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Understanding Vana
This week, Vana (backed by Paradigm and Polychain Capital) released their official whitepaper.
The one liner for Vana is that it's the infra layer for DataDAOs.
And the one liner for DataDAOs / DLPs (aka Data Liquidity Providers) is that they're the marketplaces for data collection and tokenization.
Ultimately, the goal for the Vana team is to build the smoothest platform experience for DataDAO creators to operate and grow.
An example of a DataDAO built with Vana is r/datadao. The context here is that Reddit earns upwards of $200 million from big tech companies by providing our data to help train large AI models (i.e. Gemini, ChatGPT). But, the users that are actually generating the content get no share of that massive check!
Fortunately, because of data regulation policies like CCPA and GDPR, all of us users also have access to this data.
So, r/datadao allows anyone to enter their Reddit username and start earning points for different actions like verifying your account, connecting your history, etc. The point is for you to privately and securely share your data into the "Reddit data liquidity pool" and earn revenue when builders tap into the data for their own purposes.
And of course, this is just one example. Recently, Vana ran an accelerator program for a batch of DataDAOs. You can see other examples of data marketplaces that focus on different verticals such as X, LinkedIn, Financial Data, Browsing History, etc.
At a high level you can think of the architecture like this. The DLPs are the DataDAOs like Volara, Kleo, r/datadao, etc. And the users are people like you and me who can decide which DataDAOs we want to contribute to.
Notice that the arrows go both ways - you provide data securely in return for cash flows (i.e. tokens) on that data being used.
To be honest, in terms of context, that's all you really need to know.
The mission is straightforward and something everyone in crypto has heard before: the people should own and earn from their data!
But, with that being said, I felt pretty underwhelmed by the data sovereignty narrative as the sole fuel for this mission.
Rather, what caught my attention was the idea of data as an asset class and how that frame of thinking will lead to actual adoption of the DataDAOs.
Let's dive in.
Lean into the Market Cap Moment
If there's anything we can say for sure from the agent meta the past two months is that people take notice when market caps are part of the conversation.
The minute $GOAT launched and made its way to a billion dollar market cap, it's like the entire world of crypto (including me) got excited about agent coins.
Heck, I linked to this dashboard in my last post, but the meta grew so fast that there's an entire analytics platform built just for onchain agents!
And my belief is that the same will need to happen for DataDAOs. It's only then that data sovereignty infrastructure like Vana will truly get noticed and have a moment in the spotlight like Virtuals and ai16z are having right now.
To put it bluntly, currently the "own your data" narrative is just boring and overdone. I think most people don't care too much about the Vana pitch in its current form. It feels more philosophical and values oriented. To be clear, this is important and needs to be stated. But! I don't believe that's the way people will really start caring about DataDAOs.
And for what it's worth, it's clear that the Vana team is also on the same page. This screenshot below is from their whitepaper and also the section that stood out to me the most while digging deeper.
Basically, it's thinking about these DataDAOs as an entire new asset class. Just like how agentic coins became part of the lingo so quickly, I wouldn't be surprised if we see a DLP coins cycle in the next year or two as well.
It's a matter of building up to the "Truth Terminal" moment for DataDAOs - something flashy, funny, and financially beneficial to people.
And when that headline does come...you can expect people to quickly catch on to everything Vana is doing. They'll want to dig into every DataDAO and breakdown the litepapers, study the teams, assess the marketing plans, understand the mining process, and form investment decisions on the these DLP tokens. The primary question for investors in the DLP cycle will be, which type of data will be most valuable for developers building with open source models?
This will naturally lead to higher prices for the entire DataDAO asset class which in turn will lead to people onboarding into these DAOs in order to directly start earning the DLP tokens by...you guessed it...securely verifying and sharing their data. Aka using the products 😂
Of course, there will be the usual frothiness that comes with any hype bubble, but the more important takeaway is that the total DLP market cap going higher will inevitably lead to a new cohort of people that now care about and participate in these DataDAOs.
And this is crucial because the new set of users will bring fresh opinions on how to improve the UX, think of more interesting DataDAO models, token incentives, onboarding ideas, and much more.
For example, in just the past month, it's been crazy to see the number of new contributors and activity on the ai16z github repo. All fueled by the hype of the new agentic meta.
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As I was going through the websites and documentation of a few DataDAOs today, I didn't even care to actually onboard and finish the process for any of them. Why? The UX felt a bit sus, things just didn't feel clear, and I was generally not excited about what I was seeing.
And that's pretty crazy considering I truly embrace and understand the principles of data sovereignty. The truth is, I just didn't feel comfortable enough to pull the trigger. And the incentives were not strong enough for me.
But, that's totally okay! All of these concepts and products are very new. So it won't be long before we see some changes and eventually there will be a moment where I finally go for it.
My hope is that participating in these DataDAOs can feel as simple as it did when I recently onboarded on to Grass (which I'll discuss in a future post): get chrome extension, connect wallet, and start earning all in less than 2 mins.
The last thing I want to call out in terms of strategy for Vana is that I hope they make a more focused effort to share all the DataDAOs being built on their network. It would be great to see some Dune Dashboards for their ecosystem (I couldn't find any). Or a website similar to L2 Beat but for DLPs.
Also, when the Vana token goes live, it would be great to see some plans for "ambassador allocation" where they reward people with $VANA for onboarding to different DataDAOs in the Vana ecosystem. I'm sure they already have plans for most of these things, but just wanted to call out the low hanging fruit I noticed today.
At the end of the day, the key metrics that we all need to be watching with the DataDAO meta are:
The number of new DataDAOs
The number of people onboarding and contributing to DLPs
The total DLP market cap
Eventually, there will be a point where these numbers above start to grow at much faster rates and others will take notice at first for speculative reasons but eventually for the original purpose of contributing to the data liquidity pools.
That's all for today's post, I hope you all have a great weekend!
I'll see you all on Tuesday 🤝
- YB
