Control Over the OCEAN Contract Is Now Revoked: Overview
Remaining OCEAN tokens have been minted. OCEAN is fully decentralized and unpausable. It will vest to community over decades
Overview article [this post], technical article [here]. May 25 update: it’s done, blog is updated accordingly
1. Introduction
Ocean Protocol is ready to take the next step in our evolution. Our utmost priority is to nurture the Ocean community and protect holders of the OCEAN token. Just as one cautiously feels their way barefoot across a stone riverbed, we have always worked to take the interests of token holders as our priority — taking cautious steps forward.
2. Need for a Native OCEAN Token
In the Ocean whitepaper, we envisioned that a Data Economy could be kicked off through the use of programs and incentives that allow people to join the community and contribute meaningfully. Crypto-tokens represent a novel innovation in giving people a small slice of an emerging protocol. Crypto-tokens also can help to align activities amongst a globally dispersed group of people who want to move an idea forward. When used appropriately, tokens can help to sustain and drive the growth of protocols.
3. Tokens Nurture the Ocean Community
Over the past six years, we have had many programs such as Shipyard, Ambassadors, OceanDAO Grants, and Data Challenges to encourage people to explore the value of data and to try out new business ideas. We learned that many of the programs require significant coordination and overhead to weed out scammers and reward true contributors who are aligned with the mission and values of Ocean.
The objective is to encourage independent, non-correlated activities at scale that are the sign of healthy, sustainable protocol communities. Our goal has always been to set up long-term incentive mechanisms that can outlast the involvement of the founding team and serve the interests of the Ocean community.
We realized that the most responsible way to encourage participation in the network with the least amount of administrative overhead was to tie incentives to the publishing of data assets and algorithms, and real consumption of assets within the Ocean ecosystem. The blockchain doesn’t lie and the truest form of proof is when people put their tokens behind their convictions. The result of this is Data Farming.
4. Data Farming as a Long-Term Sustainable Incentive Program
Data Farming incentivizes both active and passive participation in the Ocean ecosystem. Token holders earn OCEAN passively for locking up their tokens for a fixed time period. Once their OCEAN is locked, they can then actively stake the derivative veOCEAN token on data assets, to help signal quality and earn Data Farming rewards. The Data Farming program is being automated so that the administrative overhead is minimal and manageable as adoption of Ocean technology scales.
With Data Farming in place and road tested for almost one year, a core piece of the incentive puzzle is now in place. Over the next few years, we will improve and secure the mechanism but after nine months of testing Data Farming and the previous years of gingerly testing out incentive programs, we’re now confident that we can finally mint the remaining OCEAN in the token contract to a multi-signature wallet and revoke any pause or destruct capabilities on the OCEAN token contract. By revoking all rights, OCEAN token holders can rest assured that their holdings are completely safe and will live indefinitely on the Ethereum network.
As of May 25, 2023, we’ve performed those actions. Details are here.
5. Crypto as a General-Purpose Technology
Our hypothesis is that crypto is a general-purpose technology. Crypto is a 14-year-old general purpose technology kicked off in 2009 with Bitcoin and if our hypothesis is correct, the journey to integrate it into society likely requires another 20 years.
In 2005, Dr. Lipsey et al posed the idea that all human progress can be attributed to 30 odd technologies that drive innovation and new products. Generally, these technology innovations are so disruptive and wide-reaching, that it takes at least 30 years to weave itself into the fabric of society and become ubiquitous.
As a comparison, work on the Internet began in the 1960s but it was only in 1989 when Tim Berners-Lee invented the world wide web that the internet could begin its rapid rise to ubiquity as a consumer and business essential. Counting forward 30 years from 1989, we land at 2019. Most people can agree that by 2019, the Internet was ubiquitous and inseparable from our modern society.
For Ocean, the interplay between crypto, data and AI is obvious now with the release of ChatGPT, Bard and other large language models (LLMs), and the rate of innovation could happen faster than expected.
Our core hypothesis at the founding of Ocean was that, in a world where AI agents are economic agents, the means of exchanging value would be over blockchains, smart contracts and crypto tokens.
AI agents will use web2 services once web2 services integrate with web3 to allow native blockchain based identity and profiles — and delivery of value will be notarized and orchestrated on blockchains, along with the payments.
These are the reasons why we launched Ocean Protocol. To give an incentive structure for AI, data and blockchains to work together beside human agents. This is also the reason why we have a long-term, Bitcoin-like emission schedule of OCEAN to encourage the adoption of Ocean technology over time — because these fundamental business and mindset changes take time.
