Decentralized Finance, popularly known as Defi is making the waves as a new era of finance where financial transactions and information is secured using cryptographic means and instead of the presence of a central authority, the decisions can be taken by a decentralized network.
Fascinating that we have come all the way from the ledger book era to an ecosystem where records can be kept transparent yet immutable in a distributed network. The technology behind this new and innovative way of storing a distributed ledger is known as Blockchain. Of course, there is much more to this technology than just a distributed ledger. Let us what is "blockchain" and how Covalent is helping to add value to this space.
What is Blockchain? Blockchain is a technology that helps us store transactional information in a distributed, peer-to- peer network in such a manner that the information remains secure and cannot be easily tampered with. It consists of a set of blocks that are linked together to create a chain secured by hashes.
Now that we know what a blockchain is, let us look at a few terminologies associated with a blockchain network.
What is a Block? A block in a blockchain is an entity that contains all the transactional data along with the cryptographic hash securing the data and linking to the previous block.
What is a wallet on the blockchain? A blockchain wallet is a way for you to connect with a blockchain network. It holds digital assets compatible with the blockchain which can be either traded/transferred or used in a transaction on a blockchain network. We can create one or more accounts within the wallet each of which can be used for various purposes to interact with the blockchain network.
What is a token? Tokens are digital assets that can be created/transacted/exchanged on the blockchain network. Tokens may represent a physical asset/a digital piece of art or they can have intrinsic value as a currency(also known as a cryptocurrency).
Alright! Now, we are in a position to appreciate what organizations like Covalent are striving to build in order to understand and analyze the blockchain-related operations easily.
So, what is Covalent? Covalent is an organization that provides us with APIs using which we can get insights into the various activities happening on the blockchain.
In today's world, where data is the new oil and blockchain is the new trust machine - Covalent is doing a brilliant job bringing the two worlds together. From checking account balances to delving deep into transactions, from looking at information regarding NFTs(Non-Fungible Tokens) to exploring the metadata that is associated with it - Covalent has it all.
The API Reference Documentation of Covalent describes the various endpoints serving different purposes partitioned into Class A, Class B and Pricing Sections giving us a clear picture of how these APIs can be used.
I am sure you must be wondering, how can these APIs help me? What is the use of this data? Well, here are 2 examples where the data can be of extreme value in our applications:
- Spot Prices: Any application built on the pivot of changing cryptocurrency prices would need accurate data about the spot price of the currency. Apart from the price itself, the spot price API gives us several other important factors like market rank, etc.
- NFT Metadata: As the use cases surrounding NFTs are increasing exponentially, NFT Metadata is very useful to determine various parameters associated with the NFT, like the creator of the NFT, the % royalties, token URI, etc.
Before we end the article, I would love to share an example of how you can work with the APIs. There are SDKs using which you could call these APIs but there's also an option to try to out on the browser. Here is an example of getting the token related balances for a particular address:
This image shows the token balances contained in my Avalanche FUJI C-Chain account. And it took me less than a minute to try this out on the browser. Super easy and accessible right?
There are still several challenges in deploying real-time applications in the blockchain space, because of the dearth of data points that can be obtained from these applications. Data helps us analyze the application, gain insights into its performance and get pointers for future enhancements. This is where solutions like Covalent can connect the dots and add huge value to the blockchain ecosystem. The product has a bright future and would definitely enhance the blockchain ecosystem 10 fold.
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