What Are Decentralized Data Marketplaces?

Use cases of decentralized data marketplaces can be different across industries. If we take finance, for example, information about profits and payment habits can help lenders make decisions on loan approvals. In healthcare, data marketplaces can optimize medical research and improve patient outcomes. These platforms transform with the development of technology, and new use cases of data. With AI development, marketplaces can be used to trade and feed AI models and Machine Learning applications. 

Centralized and decentralized data marketplaces differ in the way they are structured. 

Centralized marketplaces store the information on servers owned by a certain company. 

Decentralized ones, on the other hand, store data across multiple computers (nodes) connected to the network. When stored in distributed ledgers, data is represented as a tradable asset class in the form of tokens. Each transaction with these tokens is recorded on the ledger. 

In decentralized data marketplaces, the role of the trusted middlemen is taken by smart contracts. These smart contracts are self-executing digital agreements that ensure data providers and consumers follow the rules. If any of the parties don’t keep their part of the contract, the transaction won’t happen. 

Because DLT-based data marketplaces keep data through different locations, they are more secure. It’s more difficult to hack the system and steal data. Another benefit is transparency. Data providers can track and see which address is the owner of their data through blockchain explorers, like Etherscan. 

Transparency in the context of decentralization, doesn’t mean publicity. Decentralized marketplaces ensure a high level of privacy, not requiring users to disclose their names and other personal information. People connect to platforms through their crypto wallets, and it’s the public crypto wallet address that is seen in blockchain explorers. That address is a random sequence of characters that doesn’t reveal the user's identity. To enhance privacy further, there are marketplaces that use cryptography techniques like Zero-Knowledge Proofs. These techniques hide transaction details further, providing an additional layer of privacy. 

On the Ocean Protocol, users can share data and data-based services to improve AI models and other use cases. Built on the Ethereum blockchain, Ocean provides access to data through tokenization. It utilizes tokens that represent the right to access specific datasets. The platform’s native utility token, OCEAN, is used for purchasing and selling data services, as well as for governance, staking, and earning rewards within the ecosystem. Developers can utilize the tools provided by the protocol to create new products.

Masa introduces an AI Data Network & Marketplace. It lets users receive rewards for providing data and computation to train AI models. The company was founded in 2021 and attracted over $5.4 Million in investments from Avalanche Blizzard Fund, Animoca Brands,  Dapper Labs, and others. The Masa network with its native token MASA went live on the main net on April 11, 2024. Through MASA tokens, users can vote on proposals, stake for rewards, and earn new tokens for monetizing their data. To ensure data privacy, Masa utilizes zero-knowledge techniques.

This is an Ethereum-based marketplace for real-time data exchange. Researchers and developers can use the live data on Streamr to build and improve different types of applications. For example, based on the information on traffic and weather conditions, they can optimize the route and safety of self-driving cars. Streamtr has its native token DATA, used for governance, staking, and payments. 

Besides the platforms mentioned in the article, there are numerous projects to look at, including startups focused on DNA data marketplaces, and smart cities. Web3 data marketplaces provide control and transparency to data trading, making it direct and accessible to everyone. The platforms continue to evolve, and become more user-friendly to expand data exchange possibilities.