The Ownership Economy 2022 – Variant: Understanding the Future of Ownership and User Engagement in Web3

The Ownership Economy 2022 – Variant: Understanding the Future of Ownership and User Engagement in Web3

Introduction:

The ownership economy is a powerful concept that not only empowers builders to leverage market incentives but also has the potential to create positive social change through the wider distribution of wealth-building assets. In the world of web3, the ownership economy is becoming increasingly prevalent, with over 15,000 projects ranging from user-owned financial markets to user-owned social networks, investment clubs, and digital assets. The key idea behind the ownership economy is transforming users into owners, shaping the next generation of the internet. In April 2022, the market capitalization of tracked tokens reached $1.76 trillion, showcasing the immense growth and potential of the ownership economy.

1. User ownership can jumpstart growth, but sustaining it is more challenging:

While user ownership can be a powerful tool in jumpstarting growth, simply giving users ownership is not sufficient to ensure long-term success. Tokens can capture user attention and drive initial adoption, but they need to be coupled with strong product-market fit to sustain usage. It is essential to solve widespread needs for users and offer a unique value proposition. Additionally, liquidity remains a significant motivator for users in choosing one marketplace over another. It is crucial to consider whether ownership can potentially crowd out intrinsic incentives, leading to more transactional and temporary engagement. To preserve users' intrinsic motivation, token incentives should be optimized in terms of timing, magnitude, eligibility, and other factors.

2. New token distribution designs boost user loyalty:

Recent developments in token distribution designs have emphasized contributor growth and long-term engagement. Axie Infinity's player retention has remained strong, indicating that engagement goes beyond novelty. Traditional liquidity mining programs have driven short-term participation but failed to contribute to long-term sustainability. To address this, new token incentives are focusing on lockup periods and vesting mechanisms to encourage long-term engagement. These efforts aim to grow the ownership economy's user base and create a loyal community.

3. User ownership fosters richer ecosystems of projects and contributors:

Shared ownership reinforces network effects and encourages users, creators, and developers to build around and on top of projects. Permissionless projects attract individuals who contribute to the growth and development of the ecosystem. Projects centered around CC0 NFTs (non-fungible tokens) allow for the novel and generative use of intellectual property, expanding the possibilities of ownership. This approach stimulates collaboration, creation, and innovation within the ownership economy, leading to a more diverse and vibrant ecosystem.

4. The ownership economy enables users to become owners earlier and participate in value creation:

The ownership economy provides users with the opportunity to become owners early on and participate in value creation. Unlike traditional VC-backed companies that go public after several years, web3 companies launch tokens much earlier. This shift allows users to have a stake in the success of these companies and share in the value they create. Ownership is no longer limited to specific industries or products but is extending to all categories of software products. This trend 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.

Conclusion:

The ownership economy is revolutionizing the way we interact with products, services, and networks in web3. While user ownership can jumpstart growth, sustaining it requires a strong product-market fit and careful consideration of users' intrinsic motivation. New token distribution designs are focusing on long-term engagement and contributor growth to create loyal communities. Shared ownership fosters richer ecosystems of projects and contributors, driving collaboration and innovation. The ownership economy enables users to become owners earlier and participate in value creation, democratizing wealth-building opportunities. As we move forward, it is essential to prioritize user needs, foster inclusive communities, and continue exploring the potential of the ownership economy.

Actionable Advice:

1. Focus on building products with strong product-market fit to sustain user engagement in the ownership economy.
2. Design token incentives that prioritize long-term engagement and contributor growth to create loyal and active communities.
3. Foster collaboration and innovation within the ownership economy by embracing shared ownership and permissionless projects.