The Web3 Playbook: Using Token Incentives to Bootstrap New Networks and Seize Opportunities


Hatched by Glasp

Aug 11, 2023

3 min read


The Web3 Playbook: Using Token Incentives to Bootstrap New Networks and Seize Opportunities


Networks play a vital role in our digital landscape, connecting individuals, businesses, and communities. However, bootstrapping a new network poses a significant challenge. The initial lack of participants can hinder the network's growth potential and prevent networks that could enhance our collective well-being from coming into existence. In this article, we explore the concept of using token incentives to overcome the bootstrapping problem, enabling the creation of new networks that can flourish and benefit us all.

Token Incentives: Bridging the Gap in Network Bootstrapping

During the early stages of network development, when network effects have yet to materialize, providing users with financial utility through token rewards becomes crucial. These tokens compensate for the absence of native utility and encourage user participation. By offering a tangible incentive, networks can attract and retain users, kickstarting the growth process. This approach ensures that networks have a fighting chance to succeed, even when faced with the daunting bootstrapping challenge.

Beyond Financial Utility: The Evolution of User Motivation

While token incentives serve as a powerful tool for network bootstrapping, the shift from financial motivation to pure utility is an essential aspect to consider. As networks evolve and native utility begins to emerge, users must transition their mindset from solely seeking financial rewards to embracing the broader benefits of the network. This shift can be facilitated by emphasizing the value and utility the network provides, gradually reducing the reliance on token incentives as the network effect takes hold.

Token Incentives vs. Centralized Models: A Fairer Approach

Token incentives not only solve the bootstrapping problem but also present a fairer alternative to the centralized Web2 model. In traditional models, users contribute to the growth and success of a network, but do not have the opportunity to own a meaningful stake in its future. Token incentives disrupt this paradigm by allowing those who actively participate in building the network to become stakeholders, sharing in its success. This democratized ownership aligns incentives and rewards users for their contributions, creating a more equitable and sustainable network ecosystem.

Actionable Advice for Successful Network Bootstrapping:

  • 1. Design token incentives strategically: Tailor token rewards to incentivize specific actions that contribute to network growth. By aligning incentives with desired outcomes, networks can effectively engage users and foster organic growth.
  • 2. Foster a sense of community: Building a strong community around a network amplifies its growth potential. Encourage interaction, collaboration, and knowledge sharing among users to cultivate a vibrant and engaged user base.
  • 3. Continuously enhance native utility: While token incentives are crucial during the early stages, the ultimate goal should be to develop robust native utility that provides tangible value to users. Regularly assess and improve the network's features, ensuring it remains relevant and compelling as the reliance on token incentives diminishes.


The bootstrapping problem has long hindered the creation of networks that could significantly enhance our lives. However, with the advent of Web3 and token incentives, we have a playbook to overcome this challenge. By providing users with financial utility through tokens during the early stages, networks can attract participants and lay the foundation for sustainable growth. As the network effect and native utility increase, the reliance on token incentives gradually decreases, leading to a new, scaled network. This approach not only solves the bootstrapping problem but also offers a fairer, decentralized model where users can have a meaningful stake in the networks they help build. So, let us seize the opportunity to create and participate in networks that shape a better future. As Paulo Coelho wisely said, "One day you will wake up and there won't be any more time to do the things you've always wanted. Do it now."

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