"The Ownership Economy 2022 – Variant: How User Ownership is Shaping the Future of the Internet"

"The Ownership Economy 2022 – Variant: How User Ownership is Shaping the Future of the Internet"

At its core, the ownership economy is revolutionizing the way we interact with the internet. It goes beyond just providing new tools for builders to create networks; it also has the potential to bring about positive social change by distributing wealth-building assets more widely. With over 15,000 projects in the ownership economy, ranging from user-owned financial markets to social networks and digital assets, the products and services that will define the next generation of the internet are those that empower users to become owners.

The market capitalization of the tokens tracked by CoinMarketCap has reached $1.76 trillion as of April 26th, 2022, showcasing the immense growth and potential of the ownership economy. However, sustaining user ownership and growth is not without its challenges. Simply giving users ownership is not enough to ensure long-term success. Strong product-market fit and addressing widespread user needs are crucial factors in sustaining usage. Tokens can capture user attention and facilitate initial adoption, but they must be complemented by a valuable product that meets users' intrinsic motivations.

While user ownership can jumpstart growth, it is important to consider the impact on user loyalty and engagement. Liquidity remains a significant motivator for users in choosing one marketplace over another. The question arises whether ownership may crowd out intrinsic incentives, leading to more transactional and temporary user engagement. To preserve users' intrinsic motivation, token incentives need to be optimized in terms of timing, magnitude, eligibility, and other factors.

New token distribution designs are emerging to boost user loyalty and long-term engagement. Axie Infinity's player retention has remained strong over time, indicating that engagement is not solely driven by novelty. Furthermore, new token incentives are focusing on contributor growth, shifting away from solely deepening liquidity. Curve's voting escrow contracts and Gro's vesting mechanism are examples of this transition, encouraging long-term engagement and fostering a loyal user base.

User ownership also fosters richer ecosystems of projects and contributors. Permissionless projects attract users, creators, and developers, who build upon and around them. CC0 NFT projects, for instance, extend the possibilities of ownership by allowing free use of assets, stimulating collaboration and creativity. Shared ownership reinforces network effects and provides disincentives to switch to other blockchains, creating a strong foundation for ecosystem growth.

The ownership economy not only enables users to become owners but also allows them to participate in value creation earlier. Web3 companies that launch tokens do so, on average, 2.7 years after founding, compared to VC-backed companies that go public approximately 5.3 years after securing their first investment. Ownership is becoming a central element in various software products and networks, extending beyond the traditional realms.

Incorporating user ownership into the banking industry is another area where significant value can be unlocked. Sweep networks, for example, allow customer deposits to be spread across a network of banks, increasing FDIC insurance coverage. By utilizing a sweep network, businesses can maximize their FDIC insurance by spreading deposits across multiple accounts. This eliminates the need to manage numerous accounts and pay fees for transfers, providing both time and cost savings.

Furthermore, a sweep network does not impact transaction speed or the ability to withdraw funds. Even in the event of a bank failure, customers can recover their funds from the banks that haven't failed, exceeding FDIC insurance limits if necessary. This offers peace of mind to businesses while still providing the benefit of increased insurance coverage.

In conclusion, the ownership economy is reshaping the future of the internet by empowering users to become owners. While challenges exist in sustaining user ownership and engagement, new token distribution designs are emerging to boost loyalty and contribute to long-term sustainability. User ownership fosters richer ecosystems and provides opportunities for early participation in value creation. Incorporating user ownership into banking practices, such as sweep networks, can also unlock additional value and provide increased FDIC insurance coverage. To leverage the potential of the ownership economy, businesses should prioritize strong product-market fit, optimize token incentives, and embrace user ownership as a key driver of growth and innovation.