Introduction
Ocean Protocol is a framework for building decentralized tokenized-data marketplaces. These enable anyone to trade data/data services on the blockchain or spin up their own data marketplace. Ocean aims to build a permissionless network of markets that makes data as accessible as possible, especially for “data-intensive industries” like AI. This is what I would consider a Web 3 project.
Note: This summary was written during the OceanOnda V4 deployment. I do not hold $OCEAN.
https://www.youtube.com/watch?v=FEeicvNSyk4
The Problem
Data is a valuable resource that we produce every day with every click and scroll; even just our phone’s screen time. It is gathered and hoarded by big corporations (Google, Microsoft, Facebook, etc.) usually sold without your permission often to target you with ads. This not only keeps data out of the hands of eager innovators, but allows companies to profit off of your personal data when you could monetize it yourself!
Data marketplaces aren't new, but traditional Web 2 data marketplaces fall short on security and access. With data consolidated into a single repository, unauthorized access by attackers is much easier as only one layer has to be breached to compromise the data. Ocean’s protocol structure and being blockchain-based ultimately diminishes this risk, adding several layers of defense instead of just one.
The Goal
Imagine if data was a truly accessible resource. Imagine how much more efficient general research and development could be with an open network of data marketplaces. Imagine monetizing your own browser history or screen time. Researchers, data analysts, and AI developers can access this data all while respecting data privacy and data ownership. That’s ultimately what Ocean wants to facilitate, and this article sums it up really well.
“Ocean is about making data available to the community in order to build better products, services and experiences for all. Better and wider access to data means we can build more powerful AI that can help build a better future.”
How Does It Work?
Those looking to sell their data (publishers) can publish for free on the Ocean Market, use other public marketplace(s) built on top of Ocean, or spin up their own. After publishing some data, a “data NFT” is created containing specific metadata on the underlying dataset and its publisher (specifically, it acts as a tradable “right” to revenue earned from the published dataset).
Those looking to buy data or data services (consumers) browse marketplaces. After purchasing access to some data, it is tokenized into a "datatoken". In short, purchasers send this datatoken to the data provider and receive access to the data. Only references to data are kept on the network, never the actual raw data.
Publishers that want their data kept private but accessible use Ocean’s “compute-to-data” model. Publishers pick a “compute-to-data” algorithm to secure their data and preserve its privacy when it is accessed. So, the data’s privacy relies on the secure algorithm ran when accessing it, meaning the burden of data privacy ultimately falls on the publisher to pick a secure algorithm.
Behind the scenes, a network of “Providers” or “Keepers” facilitate data consumption. Anyone can run a Provider instance and execute certain tasks when consumers access data from publishers. Verifying who’s accessing data, starting compute jobs, and encrypting/decrypting metadata are all some task examples. Publishers need to pick a Provider for every dataset or service they publish, in which Providers earn fees any time that data or service is consumed.
Many argue that Ocean’s success relies on Ocean becoming a market agnostic data-exchange framework, not just on the Ocean Market prospering. The Ocean Market is just one marketplace built using Ocean Protocol. Anyone can spin up their own customizable marketplace or application on top of Ocean rather than using the Ocean Market. Think of it like Cosmos app-chains, but with data marketplaces. One of the most recent examples of this was Acentrik’s launch, a decentralized marketplace built by Mercedes-Benz on Polygon.
Partnerships
Ocean hasn't limited itself by any means in its partnerships, already having worked with the Central Bank of Germany, Mercedes Benz, awarded Technology Pioneer by the WEF, and works to power data economies on Ethereum, Polkadot, BSC, the Energy Web Chain, and Polygon.
Tokenomics
$OCEAN Price: $0.19
Market Capitalization: ~$83 million.
Circulating Supply: 434,026,836
Total Supply: 613,099,141
SOURCE: Coingecko
Learn more about $OCEAN token distribution here.
$OCEAN can be locked as veOCEAN for upwards of four years. veOCEAN is a fork of the veCRV token. veOCEAN holders earn in two ways. A fixed “data farming” APR paid in $OCEAN as well as 50% of community fees go to veOCEAN holders. Extra $OCEAN can be earned by regularly allocating veOCEAN to popular datasets in the Ocean Market. veOCEAN is also used to vote on OceanDAO grants, which is funded with the other 50% of community fees. Fees paid to publishers and Providers are paid in $OCEAN.
The $OCEAN token is one form of payment for data alongside $H2O, an $OCEAN-collateralized free-floating stable asset. $H2O is a $RAI fork that serves as the non-pegged yet stable unit of exchange for Ocean’s data economy. While it’s a separate protocol and entity, it is directly integrated with Ocean. Users stake $OCEAN with H2O to mint $H2O, but H2O plans to offer several other “DataFi” products in their V2 update. While it is currently only backed by $OCEAN, it plans to become “data-backed” in 2023 using tokenized data (datatokens) to expand $H2O’s backing.
Conclusion
I want to build an $OCEAN position as I’ve always loved the project. I think that this has a decent chance at riding any kind of "Web 3.0" or “DataFi” narrative in the future. I could imagine a period of increased awareness around data ownership that could further legitimize Ocean’s trading network. I would also like to see $H2O become more involved in the Curve Wars which could give more visibility to the protocol and further involve Ocean in DeFi. Have questions? Join the Ocean Protocol Discord.
Non-Cited References
https://blog.oceanprotocol.com/on-selling-data-in-ocean-market-9afcfa1e6e43