On June 9, El Salvador became the first country in the world to adopt bitcoin as legal tender after it’s Legislative Assemblyvoted to embrace the cryptocurrency. It is undeniable that, in doing so, the government of El Salvador has taken a dramatic step toward bringing decentralized finance closer to the public.
DeFi, or decentralized finance, refers to financial products running on the public blockchain. It is mainly contrasted against traditional financial products in that DeFi products lack a central point of authority mediating their transactions, instead relying on the innovative structure of the blockchain to distribute information across entire networks. Its key characteristics are openness, transparency, and immutability. More and more DeFi related projects are emerging with the developments in DeFi technology; one such example is liquidity mining .
DeFi liquidity mining refers to the practice of earning profit by providing liquidity for DeFi products. With the rapid increase in the number of cryptocurrencies entering the market, the demand for money transactions is increasing. Therefore, a decentralized fund pool to exchange tokens at any time is particularly important. Liquidity mining solves this problem. In the liquidity mining, the liquidity provider (LP) puts various token assets into the pool to share in transaction fees and receive a platform token reward. Traders exchange tokens in the pool while paying transaction fees and gas fees. The more funds in the pool, the larger the pool and the stronger the liquidity, and the better it can cope with a larger number of token exchange events.
Today, with the rapid growth of data and the serious undervaluation of data value, DeFi has unsurprisingly been implemented into data value release. As one of the most important assets today, data value release is an urgent problem to be solved. In the process of studying blockchain and data encryption computation, GDF has advanced the method of combining data and liquidity mining to release the value of data.
In GDF's blockchain platform GoodData, data owners, data users and ordinary DeFi enthusiasts all can benefit from the released value of data.
Data owners can publish data as data tokens through the GoodData blockchain platform. These tokens are then made available to query customers who wish to access the data for information or research purposes. After the platform automatically creates the liquidity pool, the price rise or transaction of data tokens can bring benefits to data owners. Furthermore,in order to avoid data leakage, encryption algorithms are used to protect the original data throughout the transaction. After obtaining the token, the data user has the right to compute data, but not have the ownership of original data. This is essential for protecting private information associated with the data set that should (or must) not be shared. This ensures the data can continuously release value securely, so as to encourage more people to share data.
Data users can obtain the right to use the data by purchasing or exchanging the data token, where machine learning training or multi-party computation can be carried out in the local environment of the data owner. Data users can also obtain GooD token at the same time of purchasing data token to participate in higher value data.
Even investors without data demand can buy valuable data tokens as a liquidity provider (LP) to earn investment revenue. Because the GooD obtained by participating in the liquidity mining can be used to participate in the data token, it also affects the price of the data token. As prices directly affect the mining profit, liquidity providers may prefer to deposit more valuable data tokens, which also provide potential price discovery for data tokens.
As technology develops, decentralized finance will inevitably become more mature.. In the future, the DeFi products will be more abundant, and will likely offer products that were not possible in traditional finance. This post has explored the potential value of data, under DeFi; however, much like the unreleased value of data, there will be more and more previously intangible assets made possible by the development of DeFi and its various applications.
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