6. Allocation of OCEAN Tokens
The Ocean token contract has a maximum cap of 1.41 billion OCEAN.
In 2019, 613.1 million OCEAN was minted with the majority of tokens distributed to token acquirors, the Ocean community via grants and Ocean Protocol Foundation for administrative expenses. The single mint in 2019 represented 43.5% of the total allowable token supply, leaving 797 million OCEAN or 56.5% of the token supply remaining to be minted.
As of May 2023, 100% of the OCEAN token supply will be minted with the proceeds being deposited into oceanDAO multisignature wallets with seven signees. The signees are made up of core Ocean team members, Ocean community members and founders of other web3 projects, with the core team members being in the minority of signees. The final allocation of all 1.41 billion OCEAN is shown in Diagram 1 below:
When 100% of OCEAN is minted, 807 million OCEAN representing 57.2% of the total supply remains to be distributed for Data Farming and incentive programs according to a multi-decade emission schedule. There is also funding for existing community programs and administrative expenses.
7. Inflation Rate of the OCEAN Token Supply
There will be no major injection of OCEAN into the circulating supply at this stage. The number of tokens disbursed will be gradually ratcheted up in lockstep with adoption, so the inflation rate in the OCEAN token supply will be at a level to attract new participants while protecting existing holders.
The main source of token inflation moving forward occurs as part of the oceanDAO Data Farming program. The emission schedule is modelled on Bitcoin and serves as a long-term, multi-decade program to incentivize passive and active participation in the Ocean ecosystem. Most importantly, Data Farming is designed to be automated with little or no intervention from the core team.
The Data Farming program has been running for nine (9) months and we have given ourselves an additional 2 years to test and harden Data Farming. If the adoption requires more time or the incentive mechanisms need more time to mature, less OCEAN will be disbursed.
Assuming the mechanisms work as designed and adoption of Ocean Protocol tools proceeds as planned, the maximum disbursement of Ocean to the curators and network starts in late-2025 and continues for 4 years (Diagram 3). At peak emissions in Year 2, the inflation rate would be 8% — 52 million OCEAN emitted into a total liquid supply of approximately 650 million OCEAN. At the first halvening at Year 6 (Week 330), the emission rate falls to 500,000 OCEAN per week and the resulting the inflation rate drops to 3%.
You can find out more about Data Farming and the emission schedule here.
We believe that crypto-adoption will continue but between now and 2025, there are broader macro-economic headwinds due to existing global disruptions, the ongoing banking crisis and unsustainable national debt loads. In 2 Years, the adoption of AI and web3 technologies could be ripe and align with the ratcheting up of OCEAN token emissions to capitalize on the long-term trend.
8. Valuation of the OCEAN Token Ecosystem
With the current circulating supply of OCEAN at 605 million, the value of the network is $200 million assuming today’s price of $0.33/OCEAN.
With the minting of the remaining 56.5% of the supply to reach maximum cap, the fully diluted value of the Ocean network is $465 million. Meanwhile, the OCEAN token contract is fully decentralized, censorship-resistant and can no longer be paused or destroyed.
The Ocean core team will notify the main coin portals CoinMarketCap and Coingecko and provide quarterly updates to the token supply so that community members can rely on them.
AMA. To field questions by the community, the Ocean core team will hold an AMA about the OCEAN actions, on May 25 at 12.30 UTC. Follow @oceanprotocol on Twitter for more details.
9. Upwards and Onwards
Trent and Masha McConaghy posed the question 10 years ago on whether digital art could truly be owned, traded and transparently tracked. This exploration led directly to Ocean Protocol - a realization that AI, data and blockchains were naturally suited to unlock immense value and human potential.
No one can predict the future, but if the past is any indicator, many of our initial hypothesis’ were proven correct with the rise of NFTs, decentralized markets for tokens and an explosion of AI + data startups.
The OCEAN token is a fundamental part of the Ocean ecosystem. With this minting of OCEAN tokens and the revocation of all control over the OCEAN token contract, it’s now up to all Ocean community members (including the core team) to imbue value in the token through real technology advances and real adoption one data scientist and user at a time.
About Ocean Protocol
Ocean was founded to level the playing field for AI and data. Ocean tools enable people to privately & securely publish, exchange, and consume data.
Follow Ocean on Twitter or Telegram to keep up to date. Chat directly with the Ocean community on Discord. Or, track Ocean progress directly on GitHub.
