4-2. Token incentives for network effects

Tokenomics is a tool for coordinating the incentives of ecosystem participants, such as networks and communities. For the ecosystem to form a virtuous circle, token incentives must be well designed to ensure that the activities of each participant are encouraged.

In this respect, digital asset tokens are a powerful tool to increase the engagement activity of participants. Web 2.0 requires a huge initial marketing expense for this effect, but Web 3.0 does not have this problem due to tokenomics.

In Web 2.0, which is centered around the Social Network Service (SNS), the issue of early user acquisition is a cold start problem, a fundamental and very important core challenge in business marketing. It is common for the basic direction of marketing to aim for network effects. A network effect is an exponential increase in the number of users. Thus, in Web 2.0, a business unit large enough to withstand an initial cold start and generate network effects was very likely to succeed.

Blockchain Web 3. At 0, compared to Web 2.0, it is possible to create network effects more effectively when utilizing tokenomics. However this is often not the case. NCOP allows you to solve these problems when designing the tokenomics Basic Rules.

l Web 3.0 Business and Cold Start

Web 3.0 offers digital asset tokens as an incentive to users. This is a powerful weapon of Web 3.0 that paves the way for startups to avoid the problem of an early cold start in their business.

"The basic idea is to make up for the lack of basic utility by providing users with financial usefulness through token rewards early in the bootstrap phase where the network effect has not begun" (Chris Dixon)

However, users who participate passively in the network experience a rapid decline in network engagement as token incentives decrease.

Therefore, Web 3.0 startups do not solve the cold start problem, but rather result in only token inflation.

l Token incentives for Web 3.0 Network Effects

In order for a Web 3.0 service to overcome an initial cold start and bring about a more efficient network effect, it must be targeted at active participants who need the service rather than passive participants. Token incentives should be designed for these active participants to be offered according to the degree of utility (utilization) of the service.

NCOP's Tokenomics has developed an incentive policy to reflect this.