In the world of Web3, tokens are more than just a fundraising tool or a virtual currency. Tokens are much more than these traditional definitions. The founder of Animoca Brands detailed the multiple functions and huge potential of tokens at the launch of MOCA.
Multiple functions of tokens: Tokens are often considered a more efficient fundraising tool that allows equity holders to avoid dilution risk. At the same time, tokens can also serve as utilities in games and other virtual environments, similar to virtual currencies. However, the functions of tokens are far more than that. It represents a new way to own assets that did not have a clear ownership structure before the emergence of tokens.
The core of network effects: The basic concept of network effects is that as the number of users of a product, service or platform increases, the overall value of the network to users will also increase. Network effects are an important indicator for evaluating the value of large companies. Whether it is a luxury brand or a technology giant, investors often evaluate the value of a company by measuring its network effects.
Metcalfe’s Law states that the value of a telecommunications network is proportional to the square of the number of users or compatible devices connected to it. The more people or devices that participate in a network, the greater the value of the network. We can roughly assess the value of networks such as Facebook, Google, and LinkedIn based on the number of users. The more users there are, the higher the value of the network and the valuation ceiling it may reach.
Combination of tokens and network effects
In Web3, tokens have become the concrete embodiment of network effects. The emergence of tokens allows users to own part of the network for the first time, which is significantly different from traditional equity instruments. Because tokens themselves have multiple functionalities and are open and permissionless most of the time, tokens can more conveniently support various practices and innovations. Therefore, Web3 can create network effects faster and more effectively than the closed network of Web2.
Inequality of individual value: Both Metcalfe’s Law and Reed’s Law assume that every user and device in the network has equal value. However, this is not the case in reality. A network with more users does not necessarily mean that it has greater value or better network effects than a network with a smaller user base. The value of individual users in the network is also an important factor.
Taking the economy as an example, Hong Kong has a population of about 7.5 million and a GDP of about $407 billion; North Korea has a population of 27.5 million and a GDP of $48.3 billion. The difference in the value (GDP) of the two networks lies mainly in the difference in the value of the network nodes. Although North Korea's network is 3.5 times larger than Hong Kong's, its value is relatively low because North Korea's economy is isolated and its network effects are closed, making the value of its entire network much lower than that of the smaller Hong Kong.
How to measure network effects
There is no single path to drive the growth of network effects. Project parties must combine a variety of appropriate methods to create lasting appeal for the network. This includes emphasizing user reach, attracting more developers and investors, or increasing total transaction volume through various measures.
In addition to focusing on the number of network users, another common way to measure network effects is to focus on the total amount of investment in the network. Many blockchains focus on driving up the total value locked (TVL), which is an indicator of the total value of assets locked or pledged in the network, which is helpful in attracting investment and entrepreneurial activities.
In the Web3 world, user stickiness is an important indicator because the Web3 network is generally open and permissionless in design, and users can enter and exit freely instead of being trapped in a "closed network". This is different from the Web2 world, where the network effect of Web2 is strongly monopolized by the network itself, and it is difficult for users to transfer data and network effects from one platform to another.
The role of cultural capital and NFT
According to Pierre Bourdieu's theory of capital and class division, "cultural capital" consists of intangible resources such as knowledge, skills and experience, which play an important role in social mobility and opportunities. NFTs can create more profound and complex network effects than homogenous tokens due to their unique properties and their ability to reflect personal identity and "cultural capital".
Although the network effects driven by NFTs may not grow as fast as homogenous tokens, they can establish a deeper and more loyal network of relationships based on common "cultural capital", forming a stronger line of defense and a stronger network effect. In the real world, we can see people's loyalty to brands, and in the virtual world, similar cultures are beginning to emerge.
Mocaverse Vision
Animoca Brands is one of the most active investors in the Web3 space, with over 450 companies and a multi-billion dollar balance sheet. We will continue to invest to expand our network and its associated economic and cultural network effects, which will lay the foundation for the expansion of the Moca Network. At the same time, we will use the full-chain token MOCA to drive the growth of the Animoca Brands network.
Mocaverse is an interoperable infrastructure stack designed to enhance network effects and bring together various "cultural capital" and "economic capital" to maximize mutual benefit. Mocaverse will integrate multiple fields including games, music, sports, animation, NFT, digital identity (DID), etc. to build a synergistic ecosystem.
Mocaverse is currently developing Moca ID, a full-chain universal identity reputation layer that will play a connecting role across ecosystems. This will help drive growth across the entire Web3 industry. Mocaverse and MOCA themselves are "cultural capital", which may still have a certain "isolation" today, but as the Mocaverse reputation layer grows, its significance will become more social.
Conclusion: The MOCA token is more than just a token, it is a bridge connecting multicultural economies, a frontier force in promoting cross-chain interoperability and cultural integration. By creating and enhancing network effects, MOCA will become an indispensable and important part of the Web3 world, leading a new chapter in the cultural economy.