title: Create Data Economy Token Index ($DATA)
author: Kiba Gateaux
type: New Index Creation
requires: 0, 2
Pre-note: I wasn’t going to post this yet because we said we will focus on DPI for the time being but I figured it’s good to park it and get feedback until the time comes.
The Fourth Industrial Revolution (4IR) is coming, powered by data and automation. The $DATA index seeks to capture the value of this new world economy.
The Data Economy Token Index is intended to capture the value of data and automation tokens for protocols and marketplaces like ChainLink and Ocean Protocol. First and foremost the important thing to note is that it takes a long term investment time horizon focus of at least five years. We are still in the early phases of 4IR 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. create open, competitive markets 2. incentive collaboration and communal resources within/through these markets 3. ensure privacy and individual freedom. We look as much for greats teams with technical excellence, discipline, and shared values as tokenomic principles.
You can read more about the Fourth Industrial Revolution at the WEF Intelligence site.
The European data economy alone will be valued at +$800 billion dollars in 2025, or 2.4% of the entire EU economy. This is ~130x the combined market cap of all tokens in the $DATA index. This doesn’t even include the U.S. or China, nor the future growth of the data economy, nor the fact that the technologies represented by $DATA will create an exponential increase in the value of data. A conservative estimate, assuming market leaders like ChainLink and Ocean Protocol succeed, would place the future growth of $DATA by 2030 at least 10,000x current valuations.
Even the U.N. one of the least innovative organizations on Earth sees the value of the data economy:
World Economic and Social Survey 2018: Frontier Technology for
Sustainable Development-a flagship publication of the United Nations Department of Economic and Social Affairs (DESA)- generated considerable interest in new technologies and their development impacts…The first edition of the series focuses on data economy.
U.N. Frontier Technology Report Q1 2019
If you read the report you’ll notice 1. they misreport the EU’s numbers differ from the report that is referenced above showing the market is still not understood or valued properly and 2. THE U.N. HAS NO IDEA WHAT’S COMING NEXT. One of the largest organizations in the world with billions of dollars of funding published a research report last year and they can’t foresee the changes that are coming with decentralized technologies and what they enable. Even the U.N complacently accepts the status quo set by mega-corps and can’t see the future we are building in crypto. And this isn’t some small team publishing the report, it’s a major division of the U.N. We are so early. Few understand the 4IR.
There is nothing like this anywhere on the market. The closest thing I can find even in the TradFi is ARKQ ($300M AUM) and ARKW ($1.3B AUM), valuing them at a tiny fraction of the data economy. I guess you could consider NASDAQ but that is a categorically different type of economy based on the criteria described in Methodology for inclusion into $DATA. We will be close to the first movers in TradFi and the first in DeFi once we deploy the $DATA index.
I applied to Set Protocol’s social trader program around May 2020 (Set team can confirm this) and this index is up about 300% against ETH since then I published a version for individual retail investors (aka my friends) in June which explains my methodology for each token in some detail.
I have modified pr removed token allocations based on liquidity needs for a multi-million dollar fund but the methodologies remain the same as laid out in my original blog post.
Overall the methodology behind $DATA index is a long-term, fundamentals based investment thesis. Buyers of $DATA should have be expecting to hold for at least a 5 years to get an optimal return. There will not be continuous rebalances, it is not marketcap weighted, it will be updated only when the macro environment changes or when certain tokens become available on the market either from sufficient liquidity or a token launch. Basically you should be confident buying any underlying token in $DATA, locking it up for 10 years, and know you made a great decision.
We evaluate $DATA tokens based on their tech, teams, and tokenomics achieving these 4 things:
- Creating open, competitive markets
- Incentivizing collaboration and communal resources inside and/or through these markets
- Ensuring individual privacy and freedom
- Demanding technical excellence in all areas of innovation
Financial market considerations are secondary to the above and include:
- It must be possible to reasonably predict the token’s supply over the next five years.
- t least 5% of the five year supply must be currently circulating.
- The token’s economics must not have locking, minting or other patterns that would significantly disadvantage passive holders.mechanisms must have clear risk reward profiles.
Synergistic Investing: There are strong synergies with all the tech and teams behind these tokens and many of them have announced integrations and partnerships with each other already. Why is this important? According to the World Economic Forum, “In the past 30 years, $1 put towards digital technology investment increased GDP by $20, whereas $1 put towards non-digital investment increased GDP by only $3.” This means by investing in the $DATA index we are collectively making the biggest impact on the global economy we possibly could on a dollar-for-dollar basis. By expanding the economy, we increase the total value of transactions within it, and large portion of those transactions will be related to data, thereby driving more revenue to networks within $DATA. This is doubly important when you consider that the technologies with $DATA are symbiotic so this money is circulating, reinvesting, and compounding within our system automatically without us doing anything.
