One of the central problems in starting any market is understanding the value of widget/quanta/packet for both the supplier and and the consumer. This problem is only compounded in view of untested, little-tested, and/or inchoate markets where both the supply and consumption side may have little to no reference value — to the fore for our project, decentralized data markets!
Traditional market orientation is tripartite: consumer-intermediary-supplier; whereas the next evolution of markets are two-pronged, a direct P2P relationship between consumer and supplier.
At Kylin, we have been developing on the basic thesis, that, just like traditional finance has been paradigmatically shifting to a direct relationship between people and their money, we are on the cutting edge of the beginning of a paradigmatic shift to a direct relationship between people and their data.
Since decentralized data markets are an entirely new and untested area of innovation, there exists a larger challenge in providing incentive catalysts at the early stages of their formation.
And, indeed, new ways of thinking about how best we can trigger the use of data markets among the ‘retail investor’ or ‘individual’ need to be thought about in the context of new technologies that may allow it.
Along with Data Feeding (oracle services), and on-chain querying, Kylin Network also has a clear commitment to developing the overall context for a broadly functioning, expansive, efficient, and comprehensive decentralized data market encompassing a wide range of data feeding and consumptive pairings.
Framing the Concept
It’s our belief that in 2021, the first Decentralized Data Markets (DDMs) will not only be born, but will start to operate in earnest. Similar to Etherdelta and DEXes in 2018, they might be clunky, hard to work with and little volume, but we are confident that they will happen. We aim to be one of the first (along with awesome contemporaries like Ocean Protocol and to a more specific extent, Oasis Labs) and one of the lasting ones.
We have been grappling in the background with many different ideas — not mutually exclusive by any means — surrounding how to create the context for DDMs to really take off. The market has so far evinced one amazing example of a decentralized data market, which is price-feeding for DeFi, or what is commonly called an ‘oracle’ service. Alone, the market cap for various projects this (narrow) use case for decentralized data feeding is currently comprising around $12B in market cap with its most prominent member (ChainLink) regularly in the top 10 of all crypto projects by market cap and trading volume. What is typically lost on crypto and more general audiences alike is that price-feeding for DeFi is just one use case of Decentralized Data, or what we have come to call “DeData”.
The challenge we find ourselves in as early pioneers (along with other projects and contemporaries seeking to initiate the existence, in general, of DeData) is that there is a lot of infrastructural work to be done, both in terms of seeding the importance of the concept and the narrative, and then also laying technological foundations and innovating composite features as well (a decentralized identity layer, for example).
We are currently engineering what we will be an infrastructural data layer, or ‘data blockchain’ on Polkadot, but that’s only half the problem. We need to spur on and initiate the various use cases that will actually take advanatge of such a thing; by analogy, it’d be great to explore the vacuum of space with our shiny, new rocket, but it’s much, much better if we have some destinations, missions, and/or planets in mind prior to building. How do we do this?
Forming the concept
True enough, the Kylin Network architecture is set up such that we can drive what we hope will be a Cambrian explosion of oracle scripting parameters serving all these use cases as they develop over time (see below), but this view may be ultimately a bit naive at the worst, if not a bit inefficient in the least. It became important for us to consider how the use cases get started in the first place as they will ultimately drive consumptive demand. It also became important for us to discover how general audiences could participate more broadly in the the business module side of Kylin — even if they are not directly involved in whatever the consumptive or feeding sides of the business become.
In this context, an idea began to form that iterated within the framework put forward by Ocean Protocol, ‘data tokens’ and ‘initial data offerings’. We agreed that leveraging one of the strongest impulses in crypto — the speculative — was the right general approach to compelling the initiation of DeData markets, but, we felt we wanted to try to take it one step further.
At the same time, as we formed these ideas, we became also acutely aware of the enormous and variegated task of initiating the myriad use cases and DeData markets possible in the future.
Our solution began to hone in on marrying the interests of our community, our network, use cases that would work in synergy with new DeData markets, and new technologies.
The DDMO was born.
Standing for “DeData market Offering”, this new vehicle will act as a resource multiplier for both Kylin Network and the holders of the DDM, and Kylin Network will soon call for a proposals for the first DDMO, which will be voted on by the Kylin community.
The DDM itself will be represented as a single NFT, a ‘DDM NFT’ (we will probably figure out a better name lol) from which all participants can own a fractionalized portion (percentage). The fractionalized ownership of the DDM NFT grants its owner the associated remuneration of the data querying fees associated with the DDM.
The DDM will be as much a DAO Venture as a DeData Market, such that it will have exclusive rights to its associated functionality (as voted on by Kylin holders and community), and the funds put within it as part of the sale will be represented as multisig rights (between Kylin and the voted DAO community holders) for ongoing treasury management and development (hiring of a qualified team for one to two years).
One can therefore think of DDMs on Kylin Network as basically like a parachain, taxi medallion, and accelerator in one.
How would it work?
For example, let’s say that the first approved DDM proposal is ‘tokenized genomics ‘— ie a DDM that will eventually see millions of researcher queries for billions of individuals anonymized genomic data, comprising a future $100B market. Once officially KYL holders can take part in its sale (using KYL for a discount) to buy fractions of the NFT associated.
The NFT sale concludes and a total of $1M is put into the DDM NFT. The holders of this DDM therefore form a specific community that will kickstart that particular use case and data market, and hold rights (for as long as they have a fraction of the DDM NFT) to the associated fees for both data provisioning, team (minus 5% for Kylin Network ongoing development), and oracle scripting, or 30% of all query fees.
As these DDM NFTs find development and success over time and thus growing query fees, their holders will have the choice to ‘sell the fees’ or re-invest into the value of the DDM NFT. As a very interesting game theoretical caveat, at any point in time, the DDM NFT will have an associated exit price, which will be the total value of the NFT.
This means that a single entity could swoop in and buy the NFT at any time (after a certain period of time). This could potentiate and motivate enterprises that could possibly be disrupted to make plays, and passionate communities to engender the growth in value of their DDM NFT (to protect from aggressive buyout), or, as a corollary, to realize a profitable exit. In any case, because of the network architecture of Kylin Network, even if a DDM was owned by a single entity, all validation and consensus mechanisms would still be decentralized and validated.
As the use cases and therefore DeData markets grow, Kylin Network finds increasing utility and there is some measure of control over the number and quality of DeData markets over time (in addition to their creation in the first place!).
Please stay tuned for details!