Data Token: The New Asset Class You Should Know About
A data-backed asset class that enables data publishers and participants to share in the value created by data assets
The Problem — Centralised Data Market
Data is undoubtedly the most valuable asset in Web 2.0; the current incarnation of the Web. Even more so in Web 3.0 (the decentralised future web). This is discerningly clear from the sale of user data points by big tech companies like Google, Amazon, Facebook, and Alphabet, for targeted user marketing. Have you ever wondered why it seems like your favourite social network conveniently knows more about your interests than your peers? This is because centralised [exclusive] data markets — championed by big tech and advertisers — already exist. The users, who own that data, are left out of the value chain.
Better Alternative — Decentralised Data Marketplaces
This centralisation has necessitated public data marketplaces where users, small businesses, and corporations can become part of the data value chain and benefit from their data as the rightful owners. Blockchain-powered solutions like Ocean Protocol and Fractal Protocol have emerged to make democratised data-sharing and consumption a reality — while preserving security, privacy and transparency throughout the process. Ocean Market enables data owners to publish, price, and monetise from their data assets through data tokens. The Singapore and Berlin-based organisation has collaborated with many big corporations, including Daimler (Mercedes-Benz), who has now, with the help of Ocean, launched their Acentrik automobile data marketplace. Many more, industry-specific data marketplaces can emerge from leveraging the Ocean Protocol technology stack — thereby breaking more data silos and opening up data for artificial intelligence.
Compute-To-Data: Security, Privacy and Transparency
One of Ocean Market’s greatest selling points is Compute-To-Data (C2D). C2D allows data consumers (data scientists, researchers, and enthusiasts alike) to train their algorithms and models on a data set of their choice while preserving the dataset’s integrity, security, and privacy in a transparent manner (as it is all on the blockchain). The data cannot be copied to another computer. This unlocks a lot of potential as we now have greater public accessibility to a larger pool of data to train Artificial Intelligence models, extract valuable market research insights and augment scientific breakthroughs surrounding healthcare issues.
But how do we agree on the value of a data asset in a public market?
Data Tokens
Data alone, in its raw forms: CSV , Excel spreadsheets, etc. is hard to put a price tag on — which can be a valuation nightmare if a company wants to share their data with third-parties at a fee. This is because it can be thought of as a commodity, or as a means to an end. It is what you do with it that makes it much more valuable. This begs the question: how do we price and set $USD(or ZAR, etc.) valuations of a particular dataset or data asset (dataset and algorithms)?
When a data owner publishes a data asset to the Ocean Market; the publisher can either set the price by themselves or the price can be set by the market through an Automated Market Maker (AMM) leveraging liquidity pools. A data-backed token is automatically published and its value is determined by participants who deem the data asset to be valuable by staking in it (resembles a part ownership of the data asset). This gives the data token its market value. Data token owners can now benefit from the value that is created by the data token as more people find value in it — and the value of the data asset increases.
Staking in a data token
Dubai-based Data Whale, a project spawned from the Ocean Protocol community, has made it easier to navigate, access, and stake in the data tokens of your choosing. There is a need for reputable contributors that curate meaningful data and provide trustworthy liquidity pools for stakeholders, data users and network participants. Through their ALGA mobile application, Data Whale’s vision is to “provide a user friendly ‘one-stop’ solution that helps data economy participants to understand the ecosystem and make smart staking decisions.”
Taken from their publication; some features of the ALGA app can be summarised:
• Data Staking Wallet, that is fully integrated with the user’s Ethereum address and records all transactions related to the data-market automatically. The user can also view his portfolio in various time-frames and analyze the profit / loss for each data-token in detail. We will also add a “Watchlist” function.
- Analysis Tools, such as Rug Pull Index have already been integrated to ALGA. and provide our users further opportunity to make smart staking decisions.
New entrants like DataX, another OceanDAO funded project, have emerged. They sought to make staking and trading in datatokens seamless and more user-friendly through their Datapolis platform. The rise of Data Finance (DataFi) is presenting other opportunities for Insurance and Asset Management services that can be built around datatokens.
Conslusion
As the web evolves we need to start thinking deeply about our relationship with the data we continue to populate the internet / web with. Do we want to take the “blue pill” and continue as things were — being left out of the data value chain by big corporations — or do we take the “red pill” and go down the rabbit hole and become part of the solution? If I were a gambling man I would bet on the latter. It is refreshing to know that the power is being repatriated to the people and there are both physical and digital ecosystems, non-profits, companies, and individuals who are continuing with the good fight for decentralisation.
For more information on the Web 3 data-economy, reach out to us here
Author: Bhalisa, Ocean South Africa — Project Lead
