Ocean Protocol AMA

Held on 23rd October, 2020 at t.me/oddgemsfamilia Telegram channel.

It was my pleasure to host Ocean Protocol’s Co-Founder Trent McConaghy, for an hour long AMA session. It was divided into two parts, First part being Trent answering the questions from my side, followed by the second part which was a short live session where everyone was open to ask anything.

This AMA mainly covers everything related to Ocean’s upcoming V3 architecture. Will be worth the read as the answers are well detailed and explained in a very comprehensive manner.

Q So first question, V2 was all about “Compute to data” like buying & selling of data, privacy, data control, auditability, compliance etc. What additional features are we going to see in V3?

V3 is the most important one yet. It is a fat, wide bridge between the world of data and the burgeoning world of DeFi.

Ocean backend has been reworked around a datatokens core which makes it simpler and more interoperable.

On top is a new community-oriented market called Ocean Market, which has built-in incentives and staking.

To users of Ocean Market, the unique selling propositions (USP) are:
- Monetize data (your data or other data you get the rights to), while preserving privacy and control
- Earning potential by staking OCEAN on data

To people building on Ocean, here are USPs:

  • An on-ramp and off-ramp for data assets into crypto, allowing: crypto wallets for data custody & data management, DEXes for data exchanges, DAOs for data co-ops, securitizing data assets, and more via DeFi composability. It’s “data Lego.”
  • Quickly launch a data marketplace, with many USPs: buy & sell private data while preserving privacy, non-custodial, censorship-resistant, auto price discovery, data audit trails, and more.
  • Decentralized data exchange platform, enabling these characteristics: improve the visibility, transparency and flexibility in usage of data; share data while avoiding “data escapes”; needs little dev-ops support; has high liveness; is non-custodial; and is censorship-resistant.

Lots of ways that Ocean tools can help :)

Q So Ocean’s V3 is all about datatokens, and I’ve gone through your article about “Data Legos” and it was a masterpiece. But for general public can you explain briefly what are datatokens and what does a datatoken represent? Also a brief difference between Data assets and data token would be appreciated.

Thanks very much (blushing)

An Ocean datatoken is a data asset.

An Ocean datatoken is an ERC20 token to wrap access control to a given data service. Each data service gets its own datatoken. To access the data service, one sends 1.0 datatokens to the data provider. To give access to someone else, send them 1.0 datatokens.

This sounds simple. But there are pretty big implications, which we will surely get into :)

Q Can any entity create its own datatoken? (Any blockchain or non-blockchain project or DeFi project?). If so then what is the process of creating a datatoken and how can one decide on its price?

Yes!

You can do it via a few lines of ‘js’ or ‘python’ code using ocean.js or ocean.py Or you can do it via Ocean Market.

There’s more.

Or, should I say, allow me to elaborate to make it easy for your audience.

In Ocean Market, you click the ‘Publish’ button on the top, which takes you to the Publish page. In that page, you fill out the fields: title, description, url of the dataset file (or data service), etc. At the bottom you click “publish” then confirm the transactions with your Web3 wallet. It will deploy a new datatoken contract, along with metadata information, for your data service. You now control that datatoken contract, and can mint datatokens from it.

You can then set a price. Click on the datatoken (data asset) you just created. It gives you the option of fixed price or auto-discovered price. Choose whichever you like, fill out the appropriate fields, and submit the transactions.
- If it’s fixed price, there will be a contract that transfers datatokens one way and OCEAN the other way. Basically an atomic swap.
- If it’s auto price, an Automated Market Maker (AMM) pool powered by Balancer will get deployed. You will add datatokens and OCEAN liquidity to the pool. Then you get all the typical AMM DEX goodness:)

In short: you can create it with a series clicks and form filling from a browser GUI.

Q What I understand is that datatokens will be based on ERC20 token standard where anyone could create their own datatoken. So, Just to be on the same page and if my understanding is correct — Suppose I (the provider) have a dataset that a person X (consumer) wants to access, then in this case that particular person X (consumer) will have to buy 1 datatoken that I (publisher) have created using Ocean’s datatoken factory, and then to access my data he (the consumer) needs to send that 1 datatoken to my wallet (providers wallet)? Right?

FYI what you call “Provider” we call “Publisher”. I’ll use “Publisher” here for accuracy.

The flow is close to what you imagine, with one key difference: after the Consumer requests to buy a datatoken, she does not need intervention by the Publisher. It’s taken care of by the smart contract setup in the blockchain. I will elaborate.

Here’s typical steps in Ocean Market:

1. The Publisher publishes the datatoken, and places it for sale in Ocean Market. Let’s assume AMM pool; then this also includes putting datatokens and OCEAN as liquidity into the pool.

2. Consumer comes to Ocean Market and discovers the asset for sale.

3. In that page, Consumer purchases 1.0 datatokens buy clicking ‘buy’ and going through the prompts. The Consumer’s wallet will send OCEAN to the pool and receive datatokens.

4. In that page, Consumer consumes the data service by clicking ‘use’ and going through the prompts

Note in step 3, the Consumer receives the datatokens without intervention by the Publisher. The AMM smart contracts take care of it. That’s the auto-pricing case. The fixed-pricing case works similarly, via a smart contract that swaps datatokens and OCEAN.