Data Ethics: I see this index as a way to direct funding to ethical, privacy preserving technologies instead of going to the likes of Facebook and Google. This is effectively a money voting block as well as an investment vehicle. I don’t 100% agree with everything they say but the WEF has a good report on ethics and values in the data economy and this article has some interesting data on how the 4IR helps gender equality. It’s near impossible to discriminate someone when you can’t know who they are, where they are, or even what they are (bots or humans or both?)
On DAOs: It might not be immediately obvious why there are DAO platform tokens included in the $DATA index and I admit it is a leap. The basic line of reasoning is this. Data and automation is used to improve human organization/coordination and workloads/workflows. Therefore the better we utilize data, the more effective human organization will be and thus the more valuable that data will be. Also if we can understand how human orgs work using data (e.g utilization of GEN/ANT tokens in votes/services), we can theoretically improve human organization structures/coordination/operations which again increases utilization and value of this data. DAOs are a complementary, but not critical, component to the data economy, I’m fine removing them if it’s a blocker for approving the $DATA index (but not without clear arguments against it).
I think this will become more standardized once the community actually starts operating an index collectively but these are the rules for how I will manage the index long term (stolen mostly from $MVI, $DPIacc and IIP2 proposals because I’m lazy):
- The index manager will be responsible for seeking new additions, allocation adjustments, and steering discussion around the index, working closely with Set team for technical implementation
- In the event of a safety incident, the team must have responded promptly and addressed the incident responsibly in the aftermath, providing users of the protocol with a reliable solution and the decentralized finance community with adequate documentation to provide transparency about the incident.
- If a suitable accumulation protocol is not identified, then the native token would be held (e.g. COMP is held until a suitable accumulating token is identified)
$DATA Index Allocation
|xSNXa (to accrue trading fees)||7.5%||$3,2M|
There are several tokens I would like to include but aren’t available or don’t have liquidity for potentially millions of dollars of volume or have not been thoroughly researched enough yet. These include (in no particular order): Orchid Protocol, FileCoin, The Graph, DAOstack, Oasis Protocol, Sia, arweave, Fetch AI, FOAM, LinkPool, Helium, LivePeer, Robonomics Network, and Robonomics Web Services.
You can read more about me at my twitter @KibaGateaux. I’m starting a collective around 4IR called Titans of Data if you want to see other investments I’ve made or things I’m building. If you’re interested in joining, shoot me a DM I’m working on some thing called gdpLINK at the moment.
I bought $LINK @ $0.16, $NXM @ $4, $SNX @ $0.70, etc. so I have multiple 10-100x investments in the last 2 years and told my friends to buy $OCEAN earlier this year at $0.04 (I didn’t have capital available) which is another 10x. I worked at ConsenSys for 1.5 years as a developer and strategist and built their internal investments dashboard at labs.consensys.net (can’t talk more about this because NDA).
I’m not an “influencer” or anything but I’ll do my best to promote. Here’s is a loose plan:
General - Set Protocol uses ChainLink network so Set team might be able to coordinate a blog post with their team and promote it in various channels
Argent - Argent wallet has already integrated Set into their interface. We should make a deal with them to give kickbacks per $1,000 invested via their app and payout after 3-6months without selling. We would track this based on buys from addresses under their ENS domain e.g. normie.argent.eth
MetaMask - Similar kickback program as Argent for all index purchases within their wallet.
Twitter - Recruit @ChainLinkGod, @DeFiGod, Crypto___Oracle, et. all.
Reddit - r/linktrader, r/chainlink, r/ethfinance
4chan - They are the supreme underground marketers and were way ahead of the game on $LINK before everyone else. They’ll pump it hard.
Fee structures still seem relatively up in the air so I’ll hold off on too many details until the community and Set converge on some standard/best practices.
Because of the long term nature of the index, I think we should setup fees to get money in the door but make it harder to leave, and provide capital for ongoing research, analysis, and marketing. For this purpose I suggest a 0.5% annual fee on AUM to pay for ongoing operations and a 5% performance fee on exit. The fees will be split 50/50 by the Coop and the index manager (Titans of Data).
I like the suggestion that fees only accrue after a certain AUM is met. This threshold will be set when a fee structure is decided.
On the ticker $DATA
I know there are $DATA tokens already on the market but they aren’t well known or used. $DATA is a premium ticker and those have been proven to perform better for pyschological human reasons so we if actually care about the success of this index we should fight to make ours the one true $DATA token.