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Now more than ever, data is powering our next phase of the industrial revolution so much so that corporations are willing to offer services for free just to have access to customers’ data. While this is indicative of the emergence of a data-powered economy, it also tells the story of how vulnerable the average individual is to data-related threats. With just over , there are absolutely no guarantees when it comes to data protection, privacy, and ownership. 4,000 data brokers controlling the loosely regulated data economy Regardless of the recent data regulatory implementations, the average consumer has little or no say on how service providers distribute or use their private data. Therefore, we must go beyond regulations to establish some sort of leeway for individuals to retain ownership of their private data and do with it as they deem fit. This limitation calls for innovative infrastructures that recognize the ownership of data, enforce privacy rights, and provide data autonomy to users. Herein lies the growing influence of blockchain and web3 in the data management and distribution conversation. Much like how blockchain enables distributed networks for assets and provides autonomy to holders, it can also create decentralized data markets where there is no place for data brokers. Due to the innovation of this architecture, several blockchain solutions have begun creating and delivering web 3.0-enhanced data solutions with sophisticated autonomous data distribution and security mechanisms. One project of this movement is , which has developed a data asset-based ecosystem where users can buy, sell, publish and send data via a decentralized network. The project treats data as an asset class and has created unique infrastructures to provide a self-sustaining data economy. Ocean Protocol I reached out to Sheridan Johns, Head of Ecosystem at Ocean Protocol, for more information about the project and the recently-concluded global hackathon. Below are excerpts from the interview. Edward Moon: What problems are Ocean Protocol trying to solve, and how relevant will these solutions be to the average user? Ocean Protocol recognizes the potential of the data economy as well as the current overly centralized nature of its components. The existing system works against the best interest of the average individual. We provide the data resources but only enjoy a meager share of the multi-billion industry. Sheridan Johns: For us at Ocean Protocol, it is only fair that users retain ownership of their personal data and generate the appropriate value when they choose to sell or share them. Therefore, Ocean Protocol looks to help users reclaim full autonomy over their data and generate value by becoming a vital party to data distribution. Edward Moon: How have you and your team solved the data economy debacle? Through Ocean Protocol, we have successfully provided an environment where data can thrive on web 3.0 infrastructures. We have envisioned data as an asset class and we expect our users to treat it as such. Sheridan Johns: We have provided a marketplace where participants can freely transfer the ownership of data or content by selling or buying datatokens. The core of operation centers around designing blockchain applications to improve the way we protect, transfer and store data. Edward Moon: What are the applications of Ocean Protocol? Like I mentioned earlier, we have enabled a data marketplace. Furthermore, Ocean Protocol has developed data-powered assets on the Ethereum blockchain. Sheridan Johns: Hence, we provide on-ramp and off-ramp data assets for the explosive DeFi sector. This opens up interesting opportunities for Ocean token holders. Edward Moon: It seems that your team is big on facilitating use cases for your project. How do you rate the progress achieved so far? We are impressed with our achievements and look forward to more wins. The team has not only designed an innovative architecture, but we have also created working products. Apart from our technical prowess, I am particularly impressed with our business achievements. The partnerships we have secured, exemplified by the number of brands that sponsored our recently concluded hackathon say a lot about our approach to project development. Our approach has established the Ocean Protocol ecosystem as an important addition to the larger crypto industry. However, I must say that there is still a long way to go. Sheridan Johns: Edward Moon: Speaking of the just concluded hackathon, what is the core motivation for initiating this