That’s all:)

Q So logically an existing project like Idex could create its own datatoken?

Absolutely. In fact, it could and should create *many*: one datatoken for each data service.

(That was a short one)

Q Ok, now suppose Idex wants to share its “trading data” with someone, and now that using ZeppilinOS we can upgrade smart contracts (though a bit cumbersome process), so does Idex need to upgrade the underlying smart contract while creating their own datatoken?

Idex does not need to upgrade any smart contract while creating their own datatoken.

How it works is: Ocean has a deployed a datatoken factory contract. When you go to publish a data asset, you are invoking that factory to publish a new datatoken contract.

Incidentally, Ocean smart contracts explicitly do *not* have upgradeability built in. This is a governance choice. Upgradeability is usually governed by a small group of people in a multisig fashion. Ocean v3 moves away from that. Therefore the only way to upgrade contracts is by community consensus to use a new set of smart contracts. Sometimes, less is more.

Q This brings a whole new concept of data, and it’s HUGE as this basically turns data into assets. As in ERC20, we need to hold ETH for a transaction, so is it necessary to hold $OCEAN for a Datatoken transfer? Also regarding transaction fees, will that be paid in OCEAN or datatokens itself?

You don’t need to hold OCEAN to transfer datatokens.

Each datatoken is an ERC20 token, so you invoke transfer() the way you normally would. Or approve() and transferFrom().

Since it’s deployed on Ethereum mainnet, you need to pay gas fees, in ETH.

One more thing: When a datatoken owner wishes to consume the data service, they send 1.0 datatokens to the Publisher. 0.1% of those datatokens go to the Ocean community, for future funding.

Q Datatokens are based on ERC20 standard so can we integrate the datatokens with the current ERC20 ecosystem, like exchanges, wallets etc? Can you brief us on this as well?

Yep, absolutely! And this makes things super exciting:

Crypto wallets become data wallets. You’re now doing data custody and data management with MetaMask or Trezor.

DEXes become data exchanges. Balancer, Uniswap, Kyber and the like can now trade datatokens. And CEXes like Binance and Coinbase can even launch their own datatokens trading desk — a nice business opportunity for them.

DAOs become data DAOs. This is how we can implement things like data co-ops and data unions. It gives us the opportunity to bargain with the likes of Facebook collectively, rather than one at a time.

Etherscan becomes a data provenance tool.

CoinGecko and CoinMarketCap can add datatokens listings. Maybe they’ll even have their own special section, just like they have for DeFi.

This has great advantages to DeFi, for two reasons.

  • Ocean grows the DeFi AUM. DeFi has about $10B in AUM. The data industry is $400B in Europe alone. Ocean now wraps data assets, to bring them into DeFi. Ocean is a big fat bridge from the data industry to decentralized finance.
  • Ocean helps to close the loop towards more capital efficiency in DeFi. For example: Ocean helps to supply and price data, data that is used to build risk models that enable giving loans at 20% collateral rather than 180%. It also helps risk models for insurance, maximizing yields in yield farming, and arb bots.

So, yeah, I’m pretty excited about Ocean datatokens too 😁

Q For launching an ERC20 tokens we had IEO’s and ICOs’, so will there be something like IDO (Initial Data Offering) using which anyone can launch their own datatokens. If yes can you share some info on the same?

Absolutely!

An Initial Data Offering (IDO) is what happens when you launch a data asset and place it into a primary market.

Ocean Market makes it easy to do this: deploying the datatoken is the data asset, and putting it into the AMM pool is the primary market. Therefore Ocean Market is the first IDO Launchpad.

Q While going through one of your blog post titled “the web3 sustainability loop” I came across OceanDAO — What I understood from this is OCEAN will be granting funds to projects that will help increase data supply for Ocean Marketplace. Can you talk more about it and also explain in brief its governance structure.

We want to ensure that the Ocean community is sustainable over time. Health of $OCEAN is paramount to this.

Therefore we have designed dynamics such that as usage of Ocean grows, it grows $OCEAN. Here is the core:

  • Here’s the loop: more usage of Ocean tools in the Data Ecosystem leads to more OCEAN being staked, leading to more OCEAN demand, growing $OCEAN. For example, Ocean Market has a staking element of OCEAN in the loop.
  • More usage also leads to more Network Revenue (a tiny % when datatokens are consumed), which mostly goes to OceanDAO (and a bit to burning). Funds go through OceanDAO to workers who have the mandate to grow usage of Ocean tools. And the loop repeats.

So we have funds for the community coming from Network Revenue, as mentioned above. We also have 51% of OCEAN tokens scheduled to be disbursed to the community over decades in a Bitcoin-like schedule.

These funds are designed to be disbursed in a way that drives near-term growth and long-term sustainability. There are many possible activities that might help. Therefore we need humans in the loop to help decide this. But Ocean is a decentralized system. Therefore the appropriate tool to make decisions is a DAO. That’s the role of OceanDAO: to efficiently allocate these funds towards growth and sustainability.

