New innovations create new opportunities to make a profit
Exciting times — Ocean V4 is here and it’s bringing a whole host of new possibilities. We’re absolutely delighted to deliver this huge upgrade — we hope you’re as excited as we are! Now if you’re wondering about how you can profit from some of these innovations — you’re in the right place — in this article we will be looking at how the community can monetize various parts of the recent V4 developments.
Let’s face it, new innovative ways of making money is one of the most impressive things about all the advances in blockchain technology over recent years. You’ll be pleased to hear that Ocean V4 is no different — we’re delivering even more ways for you to monetise your data!
Broadly speaking, there are already three ways to generate income with Ocean:
Publishing & Selling DataProviding Liquidity For Datatoken PoolsRunning Your Own Data Marketplace
Each of these has received an upgrade in V4 for more revenue upside, and more flexibility in setting fees.
In addition, we have introduced a fourth way to make money with Ocean:
4. Running Your Own Provider
In this article, we will briefly cover (1) and (2), then go into more detail on (3) and (4) as the fee structure has seen a big shake-up. Finally, we take a look at how the wider Ocean community benefits from all of this.
If you would like to know more details about the fees, we recommend reading the Ocean Developer documentation that lists the detailed fee schedule, here.
As always, the first question to ask when you’re thinking about making money through Ocean is — do you have data that you can monetise?
Ocean V3 introduced the new cripto primitives of “data on-ramp” and “data off-ramp” via datatokens. The publisher creates ERC20 datatokens for a dataset (on-ramp). Then, anyone can access that dataset by acquiring and sending datatokens to the publisher via Ocean handshaking (data off-ramp). Being useful assets, datatokens typically get priced via pools. As a publisher, it’s in your best interest to create and publish useful data — datasets that people want to consume — because the more they consume the more you can earn. This is the heart of Ocean utility: connecting data publishers with data consumers.
The datasets can take one of many shapes. For AI use cases, they may be raw datasets, cleaned-up datasets, feature-engineered data, AI models, AI model predictions, or otherwise. (They can even be other forms of copyright-style IP such as photos, videos, or music!) Algorithms themselves may be sold as part of Ocean’s Compute-to-Data feature.
Ocean V4 introduces data NFTs, which open up new opportunities. To get started, we recommend reading our article on data NFTs and all of the possibilities that they bring.
The first opportunity of data NFTs is the potential to sell the base intellectual property (IP) as an exclusive license to others. This is akin to EMI selling the Beatles’ master tapes to Universal Music: whoever owns the masters has the right to create records, CDs, and digital sub-licences. It’s the same for data: as the data NFT owner you have the exclusive right to create ERC20 datatoken sub-licenses. With Ocean V4, this right is now transferable as a data NFT. You can sell these data NFTs in OpenSea and other NFT marketplaces.
Data NFTs also open up new approaches for fractional ownership of your data asset’s base IP. Fractional ownership means that you can now sell “shards” of your data IP to investors or collaborators. This is especially suited to data DAOs (data unions, etc).
If you’re part of an established organization or a growing startup, you’ll also love the new role structure that comes with data NFTs. For example, you can specify a different address to collect revenue compared to the address that owns the NFT. It’s now possible to fully administer your project through these roles.
In short, if you have data to sell, then Ocean V4 gives you superpowers to scale up and manage your data project. We hope this enables you to bring your data to new audiences and increase your profits.
The second well-established way to profit from Ocean is by providing liquidity to datatoken pools (datapools). We introduced datapools as part of the dynamic pricing feature within Ocean V3. In providing liquidity, you get a cut of the swap fees for that pool. The more swaps there are and the more liquidity you’ve provided, the more fees you earn. You can try to predict which datasets will have the most trades via your own assessment of the dataset’s quality, and allocate your liquidity accordingly.
Pools were an instant hit, but we quickly realized there was room for improvement. One of the issues we noticed was how the pools were very susceptible to rug-pull attacks, which is obviously very concerning to anyone trying to make a profit.
Ocean V4 introduces one-sided staking to solve the issue of rug pulls from the Publisher (or any other whale in the pool). We’ve created a one-sided bot that matches your incoming OCEAN stake by minting datatokens into the pool. Similarly, when you un-stake OCEAN, it burns datatokens. Therefore, the ratio of basetokens (e.g. Ocean tokens) to datatokens is kept constant during staking or unstaking. It sounds like a simple solution but it works really well. The possibility of a rug-pull from a whale is completely removed.
