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
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.
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.
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.
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.
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.
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.
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.
Ocean staking risks and REWARDS explained.
Ocean staking RISKS and rewards explained.
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.
Profit = (swap fees) + (farming rewards) - (impermanent loss) - (rug pull loss)
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.
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.