We are targeting to launch the first version of OceanDAO in Q4. Anyone can apply with a project proposal. This can be projects for developing core software, developing integrations and apps, outreach, adding data, or other. OCEAN will play a role in voting.

Governance isn’t easy. Therefore we expect it to take time, likely years before OceanDAO fully stabilizes. So we have a number of measures to “bake slowly”.

Oh yeah, we wrote our own agent-based simulator to verify this all too. TokenSPICE. We’ll open source that at some point.

Q How can a data asset be recognised/identified in a data marketplace?

It has metadata like name of asset, description, etc. Its datatoken has an Ethereum address.

Ocean Market has ways to discover data assets via browsing, search, and filtering.

Q Why would, for example, Mercedes share its private data with Tesla? Wouldn’t this reduce the competitive edge these companies have?

Each company can choose where it wishes to compete. It’s common for companies to cooperate in one aspect and compete in others.

We first discovered the self-driving automobile use case in early 2017. Toyota Research reached out to us. They had run the numbers and realized it would take them way too long to generate all the miles-driven data they needed for safe self-driving cars. But if they could pool their data with others, they could ship safe cars much sooner. So with them, we prototyped an data exchange for self-driving cars. We announced that in May 2017 at the big Consensus conference. Since that time we’ve continued to build on this use case via MOBI — the blockchain mobility alliance.

This is an example where Toyota would cooperate with other automakers on self-driving technology, yet compete in selling cars.

Q Can you let us know what Data Farming is all about and how significant will this be in the near future? What are the plans for long term sustainability as well?

Ocean is designed for near-term growth and long-term sustainability.

For long-term sustainability: I described it earlier but I will summarize here.
- Make sure that as usage goes up the health of OCEAN goes up as well
- Ensure that there’s funding to drive it all, via network revenue and 51% supply

For near-term growth, Ocean Data Farming is a program to help. Its goal is to incentivize a supply of relevant and high-quality data assets into Ocean Protocol. Ocean data farmers can earn OCEAN for providing liquidity to OCEAN-datatoken pools; the amount earned will be multiplied by usage of the datasets they stake on, and more.

Here’s a bit more detail on it, to be precise :P

Ocean Data Farming aims to maximize the data supply reward function (RF). The RF is a function of liquidity added to datatoken pools, dataset usage, and potentially more. We will start with an initial RF and a program budget of OCEAN over a time interval (on the order of months). Each week at a pre-set time, the program managers will:
- Off-chain, calculate contribution of each actor to the RF for that week (actor = Ethereum address).
- Manually airdrop OCEAN to each actor proportional to their contribution, the total being that week’s budgeted OCEAN.
- Declare the RF for use in the following week, to fine-tune towards the most relevant and high-quality datasets, and away from “gaming” that is against the spirit of the program.

Q How will Ocean Protocol be incentivizing data suppliers and individuals that will be providing liquidity for datatokens?

The main incentive for data suppliers to supply data is: you can earn by selling the data:):) And if they sell using AMM pools, they’ll be staking // providing liquidity, so the get the stakers benefits which I describe now.

Stakers / liquidity providers can earn in two ways:
- They get a % of tx fees, proportional to their stake and to volume
- When Ocean Data Farming ships, they will get OCEAN rewards for stake, volume and more

In short: lots of ways to earn, lots of reasons to use Ocean:)

Q Can you also explain to us the additional utility of OCEAN tokens in this v3 architecture?

I think the answers above covered it pretty thoroughly. A quick summary 51% supply, governance of funding, staking / curation in Market, some revenue from usage. All in a loop for growth & sustainability.

The “Web3 Sustainability Loop” goes into a lot more detail.
https://blog.oceanprotocol.com/the-web3-sustainability-loop-b2a4097a36e

Q When can we expect Staking to go live?

It will launch with Ocean Market, before the end of this month.

Q There’s a lot of questions to ask but time is the constraint here, coming to my last question, Ocean Protocol has lots of enterprise connections like BMW, Mercedes, Daimlerand many more, recently there’s rumour about Accenture. Any hints would be highly appreciated :)

1. Data Launch Partners: we onboard potential data sellers and buyers in the Ocean Market and we will make announcements about this starting with next week. We estimate that we will have tens of projects joining the Ocean Market as data sellers and buyers by the end of the year.

2. We are actively working with 3 corporations/multinationals and big public organisations from 3 different verticals [financial, auto, engineering] — we still cannot disclose their names due to very strict NDA rules.

Hope you like that:)

Oddgems: Ok, that’s it from my side, Now the channel will be unmuted and it’s the community’s turn to ask any other questions they wish and Trent will answer them :)
Trent: Sounds great! Thanks for all the great Q’s so far.

CHANNEL UNMUTED — LIVE SESSION STARTS

Don’t want to do this but it’s time to wrap up this AMA.

And with that my friends, we conclude this AMA. Thanks a lot Trent for answering all the questions in such a comprehensive manner. It’s been an awesome session to be honest where I’ve learned a lot and looking forward to all the great things which are coming in 2020 and beyond. Wishing the entire Ocean Protocol team the very best for their future endeavours. Hopefully we see you again soon :)

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store