"The Ownership Economy 2022 – Variant: Exploring the Intersection of User Ownership and NFTs"

"The Ownership Economy 2022 – Variant: Exploring the Intersection of User Ownership and NFTs"

Introduction:

The ownership economy has emerged as a powerful tool for builders to leverage market incentives and empower users as owners. This not only jumpstarts new networks but also holds the potential for positive social change through the wider distribution of wealth-building assets. In this article, we will explore the common points between the ownership economy and the world of NFTs, and how they contribute to shaping the future of the internet.

The Rise of the Ownership Economy:

The ownership economy has seen tremendous growth, with over 15,000 projects ranging from user-owned financial markets to user-owned social networks and digital assets. The transformation of users into owners is at the core of the ownership economy, and it is poised to define the future of web3 and the internet as a whole.

The Market Capitalization of Tokens:

As of April 26th, 2022, the market capitalization of tokens tracked by CoinMarketCap exceeds $1.76 trillion. While this is a significant figure, it is important to note that the market capitalization of global stock markets is still over $100 trillion. However, established layer 1 blockchains like Bitcoin and Ethereum have emerged as leaders, with market capitalizations of $725 billion and $337 billion respectively.

User Ownership and Sustainable Growth:

While user ownership can jumpstart growth, sustaining it proves to be more challenging. Simply giving users ownership through tokens is not enough to ensure the success of a product. Strong product-market fit, addressing widespread user needs, and providing liquidity are crucial factors for maintaining user engagement. Additionally, there is a concern that ownership might crowd out intrinsic motivations, leading to a more transactional and temporary user engagement. Token incentives should be carefully optimized to preserve users' intrinsic motivation.

New Token Distribution Designs for User Loyalty:

Traditional liquidity mining programs that reward users with ownership tokens for providing liquidity have not historically contributed to long-term sustainability. However, new token distribution designs are emerging that prioritize contributor growth over deepening liquidity. Axie Infinity's player retention and the introduction of lockup periods in Curve's voting escrow contracts are examples of these new designs. By boosting user loyalty, these designs contribute to the growth of the ownership economy's user base.