How a16z-backed DATA is rethinking its blockchain strategy after $30 million Sui deal

DATA, the blockchain startup backed by Andreessen Horowitz's a16z crypto and formerly known as Story Protocol, is shutting down its blockchain and moving to Sui after securing a $30 million investment from the network's foundation.

The move comes after spending years trying to bring intellectual property onchain. But after raising $140 million and building its own blockchain, the company found that changing how the world's intellectual property is licensed was harder than expected.

"We were trying to boil the ocean, and it was a very saturated and entrenched ocean," Andrea Muttoni, CEO of DATA Foundation, told CoinDesk in an interview.

That realization helped drive Story’s rebrand to DATA Foundation in June, when it shifted its attention to the market for AI training data. Four months later, the company is now narrowing its focus further to tracking the origins and usage rights of data used to train artificial intelligence models.

When the Bellevue, Washington-based startup was founded in 2022, the original plan covered everything from music royalties to patents and trademarks. The idea was to let owners register their intellectual property on a blockchain and set terms for how others could use it. The problem, Muttoni said, was that many of those industries already had systems in place, while large rights holders had little interest in making their intellectual property available for permissionless licensing.

"We were kind of spreading ourselves way too thin across so many different types of IP," he said.

Then came the rebrand earlier this year.

However, after that, the team began to question whether it still needed to maintain an entire blockchain, given that most of its work centered on a single product: Trace, which is a registry that records where training data comes from, who contributed it and what rights buyers have to use it.

Also, running a blockchain comes with costs, including engineers, validators, audits and infrastructure providers.

"Does it still make sense to run our own L1, or should we focus most of our energy on the protocol, on the product, on Trace?" he said.

That line of thinking led to the decision to shut down its blockchain and move to Sui.

Muttoni did not disclose how much of Story's original $140 million in funding remains, but said its existing investors, including a16z crypto, are still involved.

Now, Muttoni is positioning the new focus as a continuation of the first rebrand rather than another change in direction.

Finding a market in AI data

The company's new strategy grew partly out of its experience with Poseidon, an AI data company incubated by the Story team that collects and processes data for training AI models.

Muttoni said the team found a market where buyers often had little way to check whether the datasets they were purchasing were original, properly licensed or even exclusive. In one case, vendors offered Poseidon supposedly exclusive datasets that were already available from other sellers.

"We were at one point given our own data set back to us," he said.

DATA is trying to address that problem through its product, Trace.

For example, when someone uploads a video or voice recording via a participating data marketplace, Trace creates a receipt for that file. The record includes details such as when it was submitted, the terms the contributor agreed to and any later licensing or payment events.

Kled, a marketplace that pays people to contribute data, accounts for much of the activity. Muttoni said the platform is adding between 3 million and 4 million contributions a day, including older records being brought onto Trace.

The figures show how much data is being registered, though not necessarily how much has been sold. DATA did not disclose how many records have generated licensing revenue.

The move comes as more crypto projects shift toward AI, betting on growing demand for training data and tools to track its origins. Muttoni estimates the AI training data market could be worth hundreds of billions of dollars.

For now, Muttoni said, the goal is not to compete with data marketplaces but to provide a record that buyers and sellers can check. "The main goal for now is being the infrastructure for, let's say, the auditability and provenance of data," he said.

He didn't rule out DATA eventually operating its own marketplace, but didn’t provide any further details.

Why Sui?

Moving to Sui means DATA will no longer need to run its own blockchain, while gaining access to tools that Muttoni said fit what the company wants to build next.

One is Walrus, a decentralized storage platform that can hold copies of the original files registered through Trace. Another is Seal, which can encrypt those files and restrict access to buyers with the right permissions.

Today, Trace records information about a file rather than storing the file itself. Adding storage would let buyers compare what they receive with the original submission, making it easier to spot changes.

Sui Foundation will become DATA Network's largest institutional holder through its $30 million investment. Muttoni said Sui is taking a hands-off approach to DATA's product plans. Financial details weren’t disclosed.

The company also plans to move its existing token to Sui on a one-to-one basis, with its current blockchain remaining operational until the migration is complete. Existing $DATA tokens will move to Sui one-to-one, with holders retaining their rights and vesting schedules unchanged, according to a press release.

For Muttoni, the decision comes down to concentrating on the part of DATA’s original business that attracted the most interest.

"We were thinking of going in one direction, but you see the wind keeps pulling you in a different direction," he said. "Maybe the wind is coming from that way."