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Background of Ocean Protocol
Data is a very important factor of production at the moment. Technavio, the world's leading technology research and consulting company, proposed in its latest big data research report that by 2024, the size of the global big data blue ocean market may grow to 142.5 billion US dollars as a whole.
Moreover, the upsurge of the metaverse will continue in the future, the value attributes of data will be more prominent, and the analysis of a large number of user privacy data will provide users with a better immersive experience.
However, according to the International Data Corporation (International Data Corporation), only 0.5% of the world's data is actually used and analyzed, and the rest of the data is sleeping in the database.
The main reasons are:
1. The leakage of intellectual property rights and user privacy information will promote bad business competition, bring privacy and security issues, and hinder the flow and sharing of data .
2. In addition to data privacy protection, the release of data value also requires a lot of cumbersome steps . Raw data cannot bring real benefits, only the insights generated after logical analysis and combination of different data can unlock the value of data.
So, how can we eliminate the concerns of all parties, so that the data in their hands can be shared efficiently and unlock greater value?
Further, when data has generated value, how can data owners release the value of data to maximize their own interests?
The emergence of the Ocean protocol is to solve these problems, and when data can be shared and circulated, the transaction of data will also generate value, thus making data financialization possible.
What is the Ocean Protocol
3. The Ocean protocol mainly provides a decentralized data trading platform , allowing data providers to conduct transactions with data consumers through a decentralized data trading market.
At the same time, data scientists and other relevant persons can also contribute algorithms on the platform, providing added value to the original data to obtain incentive income.
To give a simple example, assuming there is daily stock price data in the past month, we cannot perceive the situation of this stock simply through the data itself, but we can know the volatility of the stock price by calculating the variance, which enriches our knowledge of this stock. Perceptual dimension.
The platform guarantees the security and privacy of all data and algorithms. Finally, the Ocean protocol has the potential to serve as the underlying infrastructure of Web3, integrating the value of data into the development of Web3.
How are sensitive data transactions shared?
Pain points of current data sharing
In the past, sensitive data held by all parties was difficult to share and could not release greater industrial value .
For example, a hospital’s database has accumulated a large number of patient cases and personal information. If data sharing can be achieved, then AI practitioners can use these patient data for machine learning training and modeling, so as to better assist doctors in identifying signs of illness .
However, in reality, due to personal privacy issues, these data cannot be directly handed over to the demander for training.
This not only wastes valuable data resources, but also greatly hinders the development of the medical industry.
Data doesn't move, algorithms move
The "compute-to- data " function of the Ocean protocol ensures that the algorithm runs on the dataset in an isolated and secure environment, so that sensitive data can be used for algorithm training, but the sensitive information of the data itself is not will not leak.
In this way, data providers are willing to provide the data at hand and create benefits through data; and data scientists can also provide algorithms to further develop the value of data and create benefits by providing algorithms.
Specify the type of algorithm to ensure data security
However, the algorithm cannot be released and used at will, because some algorithms may still retrieve sensitive information.
Therefore, in order to standardize the use of algorithms, the Ocean protocol introduces a new asset type : Algorithm .
An algorithm is a small script that can be run on a dataset under Compute-to-Data security conditions.
How to understand that an algorithm is an asset? We mentioned above that data scientists can unlock the deeper value of data by inventing algorithms.
Therefore, an algorithm can be regarded as an intellectual property that can bring cash flow, and is naturally an asset.
Obviously, Compute-to-data breaks the barrier of data sharing and circulation. It can not only expose data privacy, promote the open circulation of data, but also encourage data scientists and other relevant people to develop safe and efficient algorithms to maximize the Unlock the value of your data.
The problem of data circulation has been solved, so how are these data traded and how are they priced?
The data trading market of the Ocean protocol
token mechanism:
First, let's take a look at the token mechanism of the Ocean protocol. There are two types of tokens, Ocean token and data token .
Ocean token is the governance token of the Ocean protocol . Its core functions are:
1. Participate in data management through pledge
2. Used to purchase data tokens
3. Participate in DAO governance
From a functional point of view, Ocean token is required to add liquidity by staking and to purchase data tokens.
Therefore, the usage scenarios of Oceantoken are all over the entire trading market. When the scale of the data trading market is larger, the consumption and use of Oceantoken will also increase, which means that the price of Oceantoken can reflect the popularity of the market to a certain extent.
Another token is the data token, which represents access to data assets .
When a data asset is released on the trading market, the corresponding data token is also created.
A data token is an ERC-20 token that grants the holder access to a specific dataset or data stream.
What circulates in the data trading market is not the data packet but the corresponding data token, so the essence of the transaction is the transfer of access rights rather than the transfer of data.
On the one hand, such a design improves the efficiency of transactions, and on the other hand, compliance with the ERC-20 token standard also provides the possibility for later integration into the Web3 infrastructure.
So, what role do these two tokens play in the trading market?
From IDO(DEX) to IDO(Data) - automatic price discovery
Ocean trading market realizes data trading and automatic price discovery mechanism through Balancer's AMM mechanism .
Similar to Initial Dex Offering, which can create a liquidity pool for trading tokens, Ocean Protocol implements Initial Data Offering through Balancer.
