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 encourage each participant’s activities.

In this respect, digital asset tokens have become a powerful tool for increasing user engagement, as opposed to Web 2.0 marketing that comes at great expense. Tokenomics eliminates this problem through Web 3.0.

Web 2.0 centers around Social Network Services (SNS). Early user acquisition is a cold-start problem and a core challenge in business marketing. It is typical for the primary direction of marketing to aim for network effects, or the exponential increase in the number of users. Thus, Web 2.0 marketing requires a large budget to withstand a cold-start powerful enough to generate successful network effects.

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.

| Web 3.0 Business and Cold Start

Web 3.0 offers digital asset tokens as an incentive to users. This is a powerful Web 3.0 tool that paves the eliminates business cold-start issues.

“The 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.

Though Web 3.0 startups do not solve the cold start problem, they do create token inflation.

| 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 target active participants who need the service, rather than passive ones. Token incentives should be designed for active participants and distributed according to the degree of service utility (utilization).

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