2 min read

What are "network effects"?

I'm currently reading The Cold Start Problem by Andrew Chen. The content is generally geared toward start ups and established companies, but there are obvious applications for blockchain.

The book addresses the question of how to start and grow networks of people. For typical web2 apps, having a network shifts your business from being just a service/tool into a vibrant community. Instagram, Uber, Tinder, etc. would be nothing without the network.

The same is true for blockchain (and especially L1s with smart contracts). You need node operators (miners), token holders, protocol developers, dapp developers, dapp users, etc. The real trick is incentivizing people to participate in multiple roles, and making it dead simple for people to get started.

Koinos is designed in a way that offers the greatest network effects for rapid growth of any blockchain I've seen. As long as the network can get past the early stages in a healthy state, it's going to be an absolute juggernaut. Here's why:

  1. Koinos is the only blockchain that makes it free to use dapps. You don't even have to buy the Koin token.
  2. If you try the blockchain and like it, you're going to want to buy Koin so you can have freedom to use more dapps without needing someone (or some dapp) to sponsor your usage.
  3. If you own Koin, you have mana burning a hole in your wallet. Mana's only purpose is to be used to power dapps (instead of gas fees) and then it recharges. You don't lose Koin by using dapps.

Owning Koin right now is like owning an iPhone in the early days. The app store is brand new, and everyone with a phone wants to try out every app possible. Competition is low, but demand for apps is high.

This is unique to Koinos because any blockchain with gas fees does not automatically convert token holders into users. ETH holders are investors by default, but only convert into users of dapps if they're enthusiasts or believe they can get a better return with your dapp than with ETH alone.

Building a dapp for Koinos this early in the game allows you to leverage every Koin holder as a potential user for your dapp. Competition for people's mana will increase over time, so you'll need to cross a much higher bar with your dapps.


P.S. If you want to earn a spot on the proverbial "home screen" of Koin holders, now's the time to start building.