"The Ownership Economy 2022 – Variant: Empowering Users as Owners and Driving Social Change"

"The Ownership Economy 2022 – Variant: Empowering Users as Owners and Driving Social Change"

Introduction:
The ownership economy has emerged as a powerful tool for builders to leverage market incentives and transform users into owners. This not only jumpstarts new networks but also holds the potential to create positive social change through the wider distribution of wealth-building assets. With over 15,000 projects in the ownership economy, ranging from user-owned financial markets to user-owned social networks, the products and services that define web3 are those that empower users as owners. In this article, we will explore the growth and potential of the ownership economy in 2022.

The Market Capitalization of Tokens:
As of April 26th, 2022, the market capitalization of tokens in the ownership economy stands at $1.76 trillion. While this is a significant figure, it pales in comparison to the market capitalization of global stock markets, which exceeds $100 trillion. The largest cryptonetworks, Bitcoin and Ethereum, have market capitalizations of $725 billion and $337 billion, respectively. These numbers indicate the immense growth potential of the ownership economy.

User Ownership as a Growth Driver:
User ownership has the potential to jumpstart growth in the ownership economy. However, sustaining this growth is more challenging. Simply giving users ownership is not enough to ensure that a product succeeds over its competitors. Tokens can capture user attention and bootstrap initial adoption, but they must be coupled with strong product-market fit to sustain usage. Liquidity remains a significant motivator for users of marketplaces, as the presence of a counterparty for transactions influences their choice. It is also essential to consider whether ownership crowds out intrinsic incentives, leading to temporary engagement. Token incentives should be optimized to preserve users' intrinsic motivation and foster long-term engagement.

New Token Distribution Designs for User Loyalty:
To drive long-term sustainability, new token distribution designs are emerging that emphasize contributor growth rather than solely deepening liquidity. Axie Infinity, for instance, has maintained strong player retention, indicating that engagement is not solely driven by novelty. Liquidity mining programs, which reward users with tokens for providing liquidity, have historically led to short-term participation. However, designs such as lockup periods and vesting mechanisms are being introduced to encourage long-term engagement. These new token incentives aim to boost user loyalty and contribute to the growth of the ownership economy.

Fostering Richer Ecosystems of Projects and Contributors:
Shared ownership in the ownership economy reinforces network effects and creates a disincentive to switch to other blockchains. This permissionless nature has attracted users, creators, and developers to build around and on top of these projects. CC0 NFT projects, for example, enable the free use of assets, expanding the possibilities of ownership and stimulating collaboration. This approach has the potential to enhance the reach, relevance, and value of intellectual property, leading to the creation of richer ecosystems within the ownership economy.

Users as Early Owners and Participants in Value Creation:
The ownership economy allows users to become owners earlier and participate in value creation. Web3 companies, on average, launch a token 2.7 years after founding, while VC-backed companies go public approximately 5.3 years after securing their first investment. This shift towards ownership as a keystone of new experiences across software products signifies a changing landscape. Users are now given the opportunity to be owners and actively contribute to the growth and success of projects.

Actionable Advice:

1. Focus on strong product-market fit: To sustain user ownership and usage, it is crucial to solve a widespread need for users and offer a product that stands out among competitors. Strong product-market fit ensures long-term engagement beyond token incentives.

2. Design token incentives for user loyalty: When implementing token incentives, consider designs that prioritize contributor growth rather than solely deepening liquidity. Lockup periods, vesting mechanisms, and other strategies can encourage long-term engagement and foster user loyalty.

3. Foster collaboration and building: Embrace the collaborative nature of the ownership economy by allowing free use of assets and encouraging collaboration between users, creators, and developers. This stimulates building, creation, and the formation of richer ecosystems within the ownership economy.

Conclusion:
The ownership economy has gained significant traction in 2022, empowering users as owners and driving social change through the wider distribution of wealth-building assets. While user ownership can jumpstart growth, sustaining it requires strong product-market fit and optimized token incentives. New token distribution designs are boosting user loyalty, and shared ownership is fostering richer ecosystems of projects and contributors. Users now have the opportunity to become owners earlier and actively participate in value creation. By embracing these principles and implementing the actionable advice provided, builders can thrive in the ownership economy of 2022 and beyond.