Since 2019, decentralized finance (DeFi) has proven invaluable to cryptocurrency and likely started the bull market. Yield farming, staking, and lending have earned many cryptocurrency investors double- and even triple-digit annual interest rates. Unheard of in traditional finance!
But with high returns, investors also faced high risks. Numerous smart contract exploits where user funds were drained and malicious activity of DeFi protocols that suddenly withdrew large amounts of cryptocurrency have resulted in a healthy dose of skepticism. Additionally, DeFi has gone behind the scenes since speculation around NFTs became a lucrative investment alternative, allowing investors to gain immense multipliers by flipping JPEGs.
But as the attention of crypto enthusiasts has shifted to NFTs, DeFi has developed into a broader “Web3” movement. Providers like Bancor have continually developed their protocols to provide a safer environment for stakeholders. Others, like Ocean Protocol, have enhanced and implemented DeFi infrastructure to disrupt multi-trillion dollar industries. Ultimately, the foundations are laid and DeFi may be poised to take center stage again to push the broader cryptocurrency market capitalization to new all-time highs. With the NFT market valued at nearly $50 billion and projects featured on the Superbowl, it might be worth looking for other trends.
An Unexplored DeFi Utility: Data
Data is the world’s most valuable resource. Our future depends on technologies such as artificial intelligence, which can only work well when large amounts of data are available. But currently, less than 0.5% of global data is accessible. Like traditional resources, data is exploited by large corporations creating unfair monopoly market power. Have you ever wondered why Google’s analytics are the best in the world? They have the most data. The data economy is a trillion dollar opportunity that has yet to be explored.
There is a project in the DeFi space that aims to unlock this opportunity. It’s called Ocean Protocol, which recently received the Technology Pioneer Award from the World Economic Forum. Ocean also struck a deal with the European government and the German Central Bank, which said their technology “has no comparable competitors” in space.
Ocean is building a decentralized, multi-chain data marketplace based on DeFi infrastructure. The goal is to make their native token OCEAN the underlying currency of an open data economy.
When launching the Ocean Data Market V4 in the first quarter of 2022, data owners can tokenize their data set into an NFT, which proves the exclusive right to the data. It’s like owning a Bored Ape, but instead of a JPEG file, owners of Data NFT own the right to a dataset. Data NFT owners can also create an offering of Datatokens, which are based on the ERC20 standard. Data tokens enable all DeFi activity to take place, while assets are backed by real-world data. A breakthrough!
On the Ocean Protocol Data Market, data investors can bet on pools of Datatoken liquidity or can simply bet on the increase in value of a dataset by exchanging OCEAN for Datatokens. If someone wants to access the dataset themselves, data buyers can purchase data tokens to access the data. This proves invaluable as Data NFT owners can actively generate revenue by selling Datatokens to data buyers. All functions are regulated by blockchain technology on Ethereum, Polygon, Binance Smart Chain or Polkadot’s Moonriver
There is a growing community around the Ocean Protocol ecosystem. Those who have understood the magnitude of Data Finance have not left. Ocean Protocol’s DAO funds third-party teams to build valuable infrastructure that accelerates the adoption of data as a valuable DeFi utility. DataX, for example, is building Datapolis, a data finance protocol offering a “Data DEX” that expands into data-backed lending and more. Another project is Data Whale’s Datatoken ALGA mobile wallet for iOS and Android, where users can track their data assets and stake or trade in the ocean data market via their phone.
If you want to learn more about DataFi, go to the Data Whale website and follow the Ocean Data Market tutorials. Read the definitions and watch our simple explainer videos on our Web3 Data Economy YouTube channel.
Photo by Luke Chesser on Unsplash