Reinventing the data economy: why we invested in Oamo
By Sep Alavi, General Partner and Sanjay Zimmermann, Partner
We’re thrilled to announce our $1.25m pre-seed investment in Oamo, a decentralised data broker allowing individuals to own and monetise their data while remaining anonymous. Here’s why we invested.
User data has become a commodity in the twenty-first century. Understanding who users are, what they do, and how they interact helps businesses build their products and acquire users more effectively.
Use cases and insights from aggregated data about the customer demographic include:
- Marketing (e.g. targeting specific audiences with social media campaigns)
- Product (e.g. optimising website design for desirable user behaviour)
- Strategy (e.g. effectively prioritising the financing of R&D into new products in line with consumer trends).
- Customer selection (e.g. credit scoring and risk analysis)
- Customer protection (e.g. fraud detection).
These demand-push factors are complemented by an ever-green abundance in supply, with data readily available from open banking, social media, Internet of Things (IoT) technology, and mobile apps.
As a result, the data brokerage industry is booming. With an estimated total of 5,000 data brokers, at an estimated value of $257bn in 2021, data broker revenue is expected to grow at 4.5% from 2022 to 2029 and reach nearly $365bn.
Now, Web3 companies have the same fundamental need for user acquisition and retention that Web2 companies do. They also have their own unique demands for an ID and data tracking solutions, such as:
- Understanding their target audience’s behaviour
- Understanding their token owners and dApp users’ behaviour
- Reaching, communicating with and rewarding their target audience
- Airdrop strategies, including identifying and incentivising top contributors)
Ostensibly, a lot of this data is freely available on chain, and accessible through chain data index and query solutions. An abundance of on-chain analytics platforms have developed over the years, making it easy to get raw data about protocol performance and individual wallets like ERC-20 and NFT holdings, dApp interactions, and trading frequency.
However, users remain excluded from the value, with analytics platforms taking most of the profit from businesses instead. And for businesses — the end customers — we’ve noticed a few big gaps:
- They cannot understand how cohorts of users with specified characteristics behave, interact, and react over time.
- The marketing stack remains limited to Web2 native strategies such as sponsored posts or email marketing. This means it is difficult to effectively reach target audiences and personalise promotions, leading to low conversion rates and low ROI for campaigns.
Historically, these problems have been difficult to solve due to the nascency of required technology. There were two components which were unaddressed until the past year.
- No way to identify distinct individual users and attach KYC and other credentials to their profiles. The only identification was the wallet address, of which each user can have infinite numbers.
- Regularly writing and updating large amounts of user information onto general-purpose blockchains is extremely costly, and exposes user privacy. The average user is unlikely to be willing to store identification data about their age, gender, location, profession, and online activity on-chain, as this is visible by default.
The first problem has been tackled by various decentralised identifier (termed DIDs) solutions that have developed over the past 12 months. Soulbound Tokens (SBTs), first described in Weyl and Buterin’s white paper in May 2022, are digital identity tokens that represent the traits, features, and achievements that make up a person or entity. Verifiable Credentials (VCs), meanwhile, are issued by third-party authorities to prove a certain assertion or claims of a person.
The second problem (namely, the privacy of on-chain data) is also being addressed. Decentralised storage networks like Arweave have been specifically designed for permanent data storage, requiring ‘proof-of-access’ for miners which preserves user privacy. However, though general purpose storage networks like Arweave and IPFS guarantee immutability which is useful for permanent properties, most interactions which businesses would want to track are mutable data points. This is where Ceramic comes in as a protocol of decentralised data mutation and composability, which works by taking immutable files from IPFS or Arweave and turning them into dynamic data streams, akin to its own mutable ledger. This enables truly decentralised, privacy-first, and automatically updating data storage.
Combined, these developments have incubated an extensive Web3 Identity stack. In 2022, companies that classify under the Chain Analytics and Market Data/Analytics subcategories raised $406m and $391m respectively, according to the Block.
Now there is a rich identity ecosystem ready for a data insights layer to tie together the full stack.
Enter, Oamo.
Oamo is a decentralised data broker that allows individuals to own and monetise the value of their data. The platform will enable users to share their on-chain and off-chain data anonymously with trusted companies in exchange for exclusive token rewards and promotions.
Businesses can create data pools with selected attributes of their target audience.
Users, meanwhile, create an Oamo profile as a DID on Ceramic. They then choose which wallets and social profiles to connect, and Oamo then generates credentials for each data point. Everything is securely encrypted with Lit Protocol.
They can then opt-in to pools for which they have the required credentials and contribute data. Upon opt-in, users earn rewards set by the data buyers (ranging from stablecoins to native tokens) while their data is aggregated and anonymized with all other pool participants to generate behavioural insights.
Businesses can also send tailored promotions and surveys to data pool participants directly via Oamo’s messaging system. By using on-chain and off-chain criteria, Oamo guarantees high-quality leads that fit their target audience receive the offers.
This model completely overhauls the existing Data Economy, by making it more efficient, profitable, and fair.
When Yannick and Ahmed came to us with Oamo, we knew they were the ones to crack this. Yannick was an analyst at White Star seven years ago, and helped author our first internal Blockchain report. He then went on to work as an early employee at Figment leading its DataHub team. Ahmed, meanwhile, after a five-year tenure at Eventbrite built a software development and blockchain firm Product Shop, building out the technical expertise required for Oamo’s product development.
We’re super excited to be backing them and the rest of their stellar team as Yannick comes full circle.
Sign up to Oamo’s waitlist now, and stay tuned for their launch with Index Coop and Lighthouse this summer!
