Introducing VRC-20: A New Standard for Data-Backed Tokens
For those engaged in the world of cryptocurrency, the ERC-20 token standard is likely a familiar term. This standard provides essential guidelines that ensure tokens created on the Ethereum smart contract blockchain are compatible with one another and can seamlessly interact with various applications across the network. Now, a new and innovative standard tailored for data-backed tokens has emerged, known as VRC-20.
Launched by Vana, an EVM-compatible Layer 1 blockchain, this new standard aims to empower users by enabling them to monetize their personal data. Vana achieves this by bundling user data into DataDAOs for the purpose of AI model training. This week, Vana unveiled the VRC-20 standard to enhance trust and transparency within the burgeoning market for data-backed digital assets. “For data markets to function effectively, tokens must be reliable, secure, and practical. As a universal standard for data-backed tokens, VRC-20 accomplishes this by ensuring fair and transparent trading of data tokens,” the company stated on social media platform X.
The design of the VRC-20 standard includes specific criteria such as fixed supply, governance protocols, and liquidity rules, while simultaneously ensuring real data access by linking tokens to genuine data utility. Moreover, it encourages continuous liquidity by offering rewards aimed at maintaining market stability. “This isn’t just speculation; this is the real financialization of data,” Vana emphasized.
Vana successfully launched its mainnet in December, with the native cryptocurrency known as VANA. Since its inception, the network has incorporated over 12 million data points through various DataDAOs, which indicates a robust demand for user-owned data. DataDAOs, or data liquidity pools, serve as decentralized marketplaces that transition data onto the blockchain as transferable digital tokens. In these liquidity pools, data is contributed, tokenized, and prepared for utilization in applications such as AI model training.
In a significant update announced this Monday, Vana revealed the replacement of VANA emissions as the incentive for DataDAOs with a novel feature. This requires DAOs to issue VRC-20-compliant tokens to gain liquidity support. Additionally, the protocol has introduced a data validator staking mechanism, allowing VANA holders to lock their coins within data validators rather than individual DataDAOs. “Rewards are determined by network security and usage. Stakers earn rewards proportionate to their contributions toward network uptime and data availability. No more idle staking; earnings are directly tied to authentic network utility and reliability,” Vana explained.
At the time of writing, the VANA token was trading at $5.58, marking a decline to its lowest point in over two weeks. This downturn extends from a recent price high of $8.78 on the Binance exchange, as reported by the data source TradingView.
