A Valuable DeFi Trend You Should Know About: Data Finance (DataFi)
March 04 2022 - 3:04AM
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Since 2019, decentralized finance (DeFi) proved a valuable utility
for cryptocurrency and likely kickstarted the bull market. Yield
farming, staking and lending earned many cryptocurrency investors
annual interest rates in double- and even triple-digit territory.
Unheard of in traditional finance! But with high returns, investors
faced high risks too. Numerous exploits of smart contracts where
user funds were drained and malicious activity of DeFi protocols
that suddenly withdrew large amounts of cryptocurrency resulted in
a healthy amount of skepticism. Also, DeFi moved backstage since
speculation around NFTs became a lucrative investment alternative,
allowing investors to achieve immense multipliers by flipping
JPEGs. But whilst the focus of crypto enthusiasts has shifted
towards NFTs, DeFi has developed into a broader ‘Web3’ movement.
Providers like Bancor continuously developed their protocols to
provide a safer environment for stakeholders. Others, like Ocean
Protocol, improved and implemented DeFi infrastructure to disrupt
multi-trillion-dollar industries. Bottom line, the foundation is
set and DeFi may just be on the verge of taking the center stage
again to push the broader cryptocurrency market capitalization to
new all-time highs. With the NFT market being valued near 50
billion dollars 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 like artificial intelligence, which can only function
successfully when large amounts of data are available. But right
now, less than 0.5% of the world’s data is accessible. Like
traditional resources, data is exploited by large corporations
creating an unfair, monopolistic market power. Ever wondered why
Google’s analytics are the best in the world? They’ve got the most
data. The data economy is a trillion-dollar opportunity yet to be
explored. There is one project in the DeFi space that aims to
unlock this opportunity. It’s called Ocean Protocol, which was
recently awarded the Technology Pioneer by the World Economic
Forum. Ocean also has an agreement with the European government and
German Central Bank, which stated that their technology ‘does not
have any comparable competitors’ in the space. Ocean is building a
decentralized, multi-chain data marketplace built on DeFi
infrastructure. The objective is to make their native token OCEAN
the underlying currency for an open data economy. When the Ocean
Data Market V4 launches in Q1/2022, data owners can tokenize their
dataset into an NFT, which proves the exclusive right to the data.
It’s similar to owning a Bored Ape, but instead of a JPEG file,
Data NFT owners own the right to a dataset. Data NFT owners can
also create a supply of Datatokens, which are built on the ERC20
standard. Datatokens allow for any DeFi activity to take place, all
while the assets are backed by real-world data. A breakthrough! On
Ocean Protocol’s Data Market, data investors can stake on Datatoken
liquidity pools or can simply bet on the value of a dataset
increasing by swapping OCEAN for Datatokens. If someone is
interested to access the dataset itself, data buyers can purchase
Datatokens to access the data. This proves a valuable utility,
because Data NFT owners can actively generate revenues by selling
Datatokens to data buyers. All functions are regulated by
blockchain technology on Ethereum, Polygon, Binance Smart Chain or
Polkadot’s Moonriver DataFi Infrastructure There is a growing
community surrounding the Ocean Protocol ecosystem. Those that
understood the magnitude of Data Finance have not left. Ocean
Protocol’s DAO funds third-party teams to build valuable
infrastructure that accelerates adoption of data as a valuable DeFi
utility. DataX for example is building Datapolis, a data finance
protocol offering a ‘Data DEX’ that is building towards data-backed
lending and much more. Another project is Data Whale’s ALGA mobile
Datatoken wallet for iOS and Android, where users can track their
data assets and stake or swap on the Ocean Data Market through
their phone. If you are interested to learn more about DataFi, head
over to Data Whale’s website and complete the Ocean Data Market
tutorials. Read up on definitions and watch our simple explainer
videos on our Web3 Data Economy YouTube Channel. Photo by
Luke Chesser on Unsplash
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