A Deep Dive Into Ocean Protocol

Markets Nov 24, 2020

CoinList is thrilled to be working with the team at Ocean Protocol to not only raise awareness of their robust platform, but also to announce that the OCEAN token will be trading on CoinList.co and CoinList Pro.

Data is the most valuable digital resource on the planet but much of it remains unused and locked away. Ocean helps to unlock and monetize that data. We sat down with the Ocean team last week to discuss what they are building in detail:

1. What is Ocean Protocol and what problem does it solve?

Ocean Protocol allows people to buy and share data securely while preserving privacy.

We want Ocean to become the connective tissue for a new Data Economy. We see a world where data is an asset that is fairly priced, where people can share their data safely and receive compensation.

Ocean V3, our latest release, introduces datatokens, Ocean Market and Initial Data Offerings (IDOs). Ocean V3 allows data to be priced by the market using an innovative combination of ERC20 datatokens and automated market makers that allow participants to both actively trade datatokens and access valuable data using Ocean smart contracts. When a datatoken reaches sufficient liquidity and maturity, it can be considered to have IPO’ed and freely tradeable in any DEX. With Ocean V3, people are truly incentivized to share data.

2. The main actors in the Ocean Protocol are data publishers, data consumers, stakers and developers. Can you define these terms and explain how these participants collaborate on the network?

Data publishers bring data to a marketplace to sell at a fixed or dynamic price. The publisher is an owner or legal custodian of data. A data consumer is anyone who purchases data for research and AI.

Stakers add $OCEAN into liquidity pools for each dataset. The idea is that stakers bring a market signal to the value of the dataset. The more popular and useful a dataset, the higher the liquidity pool and the higher the price for someone to access. Stakers are essential for giving a price signal for the dataset.

Finally, developers are community members that build on top of Ocean Protocol and help to improve the tooling, integrations and on-boarding for users. One way that developers can immediately add value is to fork the Ocean Market reference codebase and set up their own market. In this way, we can have thousands of data exchanges that use Ocean technology.

3. Explain more about datatokens and how they work?

Datatokens are ERC20 tokens that wrap access control to a given dataset. Each dataset gets its own datatoken. A consumer simply buys a datatoken to get access to the dataset and the Ocean smart contracts manage the rest. Since datatokens are ERC20 tokens, they can be bought, held and traded like any other ERC20 token. They use existing Ethereum infrastructure like wallets, AMMs and exchanges. It’s a simple but powerful construct that unlocks a universe of potential.

4. Tell us about the Ocean Market?

Ocean Market is an application built on top of Ocean smart contracts. It is the user interface layer that gives people the ability to publish datasets, generate datatokens, stake and consume datatokens.

When a data provider publishes a dataset, they can choose a fixed or dynamic price. Fixed price is straightforward. A consumer buys a datatoken using $OCEAN and they consume the dataset.

Dynamic priced datasets are more interesting. Ocean Market supports automatic price determination using an Automated Market Maker (AMM) pool powered by Balancer. This means that the moment a datatoken is generated, a publisher can go straight to setting up a Balancer pool. This is out of the box functionality.

Each data asset has its own AMM pool, deployed in a gas-efficient manner. Anyone can stake $OCEAN into each pool, to get a cut of sales and trading fees. This gives each dataset a price signal - which is critical for people to understand the value of their data. As we said earlier, useful datasets will tend to have higher liquidity, higher prices, higher signal. Over time, the market and community will be able to identify quality datasets faster from pattern recognition and methodologies to price data. This attracts more quality data because people see the rewards. This is a critical step to unlocking a new Data Economy for everyone.

5. What is an Initial Data Offering (IDO)?

An Initial Data Offering (IDO) is another name for launching a datatoken pool on Ocean Market. The community has really latched on to the idea.

It’s relatable and makes sense. Imagine an IPO for a dataset, or an ICO or IEO, where tokens are issued that represent the value of a dataset. People can buy a piece of the dataset in anticipation of it’s future sales and trading activity to earn income.

By using Balancer liquidity pools and datatokens, every dataset that is dynamically priced is essentially an IDO. And just like Uniswap experienced growing pains when it launched, we are seeing similar dynamics happening to datasets. There is an initial irrational exuberance for new data sets. People pile on. The prices fluctuate wildly. But generally within 2hrs, the price stabilizes quite nicely to an equilibrium.

In Ocean Market, we are dealing with impersonators of reputable providers. There are rug pulls where early liquidity providers pull out and cause a cascade of other withdrawals. We deal with IP infringements. This is normal. It’s how markets form and mature. We’re working through each of these issues and designing systems to offset them. The community is giving feedback on a daily basis. So I think the idea of securitizing a data set or data stream, and making it liquid and tradeable is now here to stay. With Ocean V3, it is actually a reality. Ocean Market makes it easy: it’s the first Initial Data Offering launchpad.

