Web3 as a Internet User Ownership Strategy

Discussion

A new internet owned by users ?

Variant Team:

"If the last generation of software was built upon a foundation of user-generated content, the next generation of software will be user-owned, with digital ownership leveraged as a building block to enable novel user experiences. At its core, the ownership economy not only offers a powerful new tool for builders to leverage market incentives to jumpstart new networks—it also holds the potential to create positive social change through the wider distribution of wealth-building assets.

In the two years since Jesse Walden published the initial vision for a user-owned internet, the landscape has dramatically shifted and expanded. There are now more than 15,000 projects in the ownership economy, from user-owned financial markets to user-owned social networks, investment clubs, and digital assets. While the ownership economy still represents a small portion of all internet platforms, it’s a fast-growing segment. Ethereum, one of the more mature networks that supports the ownership economy, grew 46% in monthly average accounts in 2021.

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Simply put: the products and services that will define web3—and the next generation of the internet—are those that transform users into owners. We call this the ownership economy.

Still, identifying this phenomenon isn’t always simple, or obvious. That’s because ownership manifests across a spectrum of experiences that range in user effort, responsibility and degree of collectivity. One user might own a single digital media asset, like an NFT. Another might influence a network’s operation via a governance token. The experience of being an owner encompasses both passive (i.e., hodling) and active participation.

Note that for this report, we focus on crypto tokens—rather than equity—as the basis of the ownership economy. Tokens have a richer and more frictionless design space. They can be distributed programmatically, with the potential to reward participants versus those who buy in; they are effectively free to deploy, and they can transfer value in the same way we transfer information—instantly, to anyone, anywhere in the world.

* The ownership economy is big—and growing

As of April 26th, 2022, the market capitalization of the over 19,000 tokens tracked by data aggregator CoinMarketCap is $1.76 trillion. For comparison, the market capitalization of global stock markets is over $100 trillion.

The largest cryptonetworks by market capitalization are established layer 1 blockchains: Bitcoin ($725 billion), which was launched in 2009, and Ethereum ($337 billion), which was launched in 2015. Other layer 1s in the top 20 tokens by market capitalization include Solana, Polkadot, Terra, and Avalanche.

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We can also think about the scale of the ownership economy in terms of people—the users who become owners in the networks they build.

The Financial Times and Chainalysis estimated that there were 360,000 owners of NFTs as of 2021. Beyond that, there are tens of millions of users of cryptonetworks. Metamask, a wallet that is used to connect to decentralized applications, recently announced that it had 32 million monthly active users as of February 2022, and Phantom (a wallet currently focused on Solana) announced monthly active users of 2 million in January 2022. In the fourth quarter of 2021, Ethereum had monthly average transactional users of about 6 million and daily active transactional users of about 400,000. From a multi-chain perspective, there were approximately 2.5 million average daily active users interacting with the smart contracts tracked by DappRadar. As a rough approximation, if we extrapolate these 2.5 million daily users to calculate monthly users using Ethereum’s DAU/MAU ratio of 0.06, we could estimate MAU of 39 million across the 29 networks covered by DappRadar’s data.

DAOs, decentralized autonomous organizations, are online communities owned and governed by their members. They can be thought of as the organizational building blocks that make up web3’s economic, social, and cultural landscape. New DAOs are forming at such a rapid pace that it’s difficult to count them, but it seems safe to say there are over 1,000. DeepDAO, a data source, tracks detailed information about around 180 DAOs. In these DAOs alone, there are 1.7 million holders of governance tokens, and about 500,000 of these holders actively participate in DAO governance. And some of these DAOs are quite large: 69 of the 180 have more than 1,000 members."

(https://variant.fund/articles/the-ownership-economy-2022/)

More information

• "Jesse Walden’s original essay “The Ownership Economy” posited that user ownership could result in “platforms that can be larger, more resilient, and more innovative.” As we discuss throughout this report, many of these aspirations are not yet realized, or have mixed results." [1]