# Minting and Trading Data-Backed Tokens
# Overview
Data tokenization allows you to connect your data to the wider DeFi ecosystem while retaining the rights to your data and its privacy.
Data tokenization is a lot like creating an NFT except the tokenized asset is data, and ownership of the token does not necessarily imply ownership of the underlying data. We refer to the tokens created through data tokenization as data-backed tokens (DBTs) to emphasize that the value of the token is derived from the data itself.
This tutorial presents a speed-run of data tokenization and includes creating a token, tokenizing a data asset, and transferring rights to the asset by locking a bridged token on a remote smart contracting network (in this case, Emerald (opens new window), an EVM-compatible ParaTime on the Oasis Network). It assumes that you already have a handle on the rest of Parcel's features including documents, grants, and jobs. If you follow what's going on in the Running Compute Jobs tutorial, you should be good to go. If you'd like a more detailed overview (is that an oxymoron?), there's also the Parcel Primer (opens new window) for your consideration.
# Example
Consider the problem of buying digital artwork: artists don't want to release high-res copies until the buyer has paid, but the buyer doesn't want to pay without assurance of receiving the art. This issue actually applies to NFTs on public blockchains, and the less-than-ideal workaround is to use the off-chain marketplace as an escrow service. A better solution could use Parcel:
- Artist uploads private, high-res art to Parcel.
- Artist adds the data to a token that grants its holder full access.
- Artist runs (or approves) a Parcel compute job that creates an auditable low-res preview.
- Token is bridged to Emerald where it gets listed in a DEX contract.
- Buyer purchases the bridged token on Emerald and automatically receives the token on Parcel where the data can be downloaded.
In this way, the buyer can be assured that the art will be delivered and the seller is guaranteed to receive payment.
Data tokenization can also be used for things like credit scoring, monetizing personal data, and basically anything that looks like making trades based on (private) data. Whatever you'd like to build, this series of tutorials aims to get you started in the right direction!
# Mint a Token
The fun begins when you mint a token. At the very least, the token must have a supply and an associated grant that will be given to holders of the token. You can also set the token's name and some other things, but don't worry about those now; they'll be the subject of later tutorials. When a token is first minted, it doesn't contain any data assets. You can still transfer it to others and, when assets are added, the holders will automatically have access according to the token's grant.
Here's how that looks:
console.log('Creating a new data-backed token owned by Bob, the artist.');
const artToken = await parcelBob.mintToken({
name: "Bob's Saguaro Sunset painting",
grant: {
condition: null, // Allow full access to anyone holding the token.
},
transferability: {
// The token is transferable on a remote smart contracting network (Emerald).
// The Parcel-Emerald bridge will associate the newly-minted Parcel token
// with the Emerald NFT represented by `nftAddress` and `nftTokenId`.
//
// This token must already exist on Emerald! The Parcel bridge will not create
// the NFT for you. If you set this to a token that you can't trade, you may never
// see your data asset again!
//
// In this tutorial, Acme already holds the NFT on Emerald, and Bob is (because Bob already
// sold it there and wants to add value by attaching it to a data asset on Parcel).
remote: {
network: 'emerald-testnet', // Emerald is the Oasis EVM-compatible ParaTime.
address: nftAddress,
tokenId: nftTokenId,
},
},
});
console.log('The art token is:', artToken);# Tokenize a Data Asset
For data to be tokenizable, it needs to be owned by the Parcel escrow identity, a special identity that can't be accessed by anyone, and exists only to hold data assets–a programmatic trusted third party, if you will. Transferring ownership of data to the escrow identity is similar to any other ownership change: you forgo the ability to access the data or grant others access without a grant to yourself. However, a key difference is that, when you hold the entire supply of a token, you can de-tokenize the asset and reclaim it from the escrow identity. The escrow identity is necessary to guarantee that token holders won't get assets pulled out from under them.
Once that important prerequisite is fulfilled, tokenization is quite simple:
console.log('Create a new document and prepare it for tokenization.');
const artContents = String.raw`
........::::::::::::.. .......|...............::::::::........
.:::::;;;;;;;;;;;:::::.... . \ | ../....::::;;;;:::::.......
. ........... / \\_ \ | / ...... . ........./\
...:::../\\_ ...... ..._/' \\\_ \###/ /\_ .../ \_....... _//
.::::./ \\\ _ .../\ /' \\\\#######// \/\ // \_ ....////
_/ \\\\ _/ \\\ / x \\\\###//// \//// \__ _/////
./ x \\\/ \/ x X \////// \/////
/ XxX \\/ XxX X //// x
-----XxX-------------|-------XxX-----------*--------|---*-----|------------X--
X _X * X ** ** x ** * X
_X _X x * x X_
`;
const artDocument = await parcelBob.uploadDocument(artContents, {
owner: 'escrow', // ⚠️ The data must be owned by the escrow identity to be tokenized. This can be done after uploading, too.
toApp: undefined,
}).finished;
console.log('Add the document to the token.');
await artToken.addAsset(artDocument.id);
// More data assets can also be added (by anyone).# Transfer Access by Transferring a Token
And now, the piece that we've all been waiting for: granting data access to the holder of the data token! The general idea is that the we lock the Parcel token's corresponding token on Emerald by sending the latter to the Parcel Bridge Adapter. As long as the Bridge Adapter owns the token, the Parcel identity linked to the sender's Emerald address will have the corresponding Parcel token, and thus the data rights that the token confers.
// At this point, Bob owns `artToken`, a remotely transferrable Parcel data asset.
// Assume that the following steps happen next, but are not shown here because they
// are performed outside Parcel:
// 1) Bob creates an Emerald NFT (not backed by any data) with `nftAddress` and `nftOptionId`.
// 2) Bob sends his Emerald NFT to Acme's Emerald address.
// Now Acme invokes the Emerald Parcel bridge adapter to lock the Emerald token
// in exchange for a Parcel token.
const bridgeAdapter = await EmeraldBridgeAdapterV1.connect(acmeWallet);
// Connect to the token contract using the `typechain-ethers` generated bindings.
const tokenContract = ERC721__factory.connect(nftAddress, acmeWallet);
// This is how overloaded functions are referenced when using `typechain`.
const safeTransferFrom = tokenContract['safeTransferFrom(address,address,uint256,bytes)'];
// Transfer the token's ownership to the Parcel Bridge Adapter. Locked tokens can be withdrawn
// at any time using the `unlockERC{20,721,1155}` methods.
console.log('locking NFT into Parcel Emerald bridge adapter');
await safeTransferFrom(acmeWallet.address, bridgeAdapter.address, nftTokenId, []);
// Wait a little while for the bridge to pick up and execute the lock event.
await new Promise((resolve) => {
setTimeout(resolve, 3000);
});
// Acme can now download the underlying data.
const artChunks = [];
const artDownload = parcelAcme.downloadDocument(artDocument.id);
for await (const chunk of artDownload) {
artChunks.push(chunk);
}
console.log("Acme now has access to the art! (And Bob doesn't anymore.)");
assert.strictEqual(Buffer.concat(artChunks).toString(), artContents);Once the data is downloaded, the token can be unlocked and returned to Acme.
// And finally unlock the token for trading once again.
console.log('unlocking NFT from bridge adapter');
await bridgeAdapter.unlockERC721(acmeWallet.address, nftAddress, nftTokenId, []);EXAMPLE
You can view the full example in the Parcel Examples repository.