Analysis of X to Earn’s product methodology: frequency, principal and labor

Table of contents:

1. X2earn: One of the easiest Web3 paradigms to understand

2. X2earn Product Methodology (Based on the assumptions of the 2022 study)

3. Which scenarios are suitable for X2earn?

4. Conclusions to the above scenario

1. X2earn: One of the easiest Web3 paradigms to understand

If Web3 is an obscure concept, then X2earn is the most down-to-earth product form. As A16Z said in the future column, people’s future work is to get a steady stream of income in DAO and crypto network. In this paradigm, the concepts of users, products, and PMF (Product Market Fit) are changed to players, networks, and ROI , as shown in the diagram below.

A brief analysis of X to Earn's product methodology: frequency, principal and labor

(Fig. 1) A possibility for the paradigm shift of x2earn

Let’s discuss X2earn in a broad sense. In fact, Satoshi Nakamoto’s peer-to-peer cash system is also a standard X2earn model: when you participate in verification calculations and contribute network computing power, you can get rewards. This process is called “mining”. The most important participants (participants) of the network are “miners”, who even appear before “users”. Because it is profitable, there are more and more participants, the network nodes multiply, the flywheel effect continues to increase, and participants ultimately gain huge benefits.

Therefore, it is extremely important to maintain a reasonable cost/reward ratio on an ongoing basis.

2. X2earn Product Methodology (Based on the assumptions of the 2022 study)

2.1 X2earn is a factor market

We have summarized more than 50 X2earn products on the market, and found that the common points are: using tokens as a cold start, using the rapid expansion of market value to attract participants (investing labor or capital), until the scale appears, through gamification, fee-based services, or Profit from external economic activities.

For the participants, X2earn has created a new factor market, so that their capital and labor can find a more efficient and fair way to realize the realization, get a reasonable return of economic benefits, and create social value.

2.2 Life Cycle of x2earn Product Design

A brief analysis of X to Earn's product methodology: frequency, principal and labor

    (Figure 2) X2earn’s life cycle — FMResearch mapping

1. The market value inflation period

During the period of attracting participants, the size of the participants determines the ceiling of the network. The monthly activity is the simplest indicator. If the monthly activity can reach 1 million, it is a “phenomenal” explosive product; if it reaches 10 million, it is the next potential competitor of Ethereum.

2. Market cap contraction period

The market value cannot expand indefinitely, and early participants will stay on the sidelines after making a profit. We need to pay attention to whether there are long-term loyal participants who stay when the market value shrinks, and what is the contribution value (customer order input cost)?

3. Period of uncertainty

For a long and restless phase, the network was looking for his true needs. Need to pay attention to the development of the network, how to develop more ecological products and retain participants.

4. The second growth curve period

The second manifestation of network value, explosive growth. For games, it is the active payment of players; for products with business models, it is the paid use of external users; for a Meme or currency, it is the scale of external economic activities.

5. Death spiral (a possibility)

Another possibility is that the network entered a death spiral without discovering a business model and sufficient positive externalities.

In short, successful projects keep attracting participants, and failing projects keep losing participants.

3. Which scenarios are suitable for X2earn?

3.1 Participant’s return on investment triangle:

If we design X2earn from the perspective of the participants, rational participants will consider the following triangles:

“How often do I get job confirmations and rewards?”

“How much capital do I need to invest?”

 “What labor do I need to put in?”

A brief analysis of X to Earn's product methodology: frequency, principal and labor

(Figure 3) Participant’s ROI Triangle – Mapping by FMResearch

Frequency: How often participants complete tasks and receive rewards. Example: The participation frequency of Bitcoin miners is about every 9 minutes, and the frequency of running is the interval between each run, which may be several hours.

Principal: The financial cost of the participant to purchase the input. For example: the principal of a mining machine, a liquidity provider, a certain access NFT, or a certain hardware device all belong to the principal.

Labor (work): The sweat that participants need to pay in addition to the principal. Examples: Recurring labor values ​​such as physical strength, knowledge, decision-making, and creativity. It needs to be clear that high-frequency labor is often standardized, with a low threshold or can be mechanized; low-frequency labor is often personalized and requires professional knowledge and skills.

3.2 Classification of frequency, principal and labor

The different choices of this triangle can produce a total of eight scenarios , which are as follows:

A brief analysis of X to Earn's product methodology: frequency, principal and labor

(Figure 4) 8 Classifications of Three Elements – FMResearch Mapping

Let’s see which ones are easier to design as x2earn models.

1. High frequency, high capital, and high labor

A brief analysis of X to Earn's product methodology: frequency, principal and labor

Networks in this category include Bitcoin and all mining networks; in the new generation there are Chainlink, the Graph, and Render Network, among others.

Advantages: The economic value of network precipitation is large, and there is an opportunity to form a fat protocol;

Disadvantages: The network economy is involution, the calculation is standardized, the arms race is fierce, the competition for capital is fierce, there are many organized institutions, and the participation of retail investors is very low. It is suitable for B-end products rather than C-end.

The design idea is to introduce higher mathematical difficulty and randomness into the algorithm of verification work, so that the asymmetric advantages of large participants do not increase disorderly and reduce the Gini coefficient. Although this type of network is the ultimate goal of most product designers, it is not suitable for adoption in the first place, because it prevents the participation of a large number of participants and can easily become a game controlled by a few people. The threshold should be lowered in the early stage and gradually raised later.

