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.

Early Participation in Value Creation:
The ownership economy enables users to become owners earlier in the lifecycle of projects and participate in value creation. Compared to traditional VC-backed companies, web3 companies that launch tokens do so much earlier, allowing users to share in the success of the project. This shift towards ownership extends to all categories of software products, revolutionizing the way people interact with technology.

Existential Risk and the Inevitable Turn in Human History:
Predicting the long-term outcomes of radical technological changes has always been a challenge. Just as no one could fully comprehend the impact of the printing press or the fossil fuel era at their beginnings, it is difficult to foresee the implications of the ownership economy. While discussions on existential risk from AI and other future possibilities are important, it is crucial to acknowledge that all these possibilities are distant. Dwelling on the potential destruction can lead to a pessimistic outlook, overlooking the transformative potential of technological advancements.

Actionable Advice:

1. Prioritize product-market fit: Alongside user ownership, ensure that your product solves a widespread need for users. Combining ownership with a valuable product will help sustain usage and differentiate from competitors.

2. Emphasize contributor growth: When designing token incentives, focus on long-term engagement and loyalty rather than short-term liquidity. Encouraging users to become active contributors to the ecosystem will strengthen the ownership economy.

3. Foster collaboration and building: Create an environment that encourages collaboration, creation, and building. By enabling the free use of assets and extending the possibilities of ownership, you can stimulate the growth of richer ecosystems.

Conclusion:
The ownership economy represents a significant shift in how users interact with products and networks. It offers the potential for positive social change through the wider distribution of wealth-building assets. While user ownership can jumpstart growth, sustaining it requires a strong product-market fit. New token distribution designs are boosting user loyalty, and user ownership fosters richer ecosystems of projects and contributors. By embracing the ownership economy, users can become owners earlier and actively participate in value creation. As we navigate the future of technology, it is important to consider the transformative potential of the ownership economy and the uncertainties that come with it.