competition? This is an annual competition designed to promote community-based involvement in the Ocean ecosystem. We want to encourage and incentivize developers to create intuitive and innovative Ocean integrations. The objective for this year’s hackathon is to expand the utility of Ocean data tokens and unlock data applications on web 3.0. Sheridan Johns: Edward Moon: How did the judges pick winners? Participants had to adhere to certain requirements to stand a chance of winning in various categories. First, they must have working products. They had to utilize an open-source developmental framework, integrate with the Ocean data token, and have real-world applications. Our judges used this template of four key criteria - innovativeness, functionality, traction, and sustainability - to choose the participants with the most compelling decentralized application. Sheridan Johns: We had 16 judges, experts in blockchain, DeFi, machine learning, emerging technology, and business innovation, including Adam Hall, Security & Identity Lead, OpenMined, Andreas Fauler, Ocean Protocol Advisor, Advisory Board Member, Digitalstadt Darmstadt, Anish Mohammed, Co-Founder, R2 Labs, Aron von Ammers, CTO and Founding Partner, Outlier Ventures, Dr. Astrid Woollard, Partner, Head of Research, Scytale Ventures, Eylon Aviv, Partnerships / DAOstack, Fernando Martinelli, CEO & Co-founder at Balancer, Jonathan Victor, Product / BD at Protocol Labs (Filecoin), Matthew Fontana, Head of Developer Relations, Streamr, Meltem Demirors, Ocean Protocol Advisor, Chief Strategy Officer, CoinShares, Simon de la Rouvière, Ocean Protocol Advisor, Commons Stack, Vitor Py, CTO, Pillar and Wendell Cathcart, DOS Economics and Analytics Engineer, Energy Web Foundation. Edward Moon: Can you briefly explain why Data DAO, VideoWiki, and MoonJelly emerged as top prize winners? The winners showed beyond any reasonable doubt that they had developed innovative applications infused with Ocean Protocol components. In the first-place was Data DAO, which enhances governance, incentive mechanisms, and data value distribution by pooling data tokens. The France-based team created a permissionless marketplace and showcased the possibilities of decentralized autonomous organizations in the Ocean Protocol ecosystem. Sheridan Johns: VideoWiki emerged as the second-place winner because it could power a fully operational content edition platform. This product allows users to create and monetize content while also enforcing privacy measures like IP protection. The Portugal-based developers understand the importance of text-to-video resources to learning experiences. They also showed that web 3.0 and web 2.0 can integrate seamlessly for great effect. US-based MoonJelly, on the other hand, enables a web browser extension for seamless curation and data minting for the Ocean Market. They also integrated the services of one of the competition’s sponsors, 1inch exchange, to qualify as the winner of a bonus prize. Edward Moon: Considering the long list of brands that sponsored the hackathon, the Ocean Data Economy Challenge has somewhat risen in status. What does this mean for Ocean Protocol? First, I would like to appreciate everyone that made this competition a success. Remarkably, we could attract the support of reputable brands that understand the pivotal role of data in the ongoing technology revolution. The competition’s sponsors, including CoinMarketCap, Balancer Labs, 1inch Exchange, Energy Web Foundation, Messari, Pillar, Protocol Labs (Filecoin), DAOStack, Secret Network, and Streamr, share similar data economy ideologies. Sheridan Johns: Edward Moon: What should we expect from the next Data Economy Challenge? As always, we will ensure that this competition stays true to the broader objectives of the Ocean Protocol. Likewise, the next Data Economy Challenge will reflect the development phase that we are in at the time of the competition. This will help us promote innovation culture in our community. Sheridan Johns: Edward Moon: What about the Ocean Protocol? What should we look forward to? We will continue to capitalize on the composability of the Ethereum ecosystem to partner with other innovative platforms. This requires us to keep enabling advanced data economy solutions and delivering on the web 3.0 capacity of blockchain. So, expect much more in 2021. Sheridan Johns:

"It's Only Fair That Users Retain Ownership Of Their Personal Data & Generate Value" -Sheridan Johns

CHILOE AND CHONOS ISLANDS

STRAIT OF MAGELLAN.—CLIMATE OF THE SOUTHERN COASTS

THE GROWTH OF THE 'ORIGIN OF SPECIES.'

