The Ownership Economy 2022 – Variant: Exploring the Potential of User Ownership

The Ownership Economy 2022 – Variant: Exploring the Potential of User Ownership

Introduction:
In recent years, the concept of the ownership economy has gained significant traction. It not only offers a powerful tool for builders to leverage market incentives but also holds the potential for positive social change through the wider distribution of wealth-building assets. This article will delve into the key aspects of the ownership economy and its impact on various sectors.

The Rise of the Ownership Economy:
The ownership economy encompasses a wide range of projects, from user-owned financial markets to user-owned social networks, investment clubs, and digital assets. The products and services that define the web3 era are those that transform users into owners. The market capitalization of tokens tracked by CoinMarketCap is a testament to the growth of the ownership economy, currently standing at $1.76 trillion. However, it's crucial to note that the market capitalization of global stock markets still dwarfs this figure at over $100 trillion.

Sustaining User Ownership:
While user ownership can jumpstart growth, sustaining it is a more challenging task. Simply giving users ownership is not sufficient to ensure that a product outperforms its competitors. Tokens can be effective in capturing user attention and driving initial adoption, but they must be coupled with strong product-market fit to sustain usage. Liquidity remains a strong motivator for users in choosing one marketplace over another. Additionally, there is a concern that ownership may crowd out intrinsic incentives, leading to more transactional engagement. Token incentives need to be optimized to preserve users' intrinsic motivation.

New Token Distribution Designs:
In recent years, new token distribution designs have emerged that aim to boost user loyalty. Axie Infinity, a popular blockchain-based game, has demonstrated strong player retention over time, indicating that engagement is not solely driven by novelty. While liquidity mining programs have driven short-term participation, they have not contributed to long-term sustainability. Recent research shows that a significant percentage of users withdraw from liquidity farming contracts within days of their launch. Token incentives now focus more on contributor growth rather than just deepening liquidity, marking a transition towards growing the ownership economy's user base.

Fostering Richer Ecosystems:
User ownership reinforces network effects and creates a disincentive to switch to other blockchains. The permissionless nature of blockchain projects has attracted users, creators, and developers to build around and on top of these projects. Projects involving CC0 NFTs (non-fungible tokens) allow for the free use of assets, expanding the definition and possibilities of ownership. This approach stimulates building, creation, and collaboration, fostering richer ecosystems of projects and contributors.