Prepare for high throughput Ethereum compute with the giga-level gas limits! In recent months, Covalent has observed the clear trend of L2s racing towards gas limits that were unfathomable just a few years ago. Base has already hit 15.01 Megagas! These limits mean Ethereum will soon process billions of gas units per second. To put this into perspective, a single Uniswap V2 swap costs 100k-150k gas in a single transaction, so giga-level gas can include over 6,000 swaps in a single block. Ethereum will soon truly offer decentralized compute that lives up to the old slogan “The World Computer”.

More transactions means more data that the Ethereum Wayback Machine needs to process and verify. Covalent proposes a set of initiatives to keep up with this trend. These updates are designed to bring delegator rewards in line with market equilibrium as the Covalent Network expands participation to the Ethereum Wayback Machine (EWM) Light Clients via Base.

Current Issues

The Ethereum Wayback Machine is growing with the EWM Light Clients but Covalent’s original target of 300 million CXT staked isn’t changing, this means that APY needs to reach market equilibrium with the increased emissions load.  

Moreover, the EWM Light Client infrastructure is designed for everyday users to audit Ethereum historical data––both concatenated and processed––created and posted by the Block Specimen Producer and the Block Results Producer, validating it against fraud-proofs. However, the reality is that everyday users are not operating on the Ethereum L1. 

To address these issues, the Covalent Network proposes three main adjustments:

• Market Equilibrium: The Covalent Network proposes to firmly set the expected emissions APY for BSP delegators to ~10% for the remainder of the bootstrapping period of the security budget. 

• bCXT and bCXT Liquidity Pool: Deployment of the CXT token on the Base L2 chain and the setup of a bCXT/ETH liquidity pair on Aerodrome Finance ahead of the deployment of the EWM Light Clients. Note that bCXT is a bridged version of CXT that lives on the Ethereum L1 and this does not impact the total supply of CXT.

• Light Client Deployment on Base: Deploying EWM Light Client contracts, fixed-time staking NFTs, bCXT emissions, and EWM Light Client user access on Base to increase accessibility.

Market Equilibrium Proposal

The Covalent Network proposes setting the expected APY for the BSP to ~10% and capping the staking target at 300 million CXT for the remainder of the bootstrapping phase. 

• BSP Emissions: Block Specimen Producer emissions are proposed to be set to 402 CXT emitted per specimen created. 

• Daily Emissions: This adjustment brings daily emissions to 82,410 CXT (402 CXT per specimen across 205 daily specimens created).

These adjustments help bring the Ethereum Wayback Machine emissions into market equilibrium, aligning emissions with the Covalent Network’s bootstrapping goals while ensuring balanced rewards for delegators.

Deployment of bCXT Liquidity Pool on Aerodrome Finance

Since May 2024, Aerodrome Finance has become the clear winner of TVL and swap settlements on Base. This is why the Covalent Network proposes to deploy the bCXT/ETH liquidity pool on Aerodrome ahead of the deployment of the EWM Light Clients. 

This liquidity pool will enable users on Aerodrome and across the Base ecosystem to: 

• Swap ETH for bCXT or supply liquidity to the pool, earning a variable APY in AERO tokens as well as fees in bCXT and ETH. 

• Allow for Ethereum L1 CXT token holders to bridge their CXT over to Base, receiving an equal amount of bCXT to interact with their EWM Light Clients and of course interact with Aerodrome bCXT/ETH liquidity pool. 

To support this deployment, Covalent will seed a liquidity pool on Aerodrome Finance with $150,000-$250,000 in tokens––evenly split between bCXT and ETH in nominal terms––creating a reliable market for bCXT on Base.

Note: CXT on Ethereum (L1) is equal to bCXT on Base (L2) and the introduction of bCXT does not increase the total supply of CXT. bCXT will be brought over using the canonical bridge available on Base.

Expanding Access with the EWM Light Client on Base

The EWM Light Client is central to Covalent’s mission, providing Data Availability Sampling as a DePin network to maintain the verifiability of historical data on Ethereum. This infrastructure is designed for everyday users to audit the specimens and processed data generated and posted by the Block Specimen Producers and Block Results Producers, validating them against the fraud-proofs with commodity hardware, like a laptop. To ensure this, Covalent proposes the deployment of the EWM Light Clients and infrastructure on Base, along with bCXT. This ensures that it's easy for any participant to run an EWM Light Client and participate.

Why Base? Base offers a streamlined onboarding experience, which is especially beneficial for new users looking to get started with Covalent EWM Light Clients:

• Contracts and Infrastructure: Everything related to EWM Light Clients are proposed to be deployed on Base, including EWM Light Client contracts, fixed-time staking NFTs, bCXT emissions, and user access to EWM Light Clients via Base.

• APY for Light Clients: Operators will earn an APY of around 14% - 25% in bCXT, reflecting the critical role they play in Ethereum historical data verification.

Summary of Proposed Changes

Deployment Proposal and Current Emission vs. Proposed Emission (Next 5 Quarters)

How to Participate and Share Feedback

All CXT token holders can participate in governance and are invited to review these proposals and vote. This includes all CXT token holders with staked and delegated CXT or CXT in self-custodied wallets like Rainbow or Ledger.

To participate:

Please navigate to the Snapshot here to vote.

• Connect your Ethereum wallet on Ethereum mainnet to Snapshot.

• Follow any instructions and vote by signing a meta-transaction.

• The amount of tokens a user holds is relative to the voting weight they possess.

• The proposal must reach a Quorum of 10M CXT of voting weight to pass or be denied.

This vote will be open for 5 days.

Your support will help Covalent march the Ethereum Wayback Machine towards the Gigagas era, participation is a commitment towards Long Term Data Availability and supporting the original vision of Ethereum.