Network effects are a a phenomenon whereby a product or service gains additional value as more people use it…
Typically the network effects of marketplaces grow n^2
where n
is the number of users in the network.
By way of example, here is how you could think about the network effects of the Gitcoin entwork:
- On average, every funder who joins Gitcoin adds more grant funding to every other grant in the network.
- On average, every grant who joins Gitcoin generates more value for each funder on the network.
The value flow is rather circular here. This is really powerful because as network effects are spun through this infinite loop, it enables exponential growth in the utility of the network.
The Gitcoin Grants 2.0 Network Effects
These network effects are what enable the Gitcoin Grants 2.0 flywheel
- We enable Community/Ecosystem builders to get their JTBD (Build their ecosystem/community) done (and get feedback about which parts their community is worth funding).
- The way we do that is we enable Grant Owners to get their JTBD (raise $$$) done. (and get feedback about which things their community thinks is worth funding)
- The way we do that is we enable Contributors to get their JTBD (find great projects, support them) done. (and give feedback about which things they think is worth funding)
The Gitcoin Passport Network Effects
These network effects are what enable the Gitcoin passport are
- More users using more dapps creates more utility (stamps).
- More stamps creates more utility(stamps/sybil resistence) for users/dapps that integrate passport.
- More dApps create more utility(stamps/sybil resistence) that attracts more users.
Why is this powerful? Because once market networks start to get their network effects flowing, that creates much much more utility for the network.
For the DAO to realize it’s essential intent I advise that it may want to consider bootstrapping these network effects as much as possible. One the exponential growth of network effects begin to really compound on itself, that is a very strong position for the DAO to be in.