§ Ocean Staking FAQ - Everything you should know about staking your OCEAN tokens

The information below is intened to help educate users looking to become more familiar with Ocean Protocol with a focus on staking. All staking activities carry risks and we encourage all users to do their own research.

Last updated: August, 2021

§ What is a data token?

A data token is an Ethereum based crypto token. This data token is linked to a particular dataset and grants you access to that dataset.

You cannot access a data set with a different datatoken, e.g. ‘Data Token A’ entitles you access to ‘Data Set A’. It does NOT enable you to access ‘Data Set B’, ‘Data Set C’ etc.

§ Why should I stake Ocean Tokens?

You can receive rewards for staking your Ocean tokens on datasets.

Staking Ocean tokens is a key part of Ocean Protocol’s system design and helps to contribute towards the quality of the network.

If you’re considering staking Ocean tokens on a dataset you should also familiarise yourself with the risks.

§ Why is staking Ocean Tokens important?

Anyone can add datasets to Ocean’s data markets, but how do you distinguish a quality dataset from a bad one?

Staking Ocean tokens helps address this problem by signalling to the market that a particular dataset is more valuable.

§ How does Ocean staking work?

When you stake Ocean tokens on a data set you put Ocean tokens into a liquidity pool for that data token’s AMM.

The liquidity pool consists of 50% Ocean Tokens and 50% Data tokens. This pool rebalances using the balancer protocol.

You can learn more about AMMs here.

§ Why no APR or APY for Staking Ocean Tokens?

APR & APY are financial terms related to lending. There is no APR or APY for staking Ocean Tokens because they are not being lent out to Ocean token borrowers.

See how Ocean staking rewards are calculated below.

§ Where can I stake Ocean Tokens?

A lot of experimentation in staking has been happening on the Ocean Market so far but this is expected to change as new data markets are formed and as the ecosystem matures.

Other platforms that support staking Ocean Tokens include: Bancor, $ODollars, Balancer, Uniswap, Secret Bridge, Secret AMM, C.R.E.A.M, Sushiswap & WASP.

§ How is the price of a data token calculated?

The price of a data token can be fixed (i.e. it is set and does not change) or it can be dynamic.

This is configured by the data publisher when they publish their data listing on an Ocean Market.

The price of dynamically priced data tokens will change over time based on the amount of OCEAN tokens that are staked in a liquidity pool. If a dataset is in high demand then there will be a number of people purchasing that data token generating swap fees for the stakers in the pool.

This should start to encourage more stakers into that liquidity pool, raising the price until swap fees normalise.

§ What are the REWARDS for staking Ocean Tokens?

Ocean staking risks and REWARDS explained.

§ What are the RISKS when staking Ocean Tokens?

Ocean staking RISKS and rewards explained.

§ What’s the difference between being an Ocean liquidity provider and staking Ocean tokens?

On Ocean protocol, staking Ocean tokens is actually the act of providing liquidity to a pool of data tokens consisting of Ocean Tokens and the data pool’s Data Token.

So essentially, staking Ocean tokens is being a liquidity provider for a data pool.

§ How do I calculate my returns for staking Ocean tokens on a dataset?

Profit = (swap fees) + (farming rewards) - (impermanent loss) - (rug pull loss)

§ I just purchased a data set, why can’t I sell it?

When using Ocean markets for the first time some users get confused about the difference between purchasing datasets and purchasing data tokens. Data tokens are the token which entitles the holder access to a dataset (see What is a data token? above).

The data set is a spreadsheet or file that is being sold on an Ocean market. Once you purchase a data set, you exchange the data token for access to that dataset and no longer have the data token.

§ What are Ocean Markets?

Ocean markets are online marketplaces that connect data buyers with data sellers. They are built on Ocean Protocol and leverage the features built into Ocean Protocol.

Any developer can build their own data market by forking the Ocean Market codebase. This is a relatively simple task and enables developers to begin using all the same functionality built into Ocean Protocol.

We use the term Ocean Markets here to refer to any data market built using Ocean Protocol.