Understanding decentralized data management in Web3
A look at different Web3 technologies and their use cases for managing data in a decentralized context
Web3 is a concept that is used to describe the evolution of the internet. It is the promise of an interconnected serverless internet, i.e. the decentralized web. An internet where users are in control of their own data, identity and destiny.
This goal for the internet to progress to is an advanced form of value to be built on distributed ledger technology, beyond the initial proven use cases of digital scarce value with Bitcoin, and then programmable money with Ethereum.
The Web3 internet is built on fundamentally different infrastructure, utilizing blockchains and distributed peer-to-peer networks, compared to the current existing internet which rely on server-client relationships. To adapt to this new infrastructure, new methods of handling and interacting with data in a decentralized context need to be developed to account for the open, transparent and distributed nature in which Web3 applications operate.
Completely new applications will be enabled by this technology, by building with structures that eliminate reliance on corrupt/censoring central authorities. They will leverage immutability and open economic incentive systems to generate highly accurate and verified information without trusting other parties.
The following projects have built tools that serve as useful examples of how data can be managed in Web3.
FOAM Protocol is an open protocol for decentralized, geospatial data markets, that has the goal to build a consensus-driven map of the world that can be trusted for every application.
FOAM Protocol is a unique example of an application that can only exist effectively using the decentralized data management principles and incentivisation mechanisms that Web3 technology can provide. FOAM uses tokens to create economic incentives for the validation of geospatial data, to build a universal consensus-driven map and standard for location data and its exchange. It is what FOAM describes as ‘programmable space’.
By creating economic incentives for an open-source location standard, a much more accurate and universal standard for location data and exchange should be able to develop on FOAM to solve problems of location data monetization, interoperability of location data and verification of location data. Supporting technologies and use cases such as IOT networks, supply chain, logistics and enhanced location intelligence (e.g. mobility AI).
The core principles behind FOAM rely on the immutability and transparency of the Ethereum blockchain where values are represented in FOAM smart contracts, allowing participants to actively verify data. With base fundamentals of decentralized technology, FOAM is then able to build on top of this a verification layer built with a token curated registry(TCR), where users can stake reputation and tokens to vouch for the location data accuracy, and be rewarded for providing and verifying the correct data. This provably verified data can then either be leveraged into applications, such as in open tools like FOAM’s visualiser or available for exchange in data marketplaces.
FOAM is a prime example of how data can be managed, verified and improved for a specific purpose and ultimately with Web3 we will see more applications arise that leverage the stronger verification and wisdom able to be sourced from economically incentivised crowds with open and transparent standards.
DIRT Protocol provides another example of how data could be managed in a decentralized Web3 context by utilizing Token Curated Registeries (TCRs). DIRT Protocol is a standard for people to create openly editable, Community Moderated Datastores on Ethereum.
The idea behind DIRT is that it creates a framework for data to be community owned and managed without any central authorities, and provide a means for the data to be accurate and readily available for any service or application that requires it.
Essentially this functions in the same way as FOAM’s verification layer where any user can contribute to the shared database, but must place tokens at stake as an economic incentive to provide quality data and receive rewards for verifying the accuracy of the data.
This framework enables an entirely new concept of ‘Trust as a service’ as described by DIRT, removing the likelihood of single party manipulation and improving accuracy through crowd-sourced participation. The first iteration of an application based on this standard is OpenMarketCap a token curated alternative to CoinMarketCap to create a more trustworthy cryptocurrency trade data source in an industry that suffers inaccurate and at times very dishonest data.
ChainLink is a decentralized data management solution that focuses on data external to blockchain systems, aiming to solve the ‘smart contract connectivity’ or ‘oracle problem’. That is, due to the decentralization and tamper-proof properties of smart contracts, they lack connectivity to external data points as they form critical centralizing points of failure as oracle data inputs control the behaviour of the ‘trustless’ smart contract system.
ChainLink provides a secure, decentralized tamper-proof blockchain middleware, bridging data sources, payments and APIs to smart contracts, as well as providing a framework for easing access to multiple inputs and outputs for smart contracts.
ChainLink allows any user to run an oracle and take part in the network. ChainLink then aggregates the multiple oracle data sources for usage for each particular feed, such that the system can provide redundancy and accuracy for the end user data.
Marketplace based incentives dictate the ChainLink system operation with data users making payments to the oracles providing the data sources, and therefore alongside the reputation and staking mechanisms, data users can dictate to what level they value data accuracy and redundancy as higher payments incentivise greater honesty amongst oracles and more participants as the potential reward increases.
Currently the status of ChainLink’s mainnet, is that its smart contract aggregator only operates with a static list of four trusted oracles seen here. It is planned that the number of oracles sourced from will expand and oracle participants will build reputation and stake LINK tokens as collateral which are lost if bad data is provided, but this is yet to be operational on mainnet.
Ultimately ChainLink has demonstrated so far, that interacting with external data and managing its inputs, outputs and interactions with decentralized systems will be one of the most crucial building blocks for Web3 technology, and therefore projects that build solutions for the oracle problem will become significant players.
It is likely that many iterations and improvements will be made and will be needed in oracle design such that interacting with blockchain applications and the outside world becomes fully seamless and secure for a raft of new decentralized applications to be fully realized.
Band is an open protocol that facilitates the governance of data used in decentralized blockchain systems. The protocol functions as an open standard for data handling and management for any decentralized program or application that requires trusted and reliable data.
Building on shared principles of ChainLink, FOAM and DIRT, Band Protocol provides the infrastructure for secure and effective Web3 applications to be made by packaging up the core fundamental tools for decentralized data management into simple building blocks with infrastructure developed for off-chain oracles, identity management systems, token issuances and token curated registries.
Combining these tools will mean that Band Protocol is effective in four key areas:
- Data Valuation & Price Discovery
Dataset tokens and issuance with bonding curves for effective data monetization
- Delegated Curation
Management of data feeds and oracles for external data interactions
- Direct Curation
Token curated registries for management of community controlled datasources
- Private Data Governance
Information sharing and decentralized reputation standards for secure and private data utilization within decentralized systems
While other aspects to Web3 may prove to be more critical in future, the mechanisms for data management are crucial problems that need to be solved for effective Web3 applications to be implemented today and at Band we believe we’ve created some of the most usable and holistic tools across the board for this purpose.
We continue to build with our mainnet deployment fast approaching. If any interested parties are seeking to integrate our technology, please contact the team if any assistance is needed. For more information see our website, introductory blog and whitepaper.
About Band Protocol
Band Protocol is a data governance framework for Web3.0 application. It operates as an open-source standard and framework for the decentralized management of data. Build and manage off-chain oracles, reputation scores, identity management systems, token issuances and token curated registries.