dexFreight and Ocean Protocol are building the first Web3 marketplace for logistics industry to unlock and monetize data.
Authors: Rajat Rajbhandari, PhD, CIO dexFreight and Dev Pramoth, Product Manager, Marketplaces, Ocean Protocol
[By 2025, data is projected to be ¼ of the world’s GDP. A 15 Trillion US$ logistics industry is sitting on top of a vast data reserve unable to unlock and monetize the data. Web 3 movement is gaining traction and the call to be able to control and monetize your data is becoming a new paradigm.]
dexFreight and Ocean Protocol are building the first Web3 marketplace to allow logistics companies (freight brokers, shippers, and carriers, and technology providers) to utilize their operational data not only to generate additional revenue and savings, but also to make the data available for the community to build better products and processes, and to minimize their environmental impact.
In comparison to other industries, logistics data such as price, shipment volume, default rates, invoice attributes, etc., is difficult to find in an open marketplace. We believe this has hindered developers and engineers to build innovative AI algorithms and simulation models without paying hefty licensing fees to data aggregators.
A marketplace like this will unlock the “new oil” that could be worth billions of dollars.
Currently, logistics small and medium enterprises (SME) have significant constraints to monetize their data due to lack of tools, negotiation resources, and having smaller individual data sets. There are companies that want to sell their data and create extra revenue channels, but do not have an easy way of doing so.
We want to create a marketplace as a data infrastructure. Data sellers can price their own data and sell it to buyers using standardized templates of smart contracts. Smaller companies can pool and aggregate their data and get compensated accordingly. Using this infrastructure, illustrated in Figure 1, companies are not only able to create their own marketplaces, but they can also run bounty programs for machine learning improvements, build applications (e.g., optimal routing, pricing strategies), and much more.
A company buying and selling data is nothing new. However, those transactions occur with complicated licensing and subscription deals. Our marketplace utilizes smart contracts to automate the contractual agreements between buyers and sellers and also ensures that the sellers are paid.
Also, sellers don’t have to upload the data set to the marketplace. They can choose to keep the data at their location (e.g., FTP, AWS buckets, IPFS) until both parties sign a smart contract and unlock the data for the buyer to download it. As a result, neither dexFreight nor Ocean would have access to the published data, assuring data privacy and security.
Data sellers such as freight brokers, carriers, and shippers can publish their data (by themselves or by pooling with others) through their enterprise system (e.g., TMS, FMS, ELD) in the marketplace. Companies can sell shipment rate data, market indices, aggregated telematics data and many more. The logistics marketplace is built on top of Ocean’s substrate layer, as illustrated in Figure 2.
The substrate includes smart contracts for buyers and sellers to agree on terms and conditions of purchase and release of payments. Ocean Protocol rewrites the terms and conditions into smart contracts and only when the conditions are fulfilled by the counterparties in the agreement, the asset can be consumed. This is ensured by the verifiers of the Ocean Network which verifies the terms in the transactions. Ocean’s substrate layer ensures a basis for provable provenance, dispute resolution, rewards mechanics and so on to connect data providers to data consumers.
When a seller publishes a data asset, they also define the terms and conditions under which the data can be accessed or consumed. Conditions can be combined in more complex logic to express payment conditions, access control and verified compute.
dexFreight and Ocean Protocol are working closely to develop the beta version of the marketplace.
We see three challenges in the marketplace moving forward.
First is ensuring data quality. That means we should have mechanisms in place to 1) discourage sellers from diluting datasets with duplicate records, and 2) adding fake data to inflate the size of data sets. One solution is that TMSs maintain a hash of individual booked shipments and hash of a block of shipments signed with the public key. The hash is published along with metadata. When the buyer receives a CSV file, then it’s hash should match the published hash. This prevents sellers from modifying the data outside of the TMS. However, it assumes that sellers normally refrain from diluting and duplicating shipment records in TMS which is typically the case because TMSs are tied to accounting systems. The likelihood of falsifying shipment information in TMS is low.
Second is privacy. We assume that a very small fraction of users will sell their shipment data on its own because their competitors will know how they are pricing or what market they are operating in. However, they will be less hesitant to do so if a third-party mix their data with other sellers’ hence obfuscating the true owner of the data to buyers.
The third is pricing. At the moment, there is little or no research on how to price shipment and other operational data. There are many price discovery models however they require some base value to bootstrap with. We prefer that base value to not be arbitrary.
dexFreight will be the first user to sell shipment attributes and other operational data on behalf of our users. Obviously, users will have to opt-in to share the data and receive payments. If so, the first two challenges are resolved since dexFreight can guarantee the quality of data as well as hide data’s true owner to the buyers.
dexFreight is providing the domain expertise, design requirements, and will be the first user to sell data from its own logistics marketplace. Ocean Protocol is developing the marketplace infrastructure including the application of its blockchain network, smart contracts, and tokens.
The beta version of the web-based marketplace is scheduled to be released in April 2020. Companies will be able to publish their data with a price and also purchase the data. dexFreight will be publishing several sample data. Subsequent to the beta release, we’ll add various features such as data pooling, dynamic pricing, and grant programs.
We have bigger plans for this marketplace. Our goal is to create a true data utility infrastructure that logistics industry stakeholders can benefit by sharing and consuming data -it’s like a data highway for logistics. Ultimately, we plan to convert this marketplace to a decentralized autonomous organization (DAO) with ownership distributed between the stakeholders. Like our highway system, nobody owns it, everybody owns it.
We are just getting started.
Interested in knowing more? Please contact rajat@dexfreight.io or dev@oceanprotocol.com.
About dexFreight
dexFreight is simplifying logistics with a decentralized platform for freight brokers, shippers and carriers to handle shipments from booking to payment in one place. dexFreight is building a universal decentralized, open-source network that enables collaboration and facilitates the coordination of movement of goods while bringing liquidity to the supply chain. For information, visit www.dexfreight.io
About Ocean Protocol
Ocean Protocol is a decentralized data exchange protocol to unlock data for AI, launched in 2017. Through blockchain technology and the OCEAN token, Ocean Protocol connects data providers and consumers, allowing data to be shared while guaranteeing traceability, transparency, and trust for all stakeholders involved. It allows data owners to give value to and have control over their data assets without being locked-in to any single marketplace.