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Ocean Protocol: Tools for the Web3 Data Economy

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Handbook on Blockchain

Part of the book series: Springer Optimization and Its Applications ((SOIA,volume 194))

Abstract

This chapter describes a toolset to enable Web3 data economy. Ocean Protocol is an on-ramp for data services into crypto ecosystems, using datatokens. Each datatoken is a fungible ERC20 token to access a given data service. Ocean smart contracts and libraries make it easy to publish data services (deploy and mint datatokens) and consume data services (spend datatokens). Ocean contracts run on Ethereum mainnet to start, with other deployments to follow. Ethereum composability enables crypto wallets as data wallets, crypto exchanges as data marketplaces, data DAOs as data co-ops, and more. Ocean Market is an open-source community marketplace for data. It supports automatic determination of price using an “automated market maker” (AMM). Each datatoken has its own AMM pool. Anyone can add liquidity, aka stake (equivalent in AMMs). This is curation, as stake is a proxy to dataset quality. We envision thousands of data marketplaces, where Ocean Market is just one. In addition to Ocean Market being open-source (and therefore forkable), Ocean includes tools to help developers build their own marketplaces and other apps. Ocean’s “Compute-to-Data” feature gives compute access on privately held data, which never leaves the data owner’s premises. Ocean-based marketplaces enable monetization of private data while preserving privacy. These tools are part of a system designed for long-term growth of a permissionless Web3 Data Economy. The Ocean Data Farming program incentivizes a supply of data. The community-driven OceanDAO funds software development, outreach, and more.

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Notes

  1. 1.

    DEX = Decentralized Exchange.

  2. 2.

    DAO = Decentralized Autonomous Organization.

  3. 3.

    Let’s illustrate how the Bitcoin system prevents double-spending of Bitcoin tokens (bitcoin). In the Bitcoin system, you “control” an “address”. An “address” is a place where bitcoin can be stored. You “control” the address if you’re able to send bitcoin from that address to other addresses. You’re able to do that if you hold the “private key” to that address. A private key is like a password—a string of text you keep hidden. In sending bitcoin, you’re getting software to create a transaction (a message) that specifies how much bitcoin is being sent, and what address it’s being sent to. You demonstrate it was you who created the transaction, by digitally signing the message with your private key associated with your address. The system records all such transactions on this single shared global database with thousands of copies shared worldwide.

  4. 4.

    We could also use ERC721 “non-fungible tokens” (NFTs) [ERC721] for data access control, where you can access the dataset if you hold the token. Each data asset is its own “unique snowflake”. However, datasets typically get shared among > 1 people. For this, we need fungibility, which is the realm of ERC20.

    However, there is a more natural fit for NFTs: use an NFT to represent the base rights. The base rights are the ability to create access licenses (=mint ERC20 access tokens). The first base rights holder is the copyright holder, but they could transfer this to another entity as an exclusive deal (= transfer the NFT).

    Ocean’s V3 datatokens release uses just ERC20 tokens. There is a base rightsholder, it’s just implicit: it’s the entity that controls the ability to mint more ERC20 tokens (= “publisher”). This could conceptually be replaced with an explicit representation, which is NFT.

  5. 5.

    The World Intellectual Property Office (WIPO) is a United Nations (UN) agency dedicated to setting IP guidelines. Each jurisdiction can then choose how to implement the guidelines. For example, the United States Patent & Trademark Office (USPTO) implements WIPO guidelines on patents and trademarks in the US.

  6. 6.

    Deployed to Ethereum mainnet to start, then to other networks in time. A later section elaborates.

  7. 7.

    Thanks to Simon de la Rouviere for this framing, which he in turn derived from Austin Griffith.

  8. 8.

    The Ocean and Balancer teams have collaborated for years. Part of the collaboration between the Ocean and Balancer teams is discussion around Balancer V2. Ocean plans to use Balancer Lab’s deployment by Balancer V2, if not sooner.

  9. 9.

    The Ocean-tweaked Balancer pools are optimized for low gas cost, but because they do not come from Balancer’s official factory, they aren’t currently eligible for Balancer Liquidity Mining [Martinelli 2020]. If users choose, they can deploy datatoken pools using Balancer’s official factory, which is more expensive but does receive BAL rewards. Balancer V2 will optimize gas costs, at which point we expect Ocean libraries to use Balancer official factory (and therefore be eligible for BAL rewards).

  10. 10.

    CEX = Centralized Exchange.

  11. 11.

    Thanks to Simon Mezgec for this suggestion.

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Authors and Affiliations

  1. Ocean Protocol, Berlin, Germany

    Trent McConaghy

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  1. Trent McConaghy
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Correspondence to Trent McConaghy .

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Editors and Affiliations

  1. Department of Computer Science, University of Massachusetts Boston, Boston, MA, USA

    Duc A. Tran

  2. Department of Computer and Information Science and Engineering, University of Florida, Gainesville, FL, USA

    My T. Thai

  3. Department of Electrical and Computer Engineering, University of Southern California, Los Angeles, CA, USA

    Bhaskar Krishnamachari

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McConaghy, T. (2022). Ocean Protocol: Tools for the Web3 Data Economy. In: Tran, D.A., Thai, M.T., Krishnamachari, B. (eds) Handbook on Blockchain. Springer Optimization and Its Applications, vol 194. Springer, Cham. https://doi.org/10.1007/978-3-031-07535-3_16

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