How DIA leverages NFTs to enable distributed data rights management and enable secondary markets for data.
May 31, 2021
The DeFi ecosystem is dependent on the reliable delivery of accurate data through oracles. While the infrastructure to deliver data is maturing, the need to manage and track rights for the usage of data by the originators has not been addressed. NFTs provide the possibility to decentralise the management and monetisation as well as create a liquid secondary market for data and the attached rights.
The current infrastructure for data provision in the DeFi ecosystem has organically grown around the need for data by dApps. As the market grows, an essential building block for a maturing and increasingly regulated ecosystem will be the ability to track and audit which data is used by whom, from which sources, under which rights. As this information is currently not provided, the development of standards and best practices around the usage of data are limited and users of the data operate with unknown risks.
In addition, the usage of data feeds under commercial rights currently requires centralised management and monetisation infrastructure, which stands in stark contrast to the nature of the market. Leveraging distributed systems would enable a more efficient, transparent, and market-driven monetisation mechanism, which would be beneficial for both the data originators as well as its distributors and users.
Finally, an efficient rights management infrastructure will strongly benefit from an open and decentralised market for data and its rights, not only enabling autonomous systems for the creation of data rights trackers, but also an efficient secondary market to trade them.
The DIA Association establishes a new system to track and manage data usage rights that leverages the benefits of decentralisation to create an autonomous market infrastructure and tracking system using Autonomous Rights Tokens, or ‘ARTs ‘ for short.
ARTs are NFTs that hold the rights information of a certain data set and act as a key for smart contracts to be able to receive any given data feed. NFTs are the ideal technology to solve data rights challenges, as they enable several features required to implement an efficient and decentralised data rights tracking management.
- ARTs reference individual data rights including all relevant parameters required to define the rights, like duration, usage context etc.
- ARTs allow the rights to be associated with the smart contracts using the data and making them a prerequisite for the usage of the data.
- ARTs can be minted in a decentralised manner, opening access to anyone and removing the need for centralised administration.
- ARTs can be traded on any secondary market that enables trading financial primitives for data rights and the creation of incentive systems to create datasets.
Autonomous Rights Tokens manage the provision and monetisation of data rights between users and sources.
The ART architecture has been designed with several goals in mind:
- Enable automated distribution, tracking and enforcement of rights according to specific terms.
- Enable trading on secondary markets to improve and decentralise access to rights.
- Incentivise the sourcing of new data sets and provide additional token-economic incentives for DIA token holders.
Below we give an overview of the different components of the ART architecture and briefly deep dive into each component.
dARTs represent the right to use a dataset under certain conditions (i.e. type of usage, time etc.). They can be minted through an interface provided by DIA by defining the dataset and providing a minting fee to the dART fee pool. The generation of dARTs can also be integrated through smart contract interactions into existing or future web3 applications. dARTs can be freely traded on NFT marketplaces like OpenSea.
A dataset for a dART can be provided by several Source Tokens (‘sART’). A DIA Root ART will initially provide dARTs for assets as a ‘ USD/X ’ pair, e.g. ‘ USD/BTC ’. The dART will define and identify the corresponding dataset by the DIA API call structure.
Anyone can mint a dART through the primary interface provided by DIA or sell/buy them on secondary markets. During regular minting, users can select a dataset and different attributes like time and usage that result in a minting fee. The minting fee consists of a general minting fee and potentially a data fee, depending on the fees defined by the terms of the source(s).
sARTs represent a data source and the usage rights associated with the data provided by that source. Each sART is unique and each data source only has one sART. Each sART is linked to the dART, referencing the respective usage rights. sART are eligible to claim fees generated through the minting of a dART minting.
sARTs are initially generated by DIA on behalf of the sources, but can be claimed by the sources. Following a centralised minting of sARTs, their generation will be decentralised. A source can mint a sART itself. DIA DAO approval will be required for the source to mint and claim its sART.
sART attributes are initially predefined by DIA based on publicly available information and/ or information provided by a source. In the future sources can populate the attributes of such tokens themselves as well as change the attributes. Changes to the fee distribution will require DAO approval. Fee amounts can be set discretionary by the source. sARTs can have a vertical relationship, i.e. a derived data set may be composed of data from different sources.
Further details around the mechanics of the Fee Pools, the Launch Genesis and the minting process will be released in an upcoming announcement.