The Ownership Economy 2022 – Variant: Unlocking the Power of User Ownership in Web3

The Ownership Economy 2022 – Variant: Unlocking the Power of User Ownership in Web3

The ownership economy is revolutionizing the way we think about the internet and the distribution of wealth-building assets. With over 15,000 projects in the ownership economy, the shift towards user-owned financial markets, social networks, and digital assets is undeniable. The products and services that will define web3 and the next generation of the internet are those that transform users into owners. As of April 2022, the market capitalization of tracked tokens is $1.76 trillion, a fraction compared to the global stock markets' $100 trillion.

One of the key challenges in sustaining user ownership is ensuring strong product-market fit. Simply giving users ownership is not enough to guarantee the success of a product. While tokens can capture user attention and drive initial adoption, they must be coupled with a solution that addresses a widespread user need. Without a strong product-market fit, users may engage with products in a transactional and temporary manner. Token incentives should be optimized to preserve users' intrinsic motivation and avoid undermining their engagement.

New token distribution designs are emerging to boost user loyalty. Axie Infinity, for example, has achieved consistent player retention, showcasing the potential for long-term engagement. Liquidity mining programs, although effective in driving short-term participation, have not historically contributed to sustainable user retention. Token incentives are now focusing more on contributor growth and deepening engagement, encouraging long-term participation. Curve's voting escrow contracts and Gro's vesting mechanism are examples of this new generation of token incentives.

User ownership not only fosters loyalty but also creates richer ecosystems of projects and contributors. Shared ownership reinforces network effects and incentivizes users, creators, and developers to build around and on top of these projects. CC0 NFT projects, by allowing free use of assets, extend the possibilities of ownership and stimulate building, creation, and collaboration. The ownership economy enables the creation of novel and generative uses of intellectual property, increasing its reach and value.

One of the most significant advantages of the ownership economy is that it allows users to become owners and participate in value creation earlier. While traditional VC-backed companies typically go public around 5.3 years after securing their first investment, web3 companies that launch a token do so on average 2.7 years after founding. Ownership is becoming a keystone in new experiences across different software product categories, as predicted by Chris Dixon's adage: "what the smartest people do on weekends is what everyone else will do during the week in ten years."

Incorporating the principles of the ownership economy can lead to transformative outcomes, but it is crucial to consider the role of knowledge graphs in this context. Knowledge graphs formally represent semantics by describing entities and their relationships. They store interlinked descriptions of objects, events, situations, or abstract concepts. By utilizing ontologies as a schema layer, knowledge graphs allow for logical inference and retrieval of implicit knowledge. The integration of knowledge graphs into the ownership economy can enhance the understanding and utilization of user-owned assets and their relationships.

To leverage the potential of the ownership economy, here are three actionable pieces of advice:

1. Prioritize product-market fit: Ensure that your product solves a widespread user need and offers strong value proposition beyond ownership. Tokens can capture attention, but sustainable usage requires addressing intrinsic motivations.

2. Design token incentives for long-term engagement: Focus on contributor growth rather than just liquidity. Experiment with lockup periods, vesting mechanisms, and other methods to encourage users to stay engaged with your product over time.

3. Foster collaboration and building: Embrace the power of shared ownership to create richer ecosystems. Enable free use of assets and encourage collaboration among users, creators, and developers to unlock the full potential of user-owned projects.

In conclusion, the ownership economy is reshaping the internet and wealth distribution. By transforming users into owners, we can unlock new levels of engagement, loyalty, and value creation. However, sustaining user ownership and building thriving ecosystems require a focus on product-market fit, thoughtful token incentives, and fostering collaboration. The integration of knowledge graphs can further enhance the understanding and utilization of user-owned assets. By embracing the principles of the ownership economy and leveraging the potential of knowledge graphs, we can pave the way for a more equitable and prosperous web3.