models like discounted cash flow analysis and back the utility with the future

9:35valuation of the network so uh the the networks that we work with today are very nascent you know bitcoin clearly has a very clear use case bitcoin is a little bit different you know it's going after that that sovereign money use case i think you can look at other total addressable markets like gold as an example as a proxy to imagine how how big the market

9:58could be but in cases like productive assets like covalent or or ethereum there's actual work being performed uh behind the scenes so you would have to price it just like you would price uh any kind of productive system like a factory and you have workers coming in and you have cost of materials and you have you know downtime in your machinery and so on so that's roughly how you

10:22would you would think about these things it's uh i think we're still very early in in these things playing out but that's where the industry is leading to and very excited for that new world where you can connect the dots from the utility from the usage to the actual uh price of the assets i agree ganesh and i completely understand when when you say

10:43that that we're early and i feel like in the future all of these different blockchains which have different speeds different costs they will work together a whole lot better and we're pretty early on where there's a lot of isolated information and even transferring information from or assets from one blockchain to another requires either a centralized exchange or some bridge that

11:05doesn't work well um with covalence information you're able to pull data from all of these different blockchains and you also spoke about you know the main use cases for developers can they use that on any blockchain that they like or are there any limitations in the ways in which they can use this information so currently the api is built mostly for

11:30evm chains and uh the industry has taken a turn where most of the popular blockchains are all based on a technology called evm which stands for the ethereal ethereum virtual machine so here uh if you look at all the major blockchains so obviously ethereum is based on the ethereum virtual machine but if you look at polygon if you look at avalanche phantom binance smart chain

11:54all of those are evm chains so covalent today primarily works with mostly evm chains the non-evm chains like near and solana uh we have rudimentary support for it uh but it's not we haven't spent or invested the ten thousand hours that it takes to become an expert with uh with the evm so we've done that with evm chains you know we have a history of working with these chain with these

12:18technologies on the non-evm chains every non-evm chain is a little bit bespoke so near is a little different from solana so we have to reinvest that time and we just haven't put the time in just yet but there's work ongoing uh into that investment but today uh developers can come in we support about 40 different blockchains you can go to our documentation and see what change is

12:38supported and we're very aggressive in indexing new chains in q2 of q2 of this year we indexed eight new chains and uh q3 is looking to be a much bigger quarter so i think there's like 12 chains that are coming online so we have 40 chains and 12 of those chains uh that will lead us to 52 will be just from this quarter so you can see you know bear market doesn't apply to

13:03builders that's my message very cool i like it ganesh and that sort of leads me into the bigger picture for for the roadmap and you know is it just adding more chains or what is the main focus in terms of growth for covalent and just the overall solutions to put them into the market more yeah so there's a five-year roadmap and then there's a two-year roadmap let's

13:28talk with a five-year roadmap uh i have more conviction in this space today than i had i would say even three years ago right so i've been building in the space for a while and i think the number of orthogonal use cases that are coming online is just incredible so it's not a singular bet that you're betting on on watching network's uh success right it's not just

13:49d5 it's not just nfps but it's d5 and our nfts and our game fi and our social tokens and our uh you know um uh central central bank digital currencies and or you know other kinds of use cases like uh semi-private chains right so the the list just goes on and if you just take any of these single um applications let's take game five for example gaming today is a massive

14:15industry it's even bigger than the movie industry right so so games you know a percentage that moving into the blockchain very very exciting so we're in talks with multiple you know aaa and double a studios that are looking to add a blockchain component to them so i think that's really really interesting the fintech d5 merge is super exciting so applications like uh like uh robin

14:36hood adding a crypto crypto wallet that's a huge unlock so that's why i'm super bullish right all these things will take a couple of years to roll out and uh you know it's uh i'm not concerned the use cases are here use cases are growing the use cases are uh unimaginable what's going to be in the future so that's the in the five-year roadmap in the two-year road map i think we have

14:59a lot of work on the covalent side right it's too early to do victory laps if you look at the uh the biggest picture of number of developers just a developer ecosystem there's 30 million devs in the entire space this is what you see on github or stack overflow scaling back the blockchain space has about three hundred thousand devs today that's one percent of the market

15:20covalent has thirty thousand deaths that's point one percent of the market so in this journey to get uh blockchain data uh accessible on this mission we haven't even left our couch to put our shoes on that's how early we are so no one really is is making victory laps at covalent it's so early so we have a long way to go before we can call uh this industry and covalent a success so

