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Why protocols need data indexing

Blockchain data

In blockchain, transactions are created by an application called a client or wallet, collected by a miner, and stored in a block. The block is then appended to the blockchain data store using a consensus algorithm. A blockchain is an immutable list of linked blocks. Each block contains a list of transactions. The more data that gets added to a blockchain, the more secure it gets. Since each new block is building on the shared accuracy of the last block, anyone trying to break in and edit the data deceitfully would have to edit all previous blocks as well and all blocks across the network.

Blockchain data are useful for descriptive, diagnostic, predictive, and prescriptive purposes. Data history and interaction with a certain DeFi platform can show an overview of an individual's decisions. With indexing, all the details can easily be analyzed. Such as decisions resulting in loss, where have you spend most fees, and which lending option have you used to gain the most profit. Developers can take advantage of the data by creating stimuli for users who use their platforms.

Based on the history provided by the blockchain, individuals can use data to diagnose inconsistencies, by pinpointing sources and times of errors. The data can also be used to predict the future, like DeFi platforms predicting the average yield for a particular pool.

Vernor Vinge, an emeritus professor of Mathematics at San Diego State University, stated in a talk about “A Singularity Sensation” that the major problem humankind faces is data glut. We produce so much data that we cannot arrange them properly to do us good.

Problems with blockchain data

Indexing blockchain data is not only very important but also very hard to do. Without an indexing protocol it is:

  • a black box — smart contracts are complex and not all events are visible. Projects have tens of different smart contracts running which makes it hard to decipher.
  • increasing in complexity — each generation of blockchains makes data handling harder.
  • hard to read — The data is not only inaccessible but also very messy. Making the data easy to read and use saves developers lots of time.

The solution: Covalent

The Covalent API contains the richest blockchain data on the Internet today. Developers can use Covalent to access over 25 billion rich transaction data indexed since the genesis of Ethereum. They can access more than 30,000 price feeds for fiat and crypto pairs and access approximately 215,000 smart contracts.

Covalent provides a unified API bringing visibility to billions of blockchain data points. It currently supports ten different blockchains, as shown below.

Blockchains Covalent supports

Currently, over 100 projects are building and succeeding with the Covalent API.

With Covalent’s robust API, developers and their users can gain transparency and visibility of assets across all blockchain networks. Covalent structures the disordered blockchain data and analyses it by its proprietary technology to deliver institution-specific answers. Covalent helps businesses in accessing synthesized blockchain data to gain insights and accommodate decision-making processes. Some use cases Covalent provides are:

  • Validators: you can figure out if your share of delegated tokens are growing
  • Wallets: show your users detailed stats like swap prices and slippages
  • Blockchain games: show the NFTs your users have in their wallets

To read more about what Covalent is and why it is important read this article: What is Covalent and why is it important?.

To check out a case study using Covalent check out this article: Case study of the data availability gap in DeFi using Covalent.

To learn more about Covalent, visit

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