2. High frequency, high capital, and low labor

A brief analysis of X to Earn's product methodology: frequency, principal and labor

The representatives of this type of network are: POS network, Staking platform, Liquidity Mining network, network with asset proof as the entry threshold, etc., belong to this category.

Advantages: Participants do not consume too much labor, the efficiency of capital is extremely amplified, and it is a very effective network for raising capital and liquidity.

Disadvantages: The risk of being hijacked by whales. After failing to meet the income requirements, the withdrawal of the giant whales caused the network value to drop and entered a death spiral.

The design idea is to introduce more participants to play with each other, increase the loyalty of participants (using POAP for governance and participation rewards), and long-term value-locking capital (such as introducing voting rights mechanism), etc. Introducing more workload and labor is an inevitable direction.

3. High frequency, low capital, and high labor

A brief analysis of X to Earn's product methodology: frequency, principal and labor

The representative items of this category are: Play to Earn, Move to Earn, Speak English to Earn, Learn to Earn, Drive to Earn, Share House to Earn and so on.

Advantages: Participants do not need to be very rich, but labor can be exchanged for rewards.

Disadvantages: labor is not easy to quantify, and the business model behind it needs to be found.

The design idea is: to introduce more anti-cheating technologies such as intelligent hardware and oracle machines, and to work hard on the creation of economic value. One direction is to explore inward and design a more complex and random gamified business ecology , and the other is to outward Exploring, looking for the economic value of externalities.

4. High frequency, low capital, and low labor

A brief analysis of X to Earn's product methodology: frequency, principal and labor

The representative items are: Sleep to Earn, Read to Earn, Share to Earn, Comment to Earn, etc.

Pros: Low barriers to entry, huge audience of participants.

Disadvantages: Inaccurate portraits of participants (anyone can do “like”, “comment”, “share”, etc.), and the value of labor is very low, and the capital contribution is also very low, and it is easy to become a low-value network.

The design idea is: increase the principal or labor threshold of participants, try to find specific vertical scenarios, and make simple labor more meaningful. Appropriately increase the principal investment so that labor participants will not do evil, otherwise the principal will be confiscated.

5. Low frequency, low capital, and high labor

A brief analysis of X to Earn's product methodology: frequency, principal and labor

Low-frequency high labor force means that this kind of labor is more professional, and it may only produce results once a week and get a reward. Participants are more niche and have certain professional skills. The representative projects are: Research to Earn, Code to Earn, Create to Earn, Sing to Earn and so on.

Advantages: accurate users, high-tech labor, and a business model.

Disadvantages: Participants are very elitist, it is difficult to scale up, and work tasks are difficult to quantify and reward.

The design idea is: split a complex skill task into several simple tasks, and then combine them. Instead of linking all stock analysts to make a research2earn, product managers should disassemble research into i) a read 2 earn that only collects information, plus a ii) comment 2 earn that gives investment opinions, which will be complicated The research labor is simplified into two different modules, which speeds up the settlement frequency and simplifies the process.

6. Low frequency, high economic threshold, high labor threshold

A brief analysis of X to Earn's product methodology: frequency, principal and labor

This kind of model is not common, and the closest one is Venture DAO, that is, the participants contribute money together, make investment strategies together, and share dividends together.

Problem: The confirmation and incentive frequency of this kind of network is very low, the workload is difficult to measure, the work tasks are extremely non-standardized, and it is difficult to reach a consensus. So it’s hard to scale.

In the last two scenarios of “low frequency, high capital, low labor” and “low frequency, low capital, low labor” , the value contributed by the participants is too low, and we think such scenarios are temporarily meaningless.

Fourth, the conclusion of the above scenario

4.1 Choose the general direction, high frequency and low frequency

Frequency is a form of energy, and it is the most important in design. If the confirmation and reward frequency of the network is too low, there are two fatal problems:

1) Participants did not give timely feedback, and it is easy to migrate to other competing products;

2) Due to the low frequency, it is difficult for network administrators to detect cheating and attacks in time, and malicious participants take advantage of their unpreparedness to destroy the network at one time.

4.2 After selecting the general direction, it is important to split and combine

A brief analysis of X to Earn's product methodology: frequency, principal and labor

(Figure 5) Splitting and recombining complex tasks – FMResearch mapping

If we see that a scene has the potential of 2earn, then we must split it as much as possible. Among them, high-frequency behaviors and quantifiable behaviors can be designed as 2earn models; non-quantifiable, complex, and personalized behaviors , retain the centralized business model and continue to operate.

X2earn is a factor market, so consider the efficiency and low friction of the market.

4.3 Don’t just design around capital, introduce labor value

We firmly believe that X2earn 2.0 (value network) should be designed around labor because:

  • The network is more durable. It is relatively easy for human nature to stop losses with money, but it is difficult to let go of “wasting effort”.
  • The network is more valuable. Countless labors that can create goods and services.
  • Networks can create positive externalities. It is easy to generate a richer upstream and downstream industrial chain.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/analysis-of-x-to-earns-product-methodology-frequency-principal-and-labor/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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