DeFi protocols are pushing the boundaries of financial technology in a high-risk, high-reward game. Here are some of the basic terms, defined in plain English Decentralized finance is the latest evolution of cryptocurrency trading and investing. Protocols that are not tied to a particular country or company and which allow anyone to interact with them have enabled many different kinds of people to make — or in some cases lose — large sums of money. Allowing anyone in the world to permissionlessly access financial products and services that closely mirror those offered by TradFi companies is an exciting prospect. However, this is a world where responsibility for understanding exactly where your transactions are going sits firmly with the individual. In order to figure out what’s going on under the hood, the first thing to understand is what some of the obscure-sounding terms actually mean. Here are some DeFi-nitions that I hope will demystify some of the jargon: 1. DEX The acronym DEX stands for ‘decentralized exchange’. When the first exchanges for trading tokens were launched, you had to send your crypto to a wallet that someone else controlled and simply hope that the code was bug-free and the exchange admins were honest. Over the years, hacks, thefts and even (alleged) deaths at the likes of MtGox, Cryptsy and Quadriga have proved over and over again the mantra of “Not your keys, not your crypto”. While centralized exchanges are far more professional these days, it still means relying on someone else to take charge of your assets. Decentralized exchanges are different. In order to swap tokens, you simply connect your wallet to an interface that allows you to interact with a smart contract. There is no need to set up an account or to log in. Of course, this means that if you lose your private key or seed phrase, there is no one to unlock your account or restore your login. DEXs also allow traders to access more sophisticated financial products such as collateralized loans, options, and derivatives. Tax reporting is becoming easier, with the likes of tools such as , which includes QuickBooks integration with the many other features in its asset tracker. And, of course, residents in different countries are subject to the same money-laundering rules as users of the TradFi system. Skytale However, because traders do not have to provide any personal information when they transact, regulators are in many cases figuring out how to apply more specific legislation without stifling the innovation brought by DeFi. 2. Automated market maker Automated market makers are the protocols that allow DEXs to exist. Centralized exchanges use matching engines to match buy and sell orders and execute them at the best price, while market makers (either companies or individuals) add liquidity to the market by quoting both a buy and a sell price. Within a DEX, such as UniSwap, all this is done by a smart contract called an AMM or automated market maker. Pairs of tokens are deposited in liquidity pools (below) by people who want to make money with their cryptocurrency instead of simply leaving it in a wallet and hoping its value increases. The code in the AMM calculates the price a token should be bought and sold at depending on how much demand there is to buy or sell the tokens in each pair. What’s in it for the liquidity providers? They receive a fee every time a trade is executed and may also receive liquidity pool tokens as a reward. See the Liquidity mining definition for more detail. 3. Liquidity pools A liquidity pool is a collection of assets locked in a smart contract. Pairs of assets are matched in a liquidity pool and the Automated Market Maker determines how they are priced against each other. For example, if a liquidity pool contains Token A and Token B, and more of token B is being bought than sold, then the price of Token A in the pool will fall and the price of Token B will rise. There is no waiting around for an order in your order book to be matched and filled: instead, a buy or a sell happens instantaneously, once you have authorized by signing via your wallet. 4. Liquidity mining Adding your tokens to a liquidity pool carries a certain amount of risk. Even though the risk of hacking or fraud is mitigated by the AMM code being open source, so anyone can scrutinize it, there have still been instances of DEXs being hacked. Additionally, while your tokens are in a liquidity pool, you are foregoing the chance of making money on them elsewhere — for example, by trading or using them as collateral. For this reason, liquidity providers are rewarded with a share of the fees generated by trading. When you add liquidity to a pool, you receive a liquidity pool token in your wallet exchange, which is redeemed when you remove your liquidity. Because trading fees in liquidity pools might not be a sufficient reward — and as an extra incentive to offset the possibility of impermanent loss, you can often use these liquidity pool tokens to earn even more yield. 