Network Bonding Theory: Grow Your Startup By Making It A Network

Web 3 introduces a powerful new tool for bootstrapping networks: token incentives.The basic idea is: early on during the bootstrapping phase when network effects haven’t kicked in, provide users with financial utility via token rewards to make up for the lack of native utility.

Web3 will be defined by “token effects” and not traditional network effects. What does that mean? Token-based projects have a better shot at building powerful and useful networks that are user-owned and operated. (visualized brilliantly by @LeConcurrential)

NFX has proposed a similar idea called network bonding theory. According to this school of thought, tokens give early users a financial incentive to participate in a network. The addition of those users then allows the network to increase its utility and reach liquidity.