Let me simplify how Covalent works under hood
Imagine you have a decentralized application and you need to find out what transactions occurred in the last block of the Ethereum chain. With Covalent's API, you can easily obtain this data in a decentralized way, with the assurance that it's free from any fraudulent activity.
Here's a breakdown of what happens at each stage of the process:
The Block-Specimen Producers, special participants in the network, download information about all the transactions in the latest block, format it in the required manner, and upload it to the Covalent blockchain. They're rewarded with tokens for this work, but their reward is locked for a certain amount of time to allow other network participants to verify that the information provided about the transactions in the block is accurate. If the information is found to be inaccurate, the reward and all staked tokens will be lost. This system discourages Block-Specimen Producers from cheating.
After you send your API request (which is paid for with tokens from the protocol), it's received by a Query Node, which processes it and sends it to an indexed Node.
The indexed Node processes the request, identifies what needs to be searched in the data provided in the first stage, searches for the required data, and sends it back to the Query Node.
The Query Node processes the received data and returns the response to the user who sent the API request.
This simplicity is supported by a well-designed system of rewards and punishments that helps maintain the decentralization of the system.
I have simplified the mechanics of this process into easy-to-understand points, but you can find the full version - https://inlnk.ru/oe0Am0 Show Less