The Ownership Economy 2022 – Variant: Transforming Users into Owners

The Ownership Economy 2022 – Variant: Transforming Users into Owners

In today's digital landscape, the ownership economy has emerged as a powerful force that not only empowers builders but also has the potential to drive 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 and digital assets, it's clear that the shift towards user ownership is redefining the way we interact with the internet. This article explores the key aspects of the ownership economy and its implications for the future.

At the heart of the ownership economy is the concept of transforming users into owners. The products and services that will define web3 and the next generation of the internet are those that empower users to have a stake in the platforms they engage with. This shift is evident in the market capitalization of tokens, which is now valued at $1.76 trillion for over 19,000 tracked tokens. While this may seem significant, it pales in comparison to the $100 trillion market capitalization of global stock markets. However, established layer 1 blockchains like Bitcoin and Ethereum are leading the way, with market capitalizations of $725 billion and $337 billion, respectively.

One of the challenges in sustaining user ownership is ensuring strong product-market fit. While tokens can initially capture user attention and drive adoption, they must be coupled with a product that solves a widespread need for users. Simply giving users ownership is not enough to ensure long-term engagement and usage. Additionally, there is a concern that ownership may crowd out intrinsic motivations for using a product, leading to more transactional and temporary engagement. To address this, token incentives should be optimized in terms of timing, magnitude, eligibility, and other factors to preserve users' intrinsic motivation.

New token distribution designs are playing a crucial role in boosting user loyalty. While liquidity mining programs have driven short-term participation in new products, they have not historically contributed to long-term sustainability. However, platforms like Axie Infinity have achieved strong and consistent player retention, indicating that engagement is not solely dependent on novelty. Some token incentives are now focusing on contributor growth rather than just deepening liquidity. For example, Curve's voting escrow contracts use lockup periods to increase token rewards, while Gro introduced a vesting mechanism to encourage long-term engagement.

User ownership also fosters richer ecosystems of projects and contributors. The permissionless nature of blockchain projects has attracted users, creators, and developers to build around and on top of these platforms. Shared ownership reinforces network effects and creates a disincentive for users to switch to other blockchains. Additionally, projects like CC0 NFTs (non-fungible tokens) enable the free use of assets, expanding the possibilities of ownership and stimulating building, creation, and collaboration.

One of the key advantages of the ownership economy is that it allows users to become owners earlier and participate in value creation. Unlike traditional companies that take years to go public, web3 companies that launch a token do so much earlier, on average, 2.7 years after founding. This early ownership empowers users to have a stake in the success of the platform and participate in its growth.

In conclusion, the ownership economy is transforming the way we interact with the internet. By empowering users to become owners, it not only drives growth and innovation but also has the potential to create a more equitable distribution of wealth. To harness the full potential of the ownership economy, here are three actionable pieces of advice:

1. Ensure strong product-market fit: While user ownership is crucial, it must be coupled with a product that solves a widespread need for users. Tokens alone are not enough to drive sustained engagement.

2. Design token incentives for long-term loyalty: New token distribution designs should focus on contributor growth rather than just liquidity, encouraging users to stay engaged with the platform over the long term.

3. Foster collaboration and building: Shared ownership and permissionless platforms enable users, creators, and developers to build and collaborate, creating richer ecosystems of projects and contributors.

As the ownership economy continues to evolve, it's important for builders and users alike to embrace the power of ownership and leverage it to drive positive change in the digital landscape. By embracing user ownership, we can create a future where users have a stake in the platforms they use and contribute to the growth and success of the internet.