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Tokenizing Data - Ocean Protocol
Hey DEFI TIMES community,
Data is the most valuable part of the internet. The largest corporations on earth use data to their advantage. For example, Facebook sells data to advertisers on its social network.
The sad thing is that you do not own your data while using Facebook. When you log in to Facebook or Instagram, you give up your privacy (= your data) in exchange for their services.
Imagine a world where you hold your data. Nobody could take it away from you. Your data is worth a lot, and the only way to solve this issue is through blockchain services.
Today, we would like to introduce a solution to this problem: Ocean Protocol. The Ocean Protocol tokenizes your data and gives it value.
Let’s see how this works!
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How Ocean Protocol works
Datatokens are the interface to connect data assets with blockchain and DeFi tools. Crypto wallets become data wallets, crypto exchanges become data marketplaces, DAOs for data co-ops, and more via DeFi composability. It’s “data legos”.
Ocean Protocol makes it easy to tokenize data on the blockchain. Data is precious, but there is currently no way to possess your information on the internet. With Ocean Protocol, you can make your data valuable, use it within DeFi services, or pay your bills with it.
The data itself does not have to be on-chain. Only the rights of ownership have to be on the blockchain. Crypto wallets turn into data wallets, crypto exchanges become data exchanges, where you can trade your data into other digital assets.
The data industry is worth hundreds of billions of dollars, if not trillions. Ocean Protocol combines this industry with Decentralized Finance.
A datatoken gives you the right to access any data. You can imagine datatokens like a license for your data on the internet. You only own your data if you own the private keys to the address where your datatokens are stored.
Variants of datatokens
At the smart contract level, all datatokens look the same. However, the use cases of each data token can vary. Here are some examples of how datatokens can be used:
Time-bound access: you can access data for 24 hours once consumption is initiated.
Compute-to-data: do analytics or AI modeling while also protecting privacy.
The variety of datatokens will increase significantly in the future as more and more developers join the ecosystem.
Datatokens are based on the ERC-20 standard. That’s why you can use them like any other Ethereum based token. You could potentially pay your bills with them, buy a house with them, manage your datatokens with DAOs. A Data DAO could manage datatokens on behalf of its users. The DAO could have governance processes deciding which datatokens to buy, sell, or license.
Example of a data DAO:
Co-ops and Unions (Collective Bargaining). These data DAOs help thousands of people to aggregate clout and resources in negotiations marketing, sales, and distribution of their collective datasets.
Use your data in DeFi services
Once your data is tokenized, you can potentially use it in DeFi services. That means you can trade it on Uniswap, use your data as collateral for your MakerDAO vault minting DAI with it, or you can lend it using Aave. There are virtually no limits.
Imagine a world where only you have access to your data. Facebook and co would have to ask permission whether they can use it. You can lend your data rights, sell them, send them to someone else as a gift, and so on.
Your data is valuable. Why don’t you use it to earn money? Ocean Protocol makes this possible!
Ocean Market is the native marketplace for datatokens. You can use the Ocean Market to buy, sell, stake, or publish data.
The Ocean Market is a Decentralized exchange, using an Automated Market Maker (AMM) model, like Uniswap. That’s how you can achieve automatic price discovery for your data.
You can also publish a new dataset via an Initial Data Offering (IDO). You set a fixed price or let the market decide about the price. You collect money in exchange for your data.
The Ocean token (OCEAN) is used in three different ways on the Ocean network.
Stakers can provide liquidity to any data-OCEAN pool on the Ocean Market. As a liquidity provider, you can earn transaction fees on the Ocean network. Every time a user swaps datatokens into OCEAN, or the other way around, you receive a small cut from the traded volume.
On the OceanDAO users, who hold OCEAN, can vote on governance proposals. They decide which projects to fund and which to reject. It is all about directing funds to the most valuable projects. 51% of the total OCEAN supply is paid out to those projects over time. That’s how OCEAN holders are incentivized to learn about new Ocean projects and keep up to date with everything that is happening in the Ocean ecosystem.
3. Medium of exchange
OCEAN is the standard unit of exchange on the Ocean Market. You can buy and sell data with OCEAN.
The Ocean Protocol gives your data value. It also ensures that the only one owning your data is you. Ocean takes away the power from large corporations and gives it back to the people.
Facebook, for example, owns your data and sells it to advertisers. Mainstream is finally starting to realize how dangerous this concept is. Ocean tries to tackle this problem: if you hold the private keys to the wallet, you own the data.
If this sounds like science fiction to you, you have to realize that everything of value will become tradable one day. There’s no reason to believe that this concept cannot be applied to your data.
The Ocean Protocol is a massive step in the right direction. Data is the most valuable asset on the internet.
We need to decentralize data as much as possible. Datatokens are the future!
All information presented above is meant for informational purposes only and should not be treated as financial, legal, or tax advice. This article's content solely reflects the opinion of the writer, who is not a financial advisor.
Do your own research before you purchase cryptocurrencies. Any cryptocurrency can go down in value. Holding cryptocurrencies is risky.