How Nice Are Aligned Incentives?

TL;DR

Full Story

To get their first million or so users, PayPal used a very simple, yet very effective tactic:

They paid them!

PayPal used to literally pay new customers $10 to use their product.

(Which led to millions of people using it for eBay purchases, and then an acquisition from eBay themselves for $1.5 Billion).

While this tactic has been used a ton since then (think: credit card companies or banks paying you a ‘sign up’ bonus), Web3 is uniquely positioned to take advantage of it.

For example, Magic Square – who call themselves ‘the first Web3 app store’ – just announced that they would be committing $66 million worth of their native SQR token for grants to projects listed on their platform.

Here’s why this is cool:

For one, providing grants to projects who plan to be listed on the Magic Square platform is a huge incentive for developers to start building.

At the same time, it helps Magic Square become less of a ghost town, and more of ‘the place to go’ for anyone looking to explore Web3 apps.

But the most important piece to this is the aligned incentives.

If a developer creates a killer app, and the only place to find it is through Magic Square, you’d expect millions of people to visit Magic Square.

The more hype around the platform → the higher the SQR token is likely to grow → the higher the value of SQR, the greater benefit to those companies who received grants.

That’s all a long way of saying:

Anything attracts more builders, where the builders themselves can be rewarded — we’re all for it.

(If only we could code).