6. How do data providers ensure that their data is being stored safely and securely?

Ocean Compute-to-Data allows data to be consumed while preserving privacy by keeping data with the data provider, yet allows data consumers to run compute jobs on data to train AI models. This feature is ready in the Ocean smart contracts and we will expose it in the Ocean Market in early 2021. With Ocean Compute-to-Data, owners can sell the private data while maintaining control.

7. Data clearly has immense value and many businesses are turning their data from cost centers to profit centers. How would the Ocean Protocol enable smaller data providers to compete with the likes of Google, Amazon, and Facebook?

With Ocean V3, we wanted to make Ocean Protocol more accessible for people anywhere to adopt. From Day 1, Ocean V3 is accessible to the globe because we built on Ethereum.

Until now, anyone looking to provide data for sale would need to set-up companies, figure out the back-office, build sales and distribution channels and then provide the actual value of the data. Now with Ocean V3, those barriers are much much lower. If a data scientist has a valuable dataset, they can publish it directly to Ocean Market. Within a few hours, someone might have bought and used the data, and meanwhile a market price has been set by the community. We think this is revolutionary.

Just like the internet made it possible for anyone to be a publisher for almost no cost, and AMMs made it possible for anyone to be a liquidity provider, Ocean V3 makes it possible for anyone to be a data provider, consumer or staker. It’s a first step to break the data monopolies - because when people know the true value of their data, and they have the means to sell it and get a fair price, they will demand control back the Facebooks and Googles of the world,

7. Given that existing tokens can serve as a means of exchange, why does the Ocean Protocol need its own token?

Ocean tokens have the capabilities of any ERC20 token but with Ocean specific needs and benefits integrated into a complete token design.

We’ve put a lot of thought into token designs in the past three years. We were one of the initiators of the Token Engineering movement that included people like Chris Burniske, Joel Monegro, Michael Zargham, Trent McConaghy and others.

The $OCEAN token design aims to accrue value in the token, while providing the means for self-sustainability of the project. For this, we have tokens that will be issued via the OceanDAO to developers and community members from a pool of network rewards as well as revenues from the Ocean Market. Part of the token design is a burn function, for instances where the community decides that tokens cannot be wisely deployed. Another piece is the OceanDAO voting rights tied to token holders. And finally, the token acts as the default currency for the Ocean ecosystem. It is the main pair for datatokens that are generated, is used for payment of datasets, can be staked by liquidity providers and is the currency of the Ocean Market fees.

8. What is the relationship between Ocean Protocol and BigchainDB?

BigchainDB is one of the founding companies behind Ocean Protocol. Since 2013, BigchainDB has been working on blockchain technology and has established itself as a pioneer in crypto. As Ocean spreads control to more community members and companies form around the protocol, the role of BigchainDB will be proportionally less, and will gradually recede over time.

9. Who are Ocean Protocol’s competitors?

Ocean’s solution is unique: we allow people to monetize data and give them the opportunity to earn rewards by staking $OCEAN on data sets. We don’t know of another project with a similar approach.

There are hundreds of crypto- and non-crypto projects working on unlocking data, too numerous to mention. All have an angle and hypothesis on how to unlock a new Data Economy. So instead of thinking about competition, we focus on delivering on the vision we set out to make reality because we think the world needs it.  When possible, we collaborate with other projects so as much as possible is reused and repurposed with minimal duplication.

If Ocean is part of a healthy, broader ecosystem, then mass adoption of crypto will happen and a large portion of these people will be able to participate in a new Data Economy.

10. Ocean has collaborated with leading institutions including Roche, Johnson & Johnson, and Unilever. Can you tell us a little bit about these partnerships?

There’s no doubt that some of the most valuable data is locked up in large, global enterprises. They are all struggling with the weight of the data that they are collecting and trying to find a path to monetize it responsibly. Enterprises play a special role because much of the economic activity and value is locked up within them. We need to help them unlock more.

Our job is to build the native Web3 infrastructure that allows data sharing to flow. Part of this is to have hooks, tooling and integrations that allow companies, large and small to join in. Our Enterprise partners challenge us to create cutting-edge technology for real-world use cases with impactful applications. Most are under NDA but we’ve announced projects with Daimler, dexFreight and others.

Specific to Daimler, Ocean delivered a decentralized data sharing solution pilot to enable the sharing of private data and monetization. We built the end-to-end platform using Ocean tech featuring access control, data discovery, storage, and Compute-to-Data. This solution can be deployed to any other partner that we work with in the future.

Deposit OCEAN now in preparation for trading on CoinList »

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