What is Ocean Protocol (OCEAN)? The Data Exchange Protocol Explained
The goal of Ocean Protocol is to make data ownership possible, and having absolute control over data and their uses.
The world produces tons of data every day, and many people are not aware of the high numbers of data they are releasing on the Internet. In the Ocean Protocol whitepaper, the authors estimate that 1 zetta-byte (1 trillion gigabytes) of data was released in 2010, while this number multiplied sixteen-fold in 2016.
Ocean Protocol allows data providers to monetise data at a fair value to those who want to purchase them. Data providers can just be regular people, like you and I, or researchers who have spare data coming from previous works.
Unlike the relationship between tech giants and their users, actual monetary exchange is involved in the Ocean ecosystem. Data providers can also choose whom they want to sell their data, how much of it, and for how long data consumers can have access to them.
- Ocean Protocol enables the possibility of data ownership by means of the decentralised software that allows the exchange between data providers and consumers.
- The OCEAN token is an ethereum-based ERC20 token that is used as medium of exchange, governance, staking, and the purchase of data tokens.
- The programs in Ocean Protocol can also be used to distribute and securely store data to be used by third parties without having them access sensitive and/or private information.
What is Ocean Protocol?
Ocean Protocol is an open-source decentralised software that allows data providers to sell data at a fair value in an exchange with data consumers.
In the Ocean ecosystem, many data consumers are actually developers of machine learning software. They require ample supply of data (at fair value), in order to feed their machines to improve, for example, models of various real-world scenarios. Many of the worlds’ most valuable data are locked behind a high paywall.
The other goal of Ocean Protocol is to make data ownership possible, and having absolute control over data and their use. This means data providers can consciously choose to supply data to projects that resonate with them, such as climate change, healthcare, economic equality, and more.
This is because data is more valuable than many people think. But just how valuable is your data?
When you simply turn on your device’s GPS service for navigation, the service also takes record of your location, movement, history of traveled places, and many more. This data is aggregated to indicate, for example, how busy a particular road traffic is or how crowded a particular area is.
Big data companies like Google take your data for free, and in exchange, the company provides free services and “improved user experience” such as serving more relevant search suggestions and adverts. In the best-case scenario, you might consider this as a good trade-off.
However, consider how much your data costs. Big data companies earn their revenue by giving advertisers and other companies access to aggregated data.
Think about how much it costs for these tech giants to run. They require massive resources, build a solid infrastructure, and hire top-tier talents to run their business sustainably. Data must cost a lot of money.
What is OCEAN token?
OCEAN is the native utility token of Ocean Protocol. Since the protocol is built on top of Ethereum, OCEAN is an ERC-20 token, and is storable inside any Ethereum wallet.
As of 2021, Ocean Protocol has also been built on top of other networks, such as Polygon, Moonriver, Energy Web Chain, and Binance Smart Chain, among others.
The latest version of Ocean Protocol is Version 3, which is the most complete version to date, as it has introduced a myriad of ways for data providers and consumers to trade and exchange just like how shareholders exchange stock with retail investors.
OCEAN is a multipurpose crypto token in the Ocean ecosystem. The supply of OCEAN is capped at 1.41 billion tokens. Details of how OCEAN tokens are distributed can be found in this article by Ocean Protocol cofounder Bruce Pon — A Token Distribution to Fund a Data Economy.
What is an ERC-20 token? In short, these are simply tokens that are used on the Ethereum blockchain and act as assets that facilitate the various utilities and functions on the network. Learn more with our guide.
While it makes a good medium of exchange, it is used for governance purposes where users vote on community proposals. OCEAN tokens are also “staked” or deposited into liquidity pools in data markets (more on this below).
However, it is not the token that is used to unlock datasets that are sold by data providers (also known as data services). The rights to access data are stored in datatokens, which are ERC-20 tokens that are minted by data services.
OCEAN can be used to purchase datatokens, but datatokens must be present in your crypto wallet in order to access a particular dataset that you want to see.
Learn more: What is Ethereum (ETH)? A Complete Guide in 2022.
How is OCEAN earned by network participants?
There are several ways that network participants can get started in Ocean Protocol, and these do not involve making an investment in fiat currency.
- Selling latent data. As mentioned before, some data providers could be researchers who have spare data that they could share and monetise. Data providers can mint their own ERC-20 datatokens, and sell these for OCEAN tokens.
- Selling value-added open data. Extending the simple act of selling latent data is selling value-added open data. Data consumers can gain access to these data for free, and add value to the data by improving them. Labeling, analysing, transcribing, or assigning new meaning to data are some of the ways to add value to open data. The processed data can then be sold under the processor’s name.
- Selling trained AI models. AI models are nothing more than special lines of code (information), which can be sold for OCEAN tokens. By selling AI models, data scientists could skip training AI models from zero, and make further progress in research.
