The Data Economy Token Index (2020)
This index is intended to capture the value of data and automation tokens for protocols and marketplaces being built on the Ethereum network. First and foremost the important thing to note is that we take a long term investing standpoint. We are still in the early phases and we expect it to be years before the tokens in this index reach their peak. We focus on tokens that do three things 1. creating open, competitive markets 2. incentive collaboration and communal resources in/through these markets 3. ensure privacy and individual freedom (aka cryptoanarchy). That being said we look as much for greats teams with technical excellence, discipline, and shared values.
The percentage next to the token is the recommended allocation so if you are to invest $10k then 30% would be $3k of tokens.
LINK (30%) - If you don’t see the value of LINK then there is no reason to consider this index valuable. Here are several links to research LINK and once you see the value of it in its the entirety, this index is for you. (A Case For ChainLink, Framework Venture’s Thesis, the Oracle Problem, 2020 review, ChainLinkGod). (Disclosure I’ve owned LINK since 2017)
OCEAN (20%)- Ocean Protocol is a nice compliment to ChainLink. They both have some overlap in that they are intended to run computations on data, but Ocean takes a different approach. While LINK is like the oil drillers (computation) and pipelines (oracles), Ocean is like being an oil surveyor, driller, futures trader, and pipeline all in one. They help data owners get their data discovered, evaluated, priced, and utilized. Data owners can keep their resources private and sell to others (machine learning developers, data analysts, etc.) for computation without exposing the underlying data, it’s the best of both worlds. It’s a perfect symbiotic relationship where everyone gets more by contributing the most possible, a commons of data and intellectual property protected and driven by the market. Contributing resources and services like raw data, data auditing, algorithms (e.g. machine learning), marketplace management, and compute resources are all incentivized through the protocol creating a robust ecosystem where people can contribute their specialty easily to everyone and be rewarded. On top of being a very necessary component in the future of any data economy, they have a brilliant token model. My favorite part is the prediction markets for the value of assets listed on Ocean which provides an incentive for people to explore and curate a list of the best data available on the protocol.
FOAM (20%) - What would you do without GPS or Google Maps? What would the world come to if they failed? How easy do you think it is to hack GPS? It’s easier. What Bitcoin did for money, FOAM is doing for geospatial data. Supply chains, telecom networks, financial markets, the entire world relies on GPS. FOAM has devised a concept of crypto spatial coordinates which are like combining a postal address with an Ethereum address into one. In short the FOAM protocol is a way to verifiably crowd source mapping data, prove your current location on the map through a p2p mesh network, and have physical locations attached to smart contracts. We highly recommend reading their whitepaper, it is fascinating. And if you are an Eth dev I would look through their code libraries, they have built a lot of functional programming alternatives to tools like truffle (Disclosure was in the FOAM ICO but sold my tokens a week later for 2x)
GEN (15%) - Alongside the Teal paradigm, DAOs are the other organizational innovation to create the next big phase change in human society. Why are DAOs in a data economy index? Organizations are run on social data as much as financial and market data - from board votes to sprint planning, lengthy strategy debates to nonverbal communication. And what DeFi does for finance, DaoStack is trying to start implementing for DAOs. DaoStack has created a modular, open-source architecture that allows developers to easily code plugins that integrate custom functionality for their organization while making it available to the ecosystem at the same time. Some signals we have seen that confirm this are industry leaders like Gnosis and Polkadot using DaoStack for their protocol DAOs (dxDAO, PolkaDAO). While their tech is great, why does it add value to GEN tokens? GEN is a collective intelligence token used to facilitate not only intraDAO but also interDAO collaboration and coordination. This will have strong network effects since governance experts (e.g. organizational developers, anarchists, policy makers) will be able to help support new fledgling DAOs who might otherwise flounder if left to figure it out on their own on platforms like Aragon and Colony. As DaoStack tech matures (much in part to our friends at dOrg), has more dev tutorials, plug and play templates, and simple user interfaces that non-technical people can use, we have no doubt that they will be the premier DAO creation platform.
OXT (10%) - Not all VPNs are as private or secure as people think. Orchid Protocol is a privacy oriented VPN network that creates an open market of services provides instead of winner-takes-all like we have today in VPN services allowing more competition and all it’s boons. Each token entitles you to 6GB of service on the Orchid network. Data usage is going up exponentially with video streaming and soon VR/AR meaning there will be increasing demand from established internet users and from emerging markets just onboarding to the internet. Conceptually I’m bullish on it but haven’t done enough due diligence yet to feel confident adding it in to the index. They do have a kickass team of researchers, engineers, and marketers so we’ll see where it goes.
ANT (3%) - The inclusion of Aragon would be more of a hedge against GEN not succeeding than an actual belief in Aragon itself. Aragon has a much more polished ui and app today but is far less extensible and customizable from a technical perspective. This will be a severe limitation as a plethora of organizations with increasing complexity adopt DAO philosophies. So while Aragon is the most well known DAO platform today, it has few users and will not be able to provide the value needed to bring in the large organizations that need DAOs the most.
FET (2%) - We make thousands of decisions everyday and our options are only growing day by day. With FET autonomous agents, little AI bots that you tell your preferences to, will go out and make various decisions for you. Anything from simplicities like ordering your lunch delivered to your desk to complex decisions like when to sell or store energy from your solar panel based on current energy usage and pricing in your area. I’m fairly wary of FET since I’m not sure why they have their own chain or own token and their technical development hasn’t been impressive. They do have a unique value prop so I’ve allocated a small amount to be reassessed pending further progress. You do get about ~10% APY staking rewards on Binance but that definitely doesn’t offset the risks. (Disclosure I’ve owned FET since mid 2019)
Tokens we would include but for some reason won’t/can’t:
OASIS - Oasis is a data privacy platform on Ethereum that is essentially the same as Ocean Protocol but targeted toward managing individual pieces of data rather than pooling them together for computation (although that is also possible on Ocean). Oasis hasn’t launched yet and their token isn’t available on any markets yet so we haven’t dug into them much.
SNX - Derivative financial markets and high frequency trading are a majority of the worlds economy (in dollar, not human terms) and are entirely run by bots using various data inputs and algorithms. As on-chain automation and pricing mechanisms become available (re: LINK/OCEAN) this industry will shift to smart contract platforms and SNX is currently the leading solution for settling these trades. SNX stakers earn exchange fees so the more bots trading off of data inputs, the more SNX holders will make. So why are we not including SNX in the Data Economy Token Index? At the moment by staking SNX you get about 25% return per year in SNX which is amazing! Unfortunately you can not stake through Set Protocol tokens so if you do want to hold SNX you are better doing it on your own so you can stake and get even more rewards than purely hodling. (Disclosure I’ve owned SNX since early 2020)
Tokens I’m not including:
iExec/Band Protocol/Kleros - Shitcoins and vaporware. No where near technical or business capabilities of Chainlink and Ocean Protocol
IOTA - I’m friends with people in the IOTA community but as we place investments as much on technical excellence as the possibilities and potential future the tech creates we can’t, at the moment, recommend IOTA to join the index.