15:44that's in the in the in the two-year frame so we are building a lot of stuff uh at the same time we're rebuilding the underlying infrastructure behind covalent we have introduced the world's first cryptographically secure blockchain pipeline which means that the data that you get from the covalent api is secured by cryptography and it's not just like trust me pro or something like

16:08that right you're not looking to one of the big fours for attestations this is you've outsourced all of that trust component to cryptography and mathematics so this is really exciting it's still going to take a couple of years to to pan out but now uh government uh reports you know all kinds of you know non-profit reports you don't have to trust anyone you don't have to go to a

16:28big four and get their stamp of approval this is cryptographically secure data that comes from the blockchain so this is a huge unlock that uh is yet to be seen so i'm very excited about that and that's the underlying covalent infrastructure that's incredible ganesha i'm super excited for for that um about uh as well as you mentioned about the the real-time reports and having

16:52real-time data i feel like when we look at reports now you know any report that's been printed the moment you print it the information just continues to get older minute by minute and if we can have real-time reports that integrate uh real-time prices with you know all the calculations that everyone's made sort of always be up to date i feel like that's definitely part

17:13of the future and as you mentioned about having 0.1 percent of the devs sort of working uh with with covalent and on these blockchain technologies i feel like do you well my question to you actually is do you think that the way that these blockchains are set up right now primarily with evm running solidity and with solana on rust and these other technologies

17:38do you see that as a limiting barrier to entry on why there aren't 30 million devs working in blockchain or what's the greatest limitation currently of why blockchain devs are not moving faster into the industry oh ashton this is a very complicated question right so i would go back to perilous and history so there's the applications versus the infrastructure

18:02so it always goes in cycles when the initial airplanes were built there were no airports you didn't have any of the infrastructure you didn't require any of the infrastructure but once the planes started to get more sophisticated you needed the infrastructure with airports and airports built better planes and back and forth so now some of the most advanced planes can

18:22only use certain airports because that's where the features are it's almost like a tesla can go only to electric charger to charge it's not a gas station right so the infrastructure needs to be built out so what you're seeing today with the applications and the infrastructure it's a see-saw motion so the infrastructure steps up to uh to serve the applications

18:44and in a bull market what happens is the applications push the infrastructure to the max and the infrastructure breaks and the application fails and so what happens is that builders go back and rebuild the infrastructure and then the next era of applications come in so this is going to happen a couple of times so i don't think we are at the application phase yet we're not

19:05going to see you know uh the millions of users just to give this in context the biggest game on in game five on the blockchain only has 5000 daily active users now if if if someone has a hobby puts an application on the apple app store as an ios game you're going to see a hundred thousand devs a hundred thousand gamers just on day one right so that's uh 5 000 is is

19:30really really small and that's because the underlying infrastructure doesn't scale so the games are not here yet right so yeah so it's it's a balancing act i think uh it's going to go back and forth you'll it'll never be like one uh one uh flip of a switch and then you'll have millions of users right it's going to be a gradual process and then these

19:49these advancements these uh improvements are incremental but they compound and then it's slowly and then suddenly right i love that analogy that's super cool uh to think about and you're right i every bear market you know last bear market there wasn't all of these great nft and d5 use cases and then it came through and and it's exploded too quickly and

20:10now we're sort of back to the building phase and who who knows what's coming in the next bull market and all the great new industries that will join um and extra value created so i'm looking forward to that um four devs and and people in general that want to find out more about covalent uh the information the apis available what's the best way for them to start getting

20:31involved with you guys yeah so the best place would be our website so you can go to covalenthq.com and then it has sections if you're a developer if you're an analyst if you're a network operator you want to be a part of the covalent network so it has funnels for all of those kind of users and then we're also very active on on twitter and then me personally my twitter handle is

20:57uh ganesh with a five so g a n e five h my dm's are open so if you want to chat tech startups funding applications i'm always game uh you know i love getting the the cool dms you know i get a lot of a lot of value from them there's also a lot of like abuse that goes on with these open dms but you know sometimes the uh the little gems that you see outweighs the the bad

21:22very cool and yeah we're still working on a blockchain solution for for twitter and socials uh but hopefully the next round of devs will work through that thank you so much ganesh i'm going to leave the website link in the socials you mentioned as well in the description box below to make it easy for the viewers all the best with everything covalent moving forward and let's follow

21:42up in the near future thank you for the time this is really fun