We’re really proud of how we’ve managed to make staking in pools so much safer. If you’re interested in learning more about how it all works, we recommend reading our recent blog post on safer staking.
Next up is the big one — all the new fees that can be implemented when you run your own marketplace. We have always been super encouraging of anyone who wishes to fork Ocean Market and make their own data marketplace. With the latest V4 release, we have taken this to the next level and introduced more opportunities for upside, and even more fee customisation options.
Upside opportunity: The main new upside opportunity is, unlike in Ocean V3, the marketplace owner can take a cut of swaps (in addition to a cut of consume). V3 showed 10x-100x or more swap volume than consume volume, so this could lead to a significant revenue bump for V4-powered marketplaces.
Another new upside opportunity is using your own ERC20 token in your marketplace, where it’s used as the unit-of-exchange and for staking in the datatoken pools. This is fully supported and can be a great way to ensure the sustainability of your project.
Fee customization options: In V4, the marketplace fees are now far more flexible and you have more options at your disposal. The fees can be split up based on the action within the marketplace that generates the fee: consuming, swapping, and publishing. Let’s explore each of them!
Consume Fees
Whenever anyone consumes an asset on any Ocean market it will generate fees. In Ocean V4 we have also opened up the possibility that you can make money from assets sold on another market if it was published on yours. The following fees apply to the consumption of data assets:
Consume Market Consumption Fee: This is simple enough — whenever someone buys a data asset they pay a fee to the marketplace where they consume the asset. The fee is set as an absolute value, so it will be the same for every purchase. This fee already existed in Ocean V3 but now we’re giving you complete flexibility to set your fees at any level and in the moneda you prefer to receive them in.
Publisher Market Consumption Fee: This is a new way of making money from any asset published on your marketplace. No matter where the asset is consumed — via another marketplace or even directly via the smart contracts and ocean libraries — you will always receive this fee. This is pretty cool but to make it even better, you get to choose which token the fee is paid in. So if you’re if you want to receive your fees in USDC, consumers will have to send USDC to you even if they’re consuming the asset in a market that doesn’t use USDC. This fee is set as an absolute value.
Provider Consumption Fees: This is another new one for Ocean V4. On any consumption, a fee will now have to be paid to the provider that the asset is using to encrypt the URL.
Ocean Community: As before, we also have an Ocean community fee in place. This is here to fund projects that promote the long term growth of Ocean. For the moment, the fee has been set to zero but it can be increased in future.
Swap Fees
Swap fees are collected whenever someone swaps a datatoken for basetoken (e.g. OCEAN) or basetoken for datatoken. The swap could be inside a pool (using an automated market maker), or in a fixed-rate exchange. As with consume fees, swap fees can be charged by both the marketplace where the swap takes place and the marketplace where the asset was originally published. These are the fees that are applied whenever a user does a swap:
Publisher Market swap fee: The owner of the marketplace will define both the fee amount and the address where the fees should be sent. These fees can be applied to assets with dynamic pricing (sold via a pool) and assets with fixed pricing. For assets sold via a pool, the fee amount is set when the pool is created and cannot be changed later, while for fixed priced assets the fee amount can be changed. In both cases, you can update and change the address where the fees are sent at any point.
Consumer Market swap fee: The owner of the marketplace where the swap is taking place can define a swap fee for any swap that happens inside a pool. It is different, however, for swaps of fixed-priced assets — in this case, only assets that are using the Enterprise ERC20 template can apply swap fees in the consumer market. There are no consumer market swap fees for Datatokens that use the standard template. The Enterprise ERC20 token template isn’t only for use in enterprise marketplaces, it is also used within Ocean Market.
Liquidity Provider Fees: As with V3, we also have a fee that is shared among the liquidity providers. This revenue stream acts as an incentive for liquidity providers to join the pool and add liquidity. This fee is set by the pool creator when they create the pricing for the asset, the default fee is 0.1%. The pool creator may wish to increase this fee to incentivise more people to provide liquidity to the pool. The amount of liquidity in the pool is a useful indication of which assets the community considers to be the most valuable.
