The Ownership Economy 2022 – Variant: Unlocking the Power of User Ownership

The Ownership Economy 2022 – Variant: Unlocking the Power of User Ownership

The ownership economy is a rapidly growing concept that not only empowers builders to leverage market incentives but also has the potential to bring about positive social change through the wider distribution of wealth-building assets. With over 15,000 projects in the ownership economy, ranging from user-owned financial markets to social networks and digital assets, it is clear that the next generation of the internet will revolve around transforming users into owners.

As of April 26th, 2022, the market capitalization of tracked tokens is a staggering $1.76 trillion. While this may seem impressive, it pales in comparison to the global stock markets' market capitalization of over $100 trillion. The largest cryptonetworks, Bitcoin and Ethereum, have market capitalizations of $725 billion and $337 billion, respectively. These numbers showcase the immense potential of the ownership economy and its impact on the financial landscape.

One key aspect of the ownership economy is user ownership, which can jumpstart growth in a project. However, sustaining this growth is a more challenging feat. While tokens can capture user attention and drive initial adoption, they need to be coupled with a strong product-market fit to ensure long-term usage. Merely giving users ownership is not enough to guarantee a product's success over its competitors.

Additionally, liquidity remains a significant motivator for users when choosing a marketplace. The presence of a counterparty for desired transactions plays a crucial role in user decision-making. Moreover, there is a concern that ownership might crowd out intrinsic incentives for using a product, leading to a more transactional and temporary engagement. Thus, token incentives should be optimized to preserve users' intrinsic motivation and strike a balance between ownership and intrinsic value.

Innovative token distribution designs are now being implemented to boost user loyalty. Axie Infinity, for instance, has achieved consistent player retention, indicating that engagement goes beyond novelty. While liquidity mining programs have historically driven short-term participation, they have not contributed to long-term sustainability. New token incentives focus on contributor growth rather than solely deepening liquidity, emphasizing the importance of growing the ownership economy's user base.

The ownership economy also fosters richer ecosystems of projects and contributors. Shared ownership reinforces network effects and discourages users from switching to other blockchains. The permissionless nature of these projects attracts users, creators, and developers, who then build upon them. CC0 NFT projects, in particular, enable the free use of assets, expanding the definition and possibilities of ownership. This approach stimulates building, creation, and collaboration within the ownership economy.

One of the key advantages of the ownership economy is that it allows users to become owners earlier and participate in value creation. Web3 companies, on average, launch a token 2.7 years after their founding, while VC-backed companies typically go public around 5.3 years after securing their first VC investment. Ownership is becoming a fundamental aspect of new experiences across various software product categories. This shift towards user ownership aligns with Chris Dixon's prediction that "what the smartest people do on weekends is what everyone else will do during the week in ten years."

In conclusion, the ownership economy is revolutionizing the way we interact with digital assets and platforms. By granting users ownership, we can unlock a powerful tool for growth, incentivize long-term engagement, and create a more equitable distribution of wealth. To leverage the potential of the ownership economy, here are three actionable pieces of advice:

1. Focus on product-market fit: While ownership is crucial, it must be coupled with a strong product that solves a widespread need for users. Tokens alone cannot sustain usage if the product does not fulfill its purpose effectively.

2. Design innovative token incentives: Explore new token distribution designs that prioritize contributor growth rather than solely focusing on liquidity. This approach fosters long-term engagement and loyalty among users.

3. Foster collaboration and building within the ownership economy: Encourage users, creators, and developers to collaborate and build upon existing projects. Shared ownership reinforces network effects and creates a thriving ecosystem within the ownership economy.

As we continue to witness the growth of the ownership economy, it is evident that the future of the internet lies in transforming users into owners. By embracing this shift, we can unlock a world of opportunities for positive social change and economic empowerment.