Ocean Protocol: enabling self-sovereignty over data assets

TL;DR:   BTC : Money :: Ocean : Data Assets

The invention of Bitcoin and its subsequent monetization was a Zero to One moment for Web3. It made credible self-sovereignty of money (and everything that money can lay claim to) possible for the very first time. Subsequent Web3 projects have taken this kernel  - self-sovereignty - and have aimed to generalize it to all forms of value. Ocean Protocol is one such protocol that aims to give users self-sovereignty over their data assets.

The core ideas underlying the protocol have been explained in a fairly accessible fashion in the Ocean Protocol whitepaper. Before diving deep into the contents of this whitepaper, it may be helpful to map out what self-sovereignty might mean in the context of data and why it might be useful to enable it.

Users and businesses generate enormous quantities of data by simply existing and transacting on the internet. Web2 Platforms that enable these transactions - think Google, Facebook, Apple, ... - typically allow users to transact freely while aggregating and monetizing their data. This data is fed into machine learning algorithms that improve incrementally with every marginal terabyte of data. That improvement in turn allows platforms to improve services and connect more businesses and users with one another (e.g. targeted advertising on Google, follow recommendations on Twitter,...) forming a virtuous loop for owners and shareholders of these platforms.

The scenario above presents a genuine dilemma. On the one hand, platforms genuinely provide a service that improves user experience: Google has made it enormously easy to access information, FB connects us to long-lost friends and kindred communities, Twitter enables instant communication with utter strangers interested in similar topics. The list is almost endless. On the other hand, platforms become de-facto owners of data and can often extract an extortionate amount from users, developers and businesses owing to their clout. Some examples of such behavior are the approximately 30% cut that Apple takes from apps on its store, YouTube's 45% cut on advertising revenue paid out to creators. In addition, users have limited ownership and portability of the social networks they establish, their audiences, the metadata they generate during usage and so on.

An obvious solution is businesses and individuals having complete control over the monetization and distribution of their data. Sell your data to whom you want, for the price you think fit, control the terms and time of access...seems perfect!

Or does it? The solution raises a lot of questions as it answers others. How do individuals and businesses go about finding buyers for their data? How do they price their data? How do they make sure that access to their data is still controlled by them? How can they make sure that data is accessed securely while obeying all required privacy laws and regulations?

Enter Ocean Protocol.

Ocean Protocol "aims to spread the benefits of AI by equalizing the opportunity to access and monetize data". The primary tool enabled by the protocol is a decentralized datatoken. Datatokens are ERC20 tokens that control access to private data.  Datatokens allow data owners fine-grained control over access to their data. They can be traded in marketplaces that can be set up anew or using existing marketplaces such as Ocean Market. Data owners can set fixed prices for data access or use tools like Automated Market Makers (AMMs) to market-determine prices.

Besides allowing data owners to monetize their data, Ocean generalizes the concept of data-monetization to data-asset-monetization. In addition to the ability to trade just data, Ocean enables intellectual property - algorithms, code and pipelines - to be priced and traded as well. In this sense, the datatoken should really be broadly understood to mean a generalized data-asset-access-token.

The Ocean project has a number of innovative features that will be explored in detail in future posts. These include foundational concepts and primitives such as datatokens and compute-to-data, built on more foundational concepts such as ERC20 tokens, AMMs, smart contracts and the like. Stay tuned!