Market Token

MarketToken is a mintable and burnable ERC-20 token (we’ll say more on what those terms mean soon). The MarketToken is tied to a particular data market and is created when the data market is created. What is the purpose of MarketToken? Well simply put, the MarketToken corresponds to “shares” in a dataset. In everyday life, you’ve probably bought share in companies. These shares give you some rights. You can vote on some company decisions, and have rights to some portion of the company’s wealth (albeit in limited form). The MarketToken is similar. It gives you partial ownership of the dataset that is hosted in the data market along with some governance rights. We’ll explain the function of the MarketToken in greater detail in this and subsequent chapters.

One very important point to note here is that each data market has a different MarketToken. Let’s unpack that statement a bit. The Computable ecosystem consists of many different data markets. Each data market holds a collection of data that is logically tied together in some fashion. For example, data market “A” might hold mapping data for self driving cars, and data market “B” might hold biological experimental data for drug discovery. There will then exist separate market tokens for each market. That is, MarketToken “A” and MarketToken “B”. These two tokens have nothing to do with one another! You might wonder why this is the case? Well it’s for the same reason that Google shares and Merck shares don’t have anything to do with one another; they’re separate companies that should be valued on their own merits independently. Similarly, different data markets have different MarketTokens to allow for separate valuations.

Another interesting feature of MarketToken is that tokens are dynamically minted and burned as the data market evolves. This flexibility is needed to accurately track the evolving value of data in a data market. MarketTokens are minted in one of a few scenarios explained in the next section.

Minting

What does it mean for MarketToken to be minted? Very mechanically, it means that new MarketTokens are created. Like suppose that a company had 100 shares, and they decide to make 50 new shares and sell them to people to raise funds. There are now 150 shares. This is a minting operation. The mechanism works very similiarly for data markets. In the rest of this section, we’ll talk through the situations in which MarketToken can be minted.

Minting happens when new data is added to the market. The owner of the data is rewarded with some new MarketToken. In a data market, a new chunk of data has a special name, a “listing.” To prevent rampant inflation, the addition of a new listing to the market requires the approval of existing MarketToken holders by a vote. You can think of this as a sort of “shareholder vote.” More precisely, this is called a “stakeholder vote.” Just as the owners of Google stock are Google shareholders, the owners of MarketToken for a particular market are “stakeholders.”

In this case, the amount minted is set by the list_reward market parameter set in the Parameterizer contract. We’ll say more about this parameter in a future chapter.

Minting also happens when a patron supports the market by making a payment into its reserve in EtherToken via Reserve.support(). We haven’t said too much about patrons yet, but you can think of them as interested parties who want to help a data market grow and gather more data (you’ll learn a lot more in a future chapter). Patrons may be driven by altruistic or economic considerations. The Reserve.support() method provides the mechanism by which a patron can provide funds to support a market in return for MarketToken. The “algorithmic price curve” is the protocol mechanism which sets this exchange rate between the patron’s funds and the minted MarketToken (see Reserve.getSupportPrice().)

The third case in which minting happens is when a datatrust reports that a listing has been queried (We haven’t said too much about datatrusts yet. These are the parties which hold the actual data off-chain) via Datatrust.listingAccessed(). The minted tokens are awarded to the entity which contributed the listing in question. The actual mechanics of how many tokens are awarded is a little complicated in this case, so we’ll punt on a thorough explanation till later.

Burning

What does it mean to burn tokens? Simply put, it’s analogous to a share buyback. Suppose our company has 100 share, 50 of which are owned by other people. If the company management buys out these other owners and tears up their share certificates, now there are only 50 shares left. This is a burning operation.

Burning for MarketToken works similarly. There’s only one mechanism for burning, the Reserve.withdraw() method. This allows any stakeholder (that is, any owner of MarketToken) to destroy their MarketToken. Why on earth would anyone do this? Well, it’s like a buyback. Burning your tokens this way entitles you to a fraction of the funds under the data market’s control (the Reserve we’ve been seeing is basically a “bank account” of sorts that holds the data market’s working capital). When you burn your tokens, you can withdraw the proportion of funds from the “bank account” that you are entitled to. This operation is interesting because there are no limits. Anyone call call this function at any time, which allows for interested parties to cash out at their wish. This lowers the risk for a potential patron or other data market participant, since they can always exit if they don’t like the direction a data market is heading towards.

Units

The MarketToken is denominated in “market wei”. A wei is a unit borrowed from Ethereum. A wei is a billion-biollionth of an ETH (1/10**18). As with ETH, a “market wei” denominates 1/10**18 of a MarketToken. Using wei units throughout prevents rounding error propagation and keeps contracts simple.

Comparing with Token Curated Registries

Those of you who have some experience in crypto might wonder if MarketToken is something like a token curated registry. There are some similarities here, since a data market also manages an on-chain “registry.”

While our original research on data market design used token curated registries as a design guide, the current design is quite different. In particular, note the contrast of MarketToken with token curated registries tokens, which don’t have a mechanism for minting and burning their associated token.

Last Thoughts

Now that you understand EtherToken and MarketToken better, it’s time to start thinking about how these pieces fit together into the market. The first place to start is with Voting, which governs all important changes in the market. You’ll learn more in the next chapter.