5. Collateralized loan The anonymous (or at least, pseudonymous) nature of DeFi means that no one will lend money to you… unless they can access some kind of collateral in case you default on the loan. The constantly shifting exchange rate between Ether, the US dollar and various other cryptocurrencies provide attractive opportunities to make money — and most loans within DeFi are used within the DeFi system to do exactly this. Different cryptos can be used for collateral, but the most deposited collateral currency is Ether. MakerDAO was the first major decentralized lending platform, allowing borrowers to mint the DAI stablecoin in return for depositing Ether into a special smart contract. This is the equivalent of borrowing USD against Ether. Borrowers have to deposit more collateral than they borrow to mitigate against the risk of exchange rate changes and default, and if the deposit-to-loan ratio falls below a certain level, they may be liquidated and the borrower has to pay a liquidation penalty. While the rules vary from platform to platform, any third party can initiate a liquidation and claim the reward. Liquidation bots constantly trawl loan positions looking for profitable potential liquidations, and borrowers who do not top up their collateral or settle on time will lose some — or occasionally all — of their funds. 6. Synthetic assets Synthetic tokens in crypto have the same function as derivatives in TradFi: they allow traders to benefit from price movements of a particular asset without actually having to own it. Confused? The easiest way to understand this is to look at a protocol like , which has around $0.5bn locked in synths. Synthetix Assets available to trade or stake on the platform include sUSD, sEUR, sBTC, sADA and sETH, as well as sDeFi, which tracks the price of the DeFi index as a whole. Asset prices are supplied by price oracles — and allow the easy trading of forex or cryptos without the trader having to hold the asset in question. 7. TVL TVL stands for Total Value Locked. Most DeFi protocols involve asset owners committing their tokens to a smart contract, which is known as ‘locking’. Sites such as DappRadar show both the TVL for the whole DeFi ecosystem and for individual protocols. As well as being useful for comparing the size of the market controlled by each protocol, it is instructive to see how the total TVL has soared: from $8bn in early 2019 to more than $80bn now. 8. Yield farming As we have seen, there are different ways to make money from your crypt assets in DeFi — whether this is committing assets to be lent out to borrowers, staking, depositing in liquidity pools or even staking the liquidity pool tokens you have received. Because rates change all the time, committed DeFi users will move their assets around to get the best yield. Some use automated programs to help do this, while others have their own strategies which they implement manually. This process of actively seeking the highest yield is known as ‘yield farming’. In 2020, this resulted in memes that generated food-based tokens such as YAM, TENDIES and CAKE. 9. APY and APR APY stands for Annual Percentage Rate and refers to the percentage reward you can make by locking up your tokens in different DeFi pools or protocols. In reality, this notion can be slightly misleading, as the highest APRs (often multiples of 100%) rarely last for very long, let alone a full year. The APR in a liquidity pool is determined by the smart contract: when more funds are added to the pool, the APR will drop, for example. A high APR is a reward for risk and usually means an illiquid pool containing a lesser-known token. APY is almost the same as APR except that it adds the compound interest, illustrating what you would receive if you allow your rewards to compound. At a high APR, compound interest will make a huge difference between APR and APY values. Remember, these are a guide and not a guarantee! 10. Impermanent Loss If you are depositing liquidity in a pool, it is also important to understand the concept of impermanent loss, which can entirely wipe out even a high APY and can mean you end up with less dollar value than you started with. As the price ratio of two assets in a liquidity pool changes, so does the value you are entitled to when you remove liquidity. A liquidity pool token entitles you to a percentage of the assets in the pool, rather than a fixed sum. The word ‘impermanent’ is used because if the price returns to the ratio it was when you deposited liquidity, then the loss is wiped out — however, there is no guarantee that this will happen, and when you withdraw your funds, this will become an actual loss. This is an excellent article that goes into more detail about the mechanics of . impermanent loss Want to know more? I’ll follow up soon with some ‘how to’ guides. Also Published Here

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