Ocean Protocol Taps Balancer to Create a Marketplace for "Data Tokens"
The days of a data monopoly could be soon behind us, as Ocean and Balancer team up to democratize the data market.
- Ocean Market is an AMM powered by Balancer that allows anybody to buy or sell tokens that represent ownership of a particular dataset.
- This will enable widespread monetization of data and access to a broader range of information for interested parties.
- Efficiently priced data on a censorship-resistant marketplace is a huge step forward for DeFi.
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While the market focuses on the plight of DeFi tokens, Balancer and Ocean Protocol have teamed up to build the sector’s first fair marketplace to buy and sell data. Ocean’s data tokens will be listable on Balancer’s exchange, promising new utility for DeFi and crypto.
Ocean Protocol Launches Data Marketplaces
Automated market makers (AMMs) like Uniswap and Balancer allows anybody to provide liquidity and trade digital assets. These products primarily focus on financial tokens.
Ocean Protocol is building an open market that focuses on the exchange of data. Just as traders on Uniswap exchange, ETH for USDC, Ocean participants can trade data tokens.
For the uninitiated, each data token represents a claim on a particular range of data. Hypothetically, if XYZ token is linked to Binance’s financial data, whoever purchases XYZ will now have access to Binance’s core financials.
With the help of Balancer Labs, Ocean Protocol introduces Ocean Market, an AMM that allows anybody to buy and sell data.
The pools will be bootstrapped with data tokens and the protocol’s native OCEAN token.
To purchase data, users must first buy OCEAN and then exchange it for the data token on Ocean Market. Just as one trades LEND for ETH on Uniswap or Balancer, users will be able to trade data tokens for OCEAN on the Ocean Market.
Ocean’s decision to use Balancer stems from the latter’s flexibility and reduced impermanent loss relative to Uniswap. An 80-20 pool of data tokens and OCEAN, for instance, would result in lower losses to price swings compared to a 50-50 Uniswap pool.
Fernando Martinelli, the founder of Balancer, said:
“Ocean Protocol’s usage of Balancer AMMs promises to add a massive new asset class – data – to the DeFi’s assets under management. Thousands of new data assets will lead to thousands of Balancer AMMs – a very long-tail of AMMs, the first of its kind for any AMM protocol.”
It isn’t difficult to think of the use cases for such a market. Businesses, even individuals, can monetize any data they wish to and sell it to willing buyers. Hedge funds looking for alternative sources of data and AI/ML developers are two obvious candidates that would often land on the buy-side of these markets.
With the integration of Balancer, buying and selling data becomes a more straightforward process.
This development could lead to a new phenomenon of “initial data offerings,” where those who own data can tokenize it and create a Balancer pool to monetize it. Because of how 80-20 Balancer pools work, the price of each data token increases with every consecutive purchase.
The data market in Europe alone is estimated at a whopping $440 billion. If successful, Ocean and Balancer will be creating the first fair and efficient market to trade data.