The Ownership Economy 2022 – Variant: Exploring the Future of Web3 and the Creator Economy

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Sep 24, 2023
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The Ownership Economy 2022 – Variant: Exploring the Future of Web3 and the Creator Economy
Introduction:
In recent years, the concept of the ownership economy has gained significant traction in the world of cryptocurrency and blockchain technology. The ownership economy not only offers a powerful new tool for builders to leverage market incentives to jumpstart new networks but also holds the potential to create positive social change through the wider distribution of wealth-building assets. The products and services that will define web3 and the next generation of the internet are those that transform users into owners. In this article, we will delve into the various aspects of the ownership economy, its potential impact on user loyalty, ecosystem development, and its intersection with the creator economy.
The Ownership Economy:
As of April 26th, 2022, the market capitalization of the over 19,000 tokens tracked by data aggregator CoinMarketCap is $1.76 trillion. This highlights the growing popularity and potential of the ownership economy. The largest cryptonetworks, such as Bitcoin and Ethereum, have established themselves as leading players in this space, with market capitalizations of $725 billion and $337 billion, respectively. Additionally, popular wallets like Metamask and Phantom boast millions of monthly active users, further solidifying the user base of the ownership economy.
1. User ownership can jumpstart growth, but sustaining it is more challenging:
While user ownership is a powerful tool for jumpstarting growth, sustaining it can be more challenging. Simply giving users ownership is not sufficient to ensure that a product wins out over its competitors. Tokens can be useful in capturing user attention and bootstrapping initial adoption, but they need to be coupled with strong product-market fit to sustain usage. For marketplaces, liquidity remains a key motivator for users, as the presence of a counterparty for desired transactions drives their choice of platform. It is also important to consider whether ownership crowds out intrinsic incentives to use a product, potentially leading to more transactional and temporary engagement. Token incentives should be optimized to preserve users' intrinsic motivation.
2. New token distribution designs are boosting user loyalty:
While liquidity mining programs have driven short-term participation in new products, they have not historically contributed to long-term sustainability. However, a new generation of token incentives is placing greater emphasis on contributor growth compared to solely deepening liquidity. Axie Infinity's player retention, for example, has remained strong over time, indicating that engagement is not solely driven by novelty. Token rewards with lockup periods and vesting mechanisms encourage long-term engagement and loyalty among users.
3. User ownership fosters richer ecosystems of projects and contributors:
Shared ownership reinforces network effects and creates a disincentive to switch to other blockchains. The permissionless nature of the ownership economy has attracted users, creators, and developers to build around and on top of these projects. CC0 NFT projects, in particular, extend the possibilities of ownership by enabling free use of assets, stimulating building, creation, and collaboration. The ownership economy has the potential to create a more vibrant and interconnected ecosystem of projects and contributors.
The Intersection with the Creator Economy:
The creator economy has also experienced significant growth and transformation in recent years. More than 50 million people around the world consider themselves creators, with the class of businesses built by independent content creators, curators, and community builders expanding rapidly. Creators are gaining power in the media ecosystem, moving their top fans off social networks, and even transitioning to become founders themselves.
The creator economy is defined by the pursuit of fulfillment, control over one's time, and being one's own boss. Creators have become incredible storytellers, relentless hustlers, and leaders of their fan communities. Numerous companies have emerged to support creators, enabling them to make a full-time career out of their passion. Platforms like YouTube and Instagram have paved the way for monetizing influencer reach, with brands recognizing the value of paying creators to advertise their products and services.
However, the latest wave of creators' evolution involves creators becoming full-fledged businesses with diversified revenue streams beyond ads. By developing off-platform fandoms, creators can directly engage with their fans and receive funding directly from them. This shift allows creators to focus on making niche content for their biggest fans, creating a more personalized and engaging experience. The "economy of recognition" enables platforms to attract creators without much effort while earning a cut from the transactions.
Conclusion:
The ownership economy and the creator economy are two distinct yet interconnected phenomena shaping the future of the internet. The ownership economy offers users the opportunity to become owners early on, participate in value creation, and potentially benefit from the wider distribution of wealth-building assets. However, sustaining user ownership requires a strong product-market fit and optimization of token incentives to preserve users' intrinsic motivation.
In the creator economy, creators are gaining power and transitioning from influencers to founders. They are diversifying their revenue streams beyond ads and building businesses with direct support from their fans. This shift allows for more personalized and engaging content, benefiting both creators and their fans.
To make the most of the ownership economy and the creator economy, here are three actionable pieces of advice:
- 1. Focus on building a strong product-market fit that solves a widespread need for users. User ownership is a powerful tool, but it needs to be coupled with a product that users find valuable and essential.
- 2. Develop token distribution designs that prioritize long-term user loyalty. Consider lockup periods, vesting mechanisms, and other incentives that encourage sustained engagement and participation.
- 3. Foster collaboration and building within the ownership economy and the creator economy. Shared ownership reinforces network effects and creates a more vibrant ecosystem of projects and contributors. Encourage creators to diversify their presence across different platforms to minimize platform risk.
As the ownership economy and the creator economy continue to evolve, we can expect to see further advancements in how users engage with products and how creators monetize their content. By embracing these trends and implementing actionable strategies, businesses and individuals can navigate these exciting new frontiers and unlock their full potential in the digital landscape.
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