What is Ocean Protocol’s Compute-to-Data feature?
Much of the world’s most valuable datasets are private, such as genomics, health history, and financial records, to name a few. Sharing these types of data outside of Ocean Protocol’s decentralised infrastructure is extremely risky.
This is why the protocol has a Compute-to-Data feature that allows data consumers to use such valuable data while preserving the privacy of the data provider. This is made possible by essentially making the data unreadable to humans, as it exists encrypted in the backend (not for viewing purposes).
The data consumer (most likely an AI researcher) sends a special algorithm to decrypt, process, and train the AI model privately in the premises — still in the backend as it is impossible to be read by a person.
After the AI model completes its training, what the AI researcher will see is the final result. The conclusions made by the AI model cannot be verified as the raw data is locked. However, the researcher can verify if the algorithm works as intended.
What are Datatokens in Ocean Protocol?
As prefaced above, datatokens are ERC-20 crypto assets that represent the right to access data from datasets. These are minted privately by data -providers. Datatokens are fungible, meaning that the asset is tradable, and that a unit of the asset grants the holder the same right as someone else who has that unit.
For example, one datatoken to view a video grants the holder 1 hour of viewing. Two datatokens can double the total viewing time. This is different from non-fungible tokens (NFT), where a unit of the NFT (such as a digital plane ticket) cannot be traded with another plane ticket, even if both holders take the same flight.
Because datatokens are ERC-20 crypto assets, they are all storable inside of wallets, and are compatible with services built on Ethereum. For example, a datatoken represents your credit history on various decentralised lending platforms.
A DeFi platform can ask you to submit your datatoken that represents your personal credit history as easily as sending any crypto token.
Ocean Protocol allows the creation of datatokens that hold certain attributes. Taking the example of the video viewing datatoken, the token can contain a value that represents the expiry time of the access. So, in this example, the smart contract of the data provider can recognise this attribute, and then proceeds to allow viewing for a limited time.
Learn more: What are Non-Fungible Tokens (NFTs)?
Is it possible to deposit OCEAN for staking?
Data markets rely on OCEAN staking to automate price discovery of datatokens. A data provider can choose to sell datatokens in the open data market with a floating price, based on supply on demand. In a data market, prices are determined automatically using a smart contract.
This smart contract checks to see the supply of a pool of token pairs. Let’s say I’m selling 1 MDT (My Datatoken) for 10 OCEAN tokens. I prepare a pool for this data token — I provide the supply of MDT, and a liquidity provider in the data market provides the balance of 10 OCEAN tokens for every 1 MDT.
When I open this market, if my MDT tokens are popular, then the pool will be abundant in OCEAN but not MDT. The smart contract sees how scarce the MDT token is in this particular pool, and will then increase the price of MDT in response.
This mechanism is formerly known as an automated market maker protocol. In this context, “staking” just means depositing OCEAN tokens into a pool as an investment. In a data market, OCEAN stakers will earn passive income from the transactions that happen to and from the pool.
Further reading: Learn more about automated market makers in Uniswap.
Who is the team behind Ocean Protocol?
Ocean Protocol was created in 2017 by BigChainDB founder, Bruce Pon, and AI expert, Trent McConaghy. The project received a great number of support from world governments, international corporations, academia, and non-governmental organisations.
According to the business whitepaper, Singapore is the lead government partner for Ocean Protocol. Singapore’s Info-communications Media Development Authority (IMDA) collaborated with Ocean Protocol to leverage data sharing activities, and has helped to create a safe “sandbox” that allows regulators to experiment and observe the extent of this new technology.
Indeed, the application of Ocean Protocol is already apparent with the 360-degree Smart Living project to make housing more comfortable and helpful for Singapore’s elderly residents, as well as their caregivers and guardians.
Another use case highlighted in the business whitepaper, such as storing private data of heart disease patients’ blood to help determine the appropriate dosage of blood anticoagulants (and to communicate this securely across different healthcare parties). You can visit the link above to find more use cases of Ocean Protocol.
Ocean Protocol Explained — in summary
Ocean Protocol allows data providers and data consumers to trade valuable data at a fair market price. The protocol also encourages more public data to be unlocked and controlled, to distribute them with privacy in mind, rather than having them circulate in hands of tech giants who have had free access to data, but are less willing to share them.
Ocean Protocol’s applications extend beyond monetising data. The protocol can be used to securely store and distribute private data, to be used by various parties, without them having access to the private data permanently nor having the power to distribute them without consent.
If you are particularly confident about the future of Ocean Protocol, you can check out today’s rate for the OCEAN token at Easy Crypto. Invest in Ocean Protocol and become part of the new Data Economy!
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Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.
Last updated December 23, 2022