Ocean Community Fee: There is also a community fee applied to swaps. These fees are reinvested in community projects via Ocean DAO and other initiatives. It’s always important to consider how we ensure the long term sustainability of Ocean — funding community projects is one way for us to achieve that. This fee has been set to 0.1% (as long as either Ocean or H20 are used as the base token in the market), however, if you are using any other token as your base token (e.g. Ether or any other ERC20 etc) then a community fee of 0.2% is applied to all swaps.
Publish Fees
For the moment no fees are charged to a publisher when they publish an asset, so that’s nice and simple. However, we have left the potential for you to implement publisher fees in your own marketplace if you wish — you would have to add an extra transaction in the publish flow.
In many ways, it is better to leave publisher fees at zero to encourage as many people as possible to publish in your market. However, we recognise that every marketplace serves a completely different audience and publisher fees may be appropriate in your case.
Now this is a completely brand new opportunity to start generating revenue — running your own provider. We have been aware for a while now that many of you haven’t taken up the opportunity to run your own provider, and the reason seems obvious — there aren’t strong enough incentives to do so.
For those that aren’t aware, Ocean Provider is the proxy service that’s responsible for encrypting/ decrypting the data and streaming it to the consumer. It also validates if the user is allowed to access a particular data asset or service. It’s a crucial component in Ocean’s architecture.
Now, as mentioned above, fees are now paid to the individual or organization running the provider whenever a user downloads a data asset. The fees for downloading an asset are set as a cost per MB. In addition, there is also a provider fee which is paid whenever a compute job is run, which is set as a price per minute.
The download and compute fees can both be set to any absolute amount and you can also decide which token you want to receive the fees in — they don’t have to be in the same moneda used in the consuming market. So for example, the provider fee could be a fixed rate of 5 USDT per 1000 mb of data downloaded, and this fee remains fixed in USDT even if the marketplace is using a completely different moneda. It also doesn’t matter if the pricing of the asset is fixed-rate, set dynamically, or free — the provider fee will still apply.
Additionally, provider fees are not limited to data consumption and swaps — they can also be used to charge for compute resources. So, for example, this means a provider can charge a fixed fee of 15 DAI to reserve compute resources for 1 hour. This has a huge upside for both the user and the provider host. From the user’s perspective, this means that they can now reserve the suitable amount of compute resources according to what they require. For the host of the provider, this presents another great opportunity to create an income.
We’re always looking to give back to the Ocean community and collecting fees is an important part of that. As mentioned above, the Ocean Protocol Foundation retains the ability to implement community fees on both data consumption and datatoken swaps. The tokens that we receive will either be burned or invested in the community via projects that they are building. These investments will take place either through Ocean DAO, Ocean Shipyard, or Ocean Ventures.
Additionally, we will also be placing an additional 0.1% fee on projects that aren’t using either the Ocean token or H2O. We want to support marketplaces that use other tokens but we also recognise that they don’t bring the same wider benefit to the Ocean community, so we feel this small additional fee is proportionate. This fee is set at the contract level so you can be sure that it won’t increase in future. It will apply to any pool and the fee is taken in the basetoken of the pool.
Our intentions with all of these updates are to ensure that your project is able to become self-sufficient and profitable in the long run (if that’s your aim). We love projects that are built on top of Ocean and we want to ensure that you are able to generate enough income to keep your project running well into the future.
With this in mind, we have aimed to deliver improvements for you irrespective of the type of project you are running:
If you’re selling data you can benefit from Data NFTs. This means you can sell your IP (or part of it) and benefit from all the new roles when managing your project with others.If you’re contributing liquidity to datapools, you will benefit from the new and much improved safer staking. No more stress about rug-pulls!If you’re running your own data marketplace you now have so many more options on how to raise revenue and charge your customers. And the fees can still apply if the asset is bought in a marketplace other than your own!For the first time, you can now also create profit for yourself by running your own provider. This also means that you can charge for compute resources
We also recommend reading about what data NFTs are and the benefits they bring and all the details on our new safer staking in pools.
As always, if you’ve got any questions or want to give us feedback, don’t hesitate to head over to discord or Telegram. We’re looking forward to seeing how you use Ocean V4 and generate income from these upgrades.
