Web3 Network Effects: Leveraging Power Users

Web2 platforms like Kickstarter, Udemy, and Skillshare scaled by getting power producers onto the platform early on. These producers, in turn, onboarded their followers as consumers, some of whom, then further converted into producers and a cycle of user acquisition and ever-increasing network effects started building up.

Owing to tokenised ownership, Web3 platforms can turbocharge power user strategies. As centralized ownership of the platform decreases, power users play an increasingly important role by driving growth of the platform and reaping the ensuing gains.

This essay provides a teardown in one of the most important Web3 strategies: Leveraging power users.

Specifically, this essay explores 6 strategies for leveraging power users to bootstrap and scale Web3 platforms.

1. Piggyback Web2 social graphs
2. Structure the token model to attract power users based on network activity needs
3. Structure power governance for power users
4. Target power users using NFT signalling
5. Leverage power users for viral growth through memetic spread
6. Drive flywheel effects through integrations

 

Why power users matter

Power users play a key role in the creation of network effects. Not all nodes on a network are equal, some – power users – contribute much higher activity to the network than others.

Power users may be power producers or power consumers or both. Power producers bring higher supply to the platform. Power consumers are responsible for driving demand. Power users drive outsized activity on the platform. Early on, getting power users onto the platform helps overcome the chicken and egg problem that most platforms face.

Web3: Turbocharging power user engagement

Web3 platforms unlock three additional value levers for power users (particularly producers) to benefit from bringing their following on board. Through fungible and non-fungible tokens, power producers gain greater returns on their actions in helping grow an underlying platform.

1. 1. Tokenized platform ownership benefits: First, Web3 platforms can award tokens to power users which enable them to gain ownership benefits beyond the transactional benefits that Web2 platforms provided. For instance, a power user on a Web3 platform may benefit from more platform transactions by bringing followers on board, and also from earning more tokens as reward for actions like onboarding their following. As the underlying protocol usage scales, the growing token value accrues upside in the favour of these power users. In this manner, the power user gains the benefits of both transactional volume on their own creations as well as growth in underlying protocol usage.
   2. Tokenized content ownership benefits: Second, Web3 platforms also provide content ownership benefits when products or content created by power users are set up as non-fungible tokens (NFTs). While Web2 platforms only allowed creators to gain transactional benefits from the first transaction, Web3 platforms can enable power users to gain ownership benefits beyond the first transaction as they continue to see benefits from secondary transactions conducted by subsequent owners of the product/content.
   3. Fractional ownership benefits: NFTs may also be fractionalized and reused by other platform users. For instance, course creators on Udemy and Skillshare only benefited from the transaction of the actual course. A Web3 online learning platform could allow creators to set up courses as NFTs. Components of these courses could be fractionalized and used by other course creators within their own courses, while the underlying NFT would allow superior copyright ownership and attribution, ensuring that proceeds from the sales of derivative courses also accrue to the original course creator.

 

Effectively, through additional ownership benefits – both in terms of platform ownership and content ownership – power users are incentivised to keep promoting not just their own content (as they already did in Web2) but also the underlying platform and any derivative content that is created on the platform.