The Ownership Economy 2022 – Variant: Unlocking the Potential of User Ownership

The Ownership Economy 2022 – Variant: Unlocking the Potential of User Ownership

Introduction:

The ownership economy is a powerful concept that not only empowers builders to leverage market incentives but also has the potential to create positive social change through the wider distribution of wealth-building assets. In today's digital landscape, the ownership economy has gained significant traction, with over 15,000 projects ranging from user-owned financial markets to user-owned social networks, investment clubs, and digital assets. The products and services that will define the next generation of the internet are those that transform users into owners. As of April 26th, 2022, the market capitalization of tracked tokens stands at $1.76 trillion, showcasing the immense growth and potential of the ownership economy.

User Ownership: Jumpstarting Growth and Ensuring Sustainability:

While user ownership can jumpstart growth, sustaining it is more challenging. Simply giving users ownership is not enough to ensure the success of a product in a competitive market. Tokens can be useful in capturing user attention and bootstrapping initial adoption, but they need to be coupled with strong product-market fit to sustain usage. Solving a widespread need for users is crucial for long-term engagement.

Furthermore, it is essential to consider whether ownership actually crowds out intrinsic incentives for using a product. If ownership leads to a more mercenary and transactional user experience, it may not foster long-term loyalty. Extrinsic motivations can undermine intrinsic motivation, especially when users previously found the behavior intrinsically rewarding. Token incentives should be optimized to preserve users' intrinsic motivation, considering factors such as timing, magnitude, and eligibility.

New Token Distribution Designs: Boosting User Loyalty:

To enhance user loyalty, new token distribution designs are emerging. Axie Infinity's player retention is a testament to the effectiveness of these designs. While liquidity mining programs have driven short-term participation, they have not historically contributed to long-term sustainability. Research has shown that a significant percentage of yield farmers exit within 24 hours of entering a farm. To combat this, new token incentives focus on contributor growth rather than solely deepening liquidity. Curve's voting escrow contracts and Gro's vesting mechanism encourage long-term engagement, ensuring the sustainability of the ownership economy.

Fostering Richer Ecosystems of Projects and Contributors:

Shared ownership reinforces network effects and creates a disincentive for users to switch to other blockchains. Permissionless projects have attracted users, creators, and developers, leading to the growth of vibrant ecosystems. CC0 NFT projects, for example, enable the free use of assets, expanding the possibilities of ownership. By allowing assets to be used in novel and generative ways, these projects stimulate building, creation, and collaboration. The ownership economy has the potential to redefine ownership itself and foster richer ecosystems of projects and contributors.

User Ownership: Early Participation in Value Creation:

One of the significant advantages of the ownership economy is that it allows users to become owners earlier and participate in value creation. Web3 companies that launch a token do so, on average, 2.7 years after founding. In contrast, VC-backed companies go public approximately 5.3 years after securing their first investment. Ownership is becoming a keystone of new experiences across all software product categories. As ownership extends to various products and networks, users have the opportunity to be part of value creation from the early stages.

Twitter Opening its Full Tweet Archive to Academic Researchers:

In a move that will benefit academic researchers, Twitter has announced that it will open up its full tweet archive for free. Previously, researchers had to pay for premium or enterprise developer access to access Twitter data. By making the "full history of public conversation" available to researchers and developers, Twitter aims to support discoveries and innovations that contribute to a better world. This is particularly important as social media discourse has become crucial in understanding topics such as online misinformation, hate speech, and election interference.

Twitter's initiative also includes a higher monthly tweet volume cap of 10 million tweets, which is 20 times higher than the previous limit. This expanded access will enable researchers to delve deeper into Twitter data and gain more comprehensive insights.

Conclusion:

The ownership economy has the potential to reshape industries and empower users in unprecedented ways. To harness its full potential, it is crucial to prioritize strong product-market fit and preserve users' intrinsic motivation. New token distribution designs can boost user loyalty, while shared ownership fosters richer ecosystems of projects and contributors. Additionally, the ownership economy allows users to become owners earlier and participate in value creation.

Three Actionable Advice:

1. Focus on building products that solve widespread needs for users while incorporating token incentives strategically to maintain intrinsic motivation.

2. Embrace new token distribution designs that prioritize contributor growth rather than solely deepening liquidity, ensuring long-term engagement and sustainability.

3. Leverage the opportunities offered by the ownership economy to foster collaboration, creation, and building within vibrant ecosystems.

By embracing the ownership economy, we can unlock new possibilities, empower users, and drive positive social change. Whether it's transforming users into owners or opening up data for academic researchers, the ownership economy is set to shape the future of industries, technology, and society as a whole.