Covalent Network Proposes Max Multiplier Increase and Onboarding More Block Specimen Producers

Increasing Delegation Room for CXT Holders

The Covalent Network has announced a new governance proposal aimed at increasing the maximum delegation room for CXT holders to 40X. This initiative targets staking approximately 35% of the circulating supply, which equates to around 297 million CXT. To support this goal, the network plans to onboard five new Block Specimen Producers (BSPs), each staking an average of 300K CXT.

Background and Current Challenges

The Covalent Network is currently experiencing a critical challenge with the delegation room for CXT holders filling up rapidly. This saturation is due to the increasing number of CXT holders eager to stake their tokens and earn emissions yield by securing the protocol. However, the onboarding process for new BSPs has not kept pace with the growing demand, resulting in limited room for additional delegations.

Mathematical Rationale for Max Multiplier Increase

Presently, there are 20 operators self-staking an average of slightly over 300K CXT, with a total staked amount of 209.1 million CXT, representing 24.42% of the circulating supply. The proposal aims to increase this to roughly 35% of the circulating supply or about 297.5 million CXT. To achieve this, the Max Multiplier needs to be increased to 40X, allowing for an expected total staked and delegated amount of approximately 297.5 million CXT.

Adjusting Emitted Rewards

The proposal also includes an adjustment of the emitted rewards to sustain a target APY of 11%. Based on the total staked amount of 297.5 million CXT, daily rewards should be 89,657.53 CXT, equating to approximately 32.5 million CXT emissions per year to maintain the 11% APY target.

Onboarding New Block Specimen Producers

To further support network expansion and enhance security, the proposal includes onboarding additional Block Specimen Producers. Currently, there are 20 BSPs active within the network. With the new proposal, five more BSPs will be added, each expected to stake an average of 300K CXT. This increase will significantly enhance the network's capacity and security infrastructure.

Voting Process

Eligibility:

• All CXT token holders, including those who are staking, are eligible to vote.

How to Vote:

• Navigate to the Snapshot page: Snapshot Voting

• Connect your Ethereum wallet on the mainnet.

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

• Voting weight is proportional to the amount of tokens held.

Quorum:

• 10 million CXT of voting weight is required for quorum.

Duration:

• Voting will last for two days.

Final Thoughts

These proposed changes are crucial for ensuring the security and stability of the Covalent Network, particularly in addressing the Long-Term Data Availability problem with modular data infrastructure. By increasing the Max Multiplier and onboarding more Block Specimen Producers, Covalent aims to enhance its network capacity, improve staking opportunities, and maintain a robust and secure protocol.