When the data owner publishes the data, it automatically creates a liquidity pool (adding liquidity Oceantoken + data token) with the help of the Ocean protocol.
When the buyer needs to purchase the right to use the data, it can be traded through the liquidity pool. In the continuous transaction process, the price of the data token is also constantly updated. When the equilibrium price is reached, the effect of price discovery is achieved.
Why did the Ocean team choose the form of AMM for data trading, rather than the form of order books and auctions?
The main reasons are as follows:
4. The AMM mechanism can provide continuous price updates and transactions can be executed at any time.
5. The order book needs to match the quotations of buyers and sellers, and has high requirements for liquidity, which is not suitable for transactions in the long-tail market such as data tokens;
6. Auction is because its process is very slow, which is not conducive to continuous price updates and efficient operation of the market.
Then I chose Balancer from AMM, because Balancer has more options for adjustment.
E.g:
1. Balancer can adjust the proportion of tokens in the liquidity pool , reducing the burden on the creator of the liquidity pool. When the current Ocean protocol creates a liquidity pool, it is composed of Ocean tokens that account for 70% and data tokens that account for 30%.
2. The data publisher can adjust the transaction fee of the liquidity pool, ranging from 0.1% to 5% . When the data is precious enough and scarce, the data owner can drive up the fees relatively high. Compared with other AMM mechanisms, such a free fee setting can attract users with high-quality data assets to enter .
Let users vote with pledge - building a high-quality data trading market
Trading through the AMM mechanism will generate slippage, and the liquidity pool needs sufficient liquidity to ensure that the transaction slippage is low enough. Users can contribute liquidity to the liquidity pool and are rewarded with transaction fees proportional to the size of their stake.
Not only that, in the Ocean protocol, the pledge mechanism also cleverly binds the user's income with the improvement of data quality. Let's first look at how the returns of the liquidity pool are calculated.
To improve the profitability of liquidity providers, there is nothing more than to choose these two situations, choose a data token pool with a large enough transaction volume, or choose a liquidity pool with a small current total amount of funds but will receive attention in the future.
The former situation motivates users to look for credible data and put their liquidity in the most credible data token pool, because only credible data can be downloaded or used to the greatest extent.
The latter situation motivates users to look for credible data that has not yet been discovered by the market , so as to occupy the initial share and obtain greater benefits.
Therefore, by binding user interests with data quality, the data trading market transforms the user's search for high returns into the process of discovering high-quality and credible data in the data market, which is a very ingenious design.
So far, we can make a brief summary, implement data trading through the AMM mechanism, and provide the basis for price discovery for data.
Mining trusted data in the market through staking to improve the quality of the overall trading market and the satisfaction of participants.
The Ocean protocol provides a high-quality data trading market, and transactions price data. Since then, intangible data has become a tangible data asset. The author believes that the core role of the Ocean protocol lies in this.
When data has price support, it provides the possibility to integrate into the vast Web3 world.
The use of data tokens in DeFi
After having a value base, data can be used as a new asset class and used in current DeFi applications in the form of data tokens.
E.g:
1. Through web applications such as Uniswap or Balancer, it is used to exchange data tokens for DAI, ETH or OCEAN, helping data providers to quickly realize cash .
2. Put the company's data token into Balancer or Uniswap to add liquidity to obtain passive income .
3. Through the loan agreement, mortgage the data token to borrow . One financial analyst estimates that "all of Tesla's data services will be worth more than its auto business."
If Tesla faces a high shortage of capital flow when building a factory, it can use its AI driving data to make pledged loans to make up for the gap in cash flow.
Ocean token analysis and acquisition method
From the above analysis, through pledge, acting as a transaction medium for purchase and governance process, the entire transaction process, including the provision of liquidity, is inseparable from Ocean token. Therefore, Ocean token captures the development dividend of the ecology very well.
On February 15th, Ocean released their 2022 Roadmap, demonstrating their determination to develop the data market. The new plan proposes the V4 version of the data trading market.
The NFT representing data, the new pledge model, Ocean's Dao organization and ecological incentive fund are used to expand the ecological development, and the ambition of the Ocean project side has also ushered in a warm response from the market, and the price of the currency has increased a lot.
Ocean token is well-liquidated and is currently traded on more than two dozen exchanges, including several leading platforms - such as Binance, KuCoin, Bittrex, and Poloniex.
Currently, Binance is the most liquid centralized exchange for Ocean token, and Uniswap is the most liquid decentralized exchange for Ocean.
Dana Community Summary
The Ocean protocol realizes the circulation of sensitive data through Compute-to-data, helps data scientists to model based on sensitive data, and realizes the availability of sensitive data.
Secondly, the Ocean protocol establishes a data trading market, and discovers prices through the market, turning intangible data value into tangible assets.
Since then, data can better serve the operation of enterprises and bring more possibilities to the Web3 digital economy.
Since then, encrypted wallets can store data value, encrypted exchanges can conduct data transactions, and companies can also borrow funds through loan agreements, releasing the value of data to make up for the company's cash flow.
In the era of digital economy, a steady stream of data is generated, and value is discovered and released through the Ocean protocol, ultimately benefiting every user of Web3.
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