Ep 65: Tokenisation Of Big Data - Ocean Protocol
Ocean Protocol
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TLDR below. This is not financial advice.
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Introduction: What is Ocean Protocol?
The main problem that Ocean tries to solve is that we do not feel comfortable sharing our data and also do not really know the true value of our data and how to accurately price it. For this reason, sharing data is perceived as being risky in terms of either losing your competitive advantage or violating some strict data privacy regulations. Sharing your data typically means losing control and privacy of your data so, there is a disconnect between data consumers and the providers of data. These consumers want to access quality data and providers find that data is a big barrier to training their AI models. This has led to data becoming siloed and value extraction being concentrated in the hands of a few dominant players.
If data could be traded openly then the barriers or costs of sharing data could plummet and if we could do that, we could unlock a brand new data economy breaking down the silos that these organisations have created and opening up access to quality data. That is really the founding idea or principle of the Ocean protocol as the sort of connective tissue between data consumers and providers.
At its core, Ocean empowers and works to give data publishers the power to take control of their data, share data the way they want to, and monetise data how they want to. These features are all in the application of the Ocean marketplace itself. If you are able to do this at scale it is not only promoting data sovereignty, because now you are in control of it and you are the owner of your self-sovereign data, but it is also steering the data economy from its previous shadow opaque state into one that is decentralised and transparent via these open data exchanges.
Architecture
One of the key things is unlocking the data providers i.e. introducing them to this Web3 data sovereignty mission where you can come and have this peer-to-peer data exchange and get rewarded for providing valuable data.
Being able to sell your data is one aspect of the business model. Ocean protocol is like Airbnb but instead of houses on the marketplace there are data sets and there are no intermediary brokers. It is just peer-to-peer via the protocol. If you choose to sell your data set you have multiple options on how you want to sell it. You can sell it for a fixed rate, or you can sell it by means of an automated market maker (AMM). With and AMM, when you publish a data set you can have the data set itself be dynamically priced by the demand of the set. This means that you can buy access tokens to that data set and then stake the LP just like you would in Balancer or Uniswap. If you are providing liquidity on that data set then you can collect fees based on the trades.
The $OCEAN Token
The $OCEAN token is ERC20 and is the means of payment in the Ocean ecosystem. This is what you are buying and selling data sets with. You can also use the $OCEAN token to stake on assets and get a share of the transaction fees generated. The fourth component of the $OCEAN token holder is governance, so you can use this for voting on the OceanDAO.
Value Accrual
The $OCEAN token's value is a premium on the value of peer-to-peer data exchange. As more and more network stakeholders begin to unlock their data and understand the power of Web3 technology, and as more and more people come in to provide data sets, this token is how you get access to unlocking self-sovereign data. This data layer in the lens of building a full-stack Web3 application is a crucial focal point.
The other thing is the velocity of money. So you have $OCEAN token as a medium of exchange where as the data consumed volumes go up the spending velocity of that currency also goes up, which creates this positive enforcement loop on the Web3 data economy.
Data Tokens
When you publish a data set on the Ocean marketplace it is basically a basket of data tokens which represent both the value and the ownership rights of a data set. What you are buying with the $OCEAN token when you go to buy a data set is actually a data token which is like an NFT. It represents a unique claim on that digital data set, so just like an NFT represents a unique claim on a digital good, a data token represents the same for a data asset. You need this data token to access the data set. When you buy the token you can go and stake on that data set, and as more consumes happen you will have the volatility of that asset. The collective amount of people staking on that data also helps to calm down the volatility because more people are staking it and providing liquidity and price support to the asset itself.
Marketplace Architecture:
When you publish a data set on the Ocean marketplace you have a few different ways in which you can choose to sell. You can sell it for a fixed rate or you can choose to put it in this AMM dynamic pricing pool so you can give the pricing power over to the marketplace and let the market decide its value. Ocean uses Balancer proxy contracts for the AMM so you can choose how many data tokens you want to create and the ratio between the $Ocean tokens provided on one side of the AMM versus the access tokens.
OceanDAO
The OceanDAO is a grants DAO. People use their $OCEAN token to vote on which projects should get grant funding and if it would have a positive ROI towards the Ocean marketplace. Positive ROI means they can contribute to data consumed volume. For example, if the $OCEAN token holders are voting for a grant project then that project can go and get funding of ten thousand dollars and can possibly create fifty thousand $OCEAN worth of value. That excess value can flow back to the DAO treasury and then we have a greater treasury that can fund more projects which can again create excess value to the Ocean marketplace. In this way it creates a Web3 self-sustainability loop. It is not only a mechanism layer of the sustainability loop but also a social layer of getting people to coordinate and vote, so it is two-fold and all with the intention of keeping things flat and arriving at self-sustainability for the Ocean protocol.
Token Sustainability
Right now, the funds are coming from the Ocean Protocol Foundation. They have been committing generous amounts of $OCEAN every funding cycle which are monthly proposals due on the first Tuesday of every month. However, as the marketplace gets more and more consumes, they are going to look at flipping the switch and having the funds no longer come from the OPF treasury but rather from a five percent fee off of the consume itself. This engages the Web3 sustainability loop, so as more and more people buy and sell data sets, more five percents go into the DAO treasury which then funds positive ROI projects. These projects then increase the data consumes volume and so more fees flow back to the treasury.
Purgatory Mechanism
The Ocean marketplace is the user interface layer of the Ocean protocol. If there is an unauthorized republication of data that is not being sold by the intellectual property rights holder, then they have a mechanism called purgatory which is an open repo on their Github where people can make intellectual property rights claims on republished data sets. If the consensus by the majority is that it is an unauthorised republication, it is flagged as incorrectly published or an intellectual property rights violation and it could be taken down from the front end of the marketplace
Conclusion
The Ocean protocol is a protocol that unlocks the value of data. Ocean Market allows data owners and consumers to publish, discover, and consume data in a secure, privacy-preserving manner. OCEAN holders stake liquidity to data pools.
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Tldr:
Data owners and consumers use Ocean Marketplace to publish, discover, and consume data in a secure, privacy-preserving fashion. OCEAN holders stake liquidity to data pools. The Ocean marketplace is the user interface layer of the Ocean protocol. The $OCEAN token's value is a premium on the value of peer-to-peer data exchange.