If you ask the average Web3 person today: “what led them into crypto?” The two answers are either: “I heard my friend made a fortune trading coin [xyz]” or “I saw on social media that you can make a 10x flipping JPEGs/cryptocurrencies.”

While this model has worked great for the first decade of crypto to lure in investors, retail traders, and technology enthusiasts; it has come with a variety of negative side effects. Financial incentives do not lead to intrinsic motivation instead they lead to greed.

Financial incentives have resulted in a variety of unpleasant cultural norms. It creates an everyone for themselves mentality. Either you are here to make money or here to lose money. Next, it has attracted an incredible amount of scammers, Ponzi schemes and cut-throat mechanics. These do not only rob simple people of their hard earned money (no one said investing/trading was easy or fair), but it has also created a wave of negative first impressions that result in a high amount of new user churn.

If you have read our article about Solomon, you understand why first impressions are crucial to build intrinsic motivation that ultimately leads to unconditional support. Financial incentives result not only in negative individual behavior, but (similar to all collective behaviors) it translates into culture as well.

Additionally, while we have a culture of innovation, community, and compassion on one side of the spectrum; we also have the flippers, the fomo-ers (fear of missing out) and the get rich quick schemers. Even more unfortunate is the fact that crypto role models, our influencers, have adapted this culture which results in more social proof and more people adapting said culture.

This is incredibly damaging to the the crypto space is general. It emphasizes gains over value creation, manipulation over transparency, and old money versus new money. This brings us to a tricky situation: we all want more adoption, more new people coming in, and more recognition as a better alternative to the incumbents. However, our whole culture is beginner-unfriendly, survival of the fittest, and made up of scams, meme coins, and rug pulls.

Do you really think that this culture will convince the mainstream that we are better than the established institutions?

Financial incentives can only be part of the answer to our problems, they cannot be the sole answer. This is why the next phase of Web3 will be incredibly important. We need value propositions, usability, and use cases. After a decade of luring people in with financial incentives, we need to start focusing on getting people in through the only way that is healthy and sustainable; by solving problems. Web3 is special because the economic layer is integrated into applications through ownership and token economies. They will help to keep the users engaged and give them a voice in moving forward. Nevertheless, financial incentives alone will not cut it anymore. We are still giving them out, but it is not enough.

This brings us to our own project. How is Solomon going to approach user acquisition and how will we integrate the economic layer into our network?

Our approach: get people in with usability and functionality, keep them engaged by making them part-owners, and reward behavior that benefits the network/community.

How will that look like? We are thinking about how to engineer viral growth loops into our product. Usually, these loops take one of two forms. Users create content and share that content with their broader network using third-party services (from email to social media or messengers). Other people then interact with the shared content and a percentage of them sign up. Or people get incentivized to invite their friends and family which ends up making the product more valuable to them and creates more value for the entire network.

But the reality is that through manipulative tactics and invite spam mechanisms in Web2, most people have gotten numb to invites even if they are financially incentivized. However, we have developed an approach that might improve the conversion/invite rate. This approach comes down to two solutions.

First variable rewards, we will not just reward our users for inviting, we will make the size of the rewards dependent on how engaged the new user becomes within the first 14 days. Why 14 days? Because a rule of thumb for network businesses is that if the new user does not show engagement within the first 5–14 Days, then they will most likely not come back to the service at all. If the new user gets activated/signs up, then the old user will be entitled to a base rate of tokens. If the user gets engaged and logs in twice within the first week, then the old user gets a multiple of the base rate. If the new user is active more than 5 times in the first 14 days, then the multiple will be even higher.

Secondly, we will make the sign-up process for the invited person as easy as possible. No email needed, no personal information needed. We will give the person that invites their friend the option to fill out a temporary username for their friend and their friend will only need to choose a password. Or additionally, they can opt to change the pre-chosen username. That is two clicks before you are signed in. Furthermore, we will make login APIs like Google, Facebook, Apple, etc, available to make the sign-up for new users as easy as in Web2. Wallet addresses will be found within the profile. Seed phrases will be shown to the new users 3 times within the first week to give them enough time to write them down.

Today, invite mechanisms are a lot less powerful than viral loops through sharing. This is why we will focus heavily on getting, “ how to share your content across other platforms,” properly. Additionally, if new users sign-up through a shared link, the same reward system detailed above will apply.

One metric that was found to be incredibly important in almost every social network that exists today is the number of connections a new user makes within the first days/weeks after signup. We will provide recommendations based on friends, region, and interests to make this process easier. The golden rule at Facebook and Instagram is that a user that makes 7 or more friends within the first 10 days will have dramatically higher chances of coming back than without them. This is the key to achieving high retention.

What does that mean for our community? Especially at the beginning of Solomon it is crucial to connect with new users on the platform. We need to help them find profiles, people to follow, and get their friends on the platform as soon as possible. We might even require new people to get two or more invites before they will be able to join. This will increase the rate of retention dramatically.

For our community members, it will be easy. You will have many people you know on the platform right from the beginning. But new people will not have that existing network. To achieve strong growth we need high retention. We can only achieve high retention by connecting new users with like-minded people as soon as possible. Homophily (the principle that contact between similar people occurs at a higher rate than among dissimilar people) is an important factor in that equation. Therefore it is not just important to connect people in general but to connect them with like-minded individuals. For example, newbies with newbies, degens with degens, artists with other artists, and so on.

Financial incentives alone will not result in growth. Neither with Solomon nor with Web3. Moving forward, it is all going to come down to delivering value to the user. Our value proposition comes from the network we create, therefore our focus needs to be to connect new users with as many other users in the network as fast as possible, to deliver as much value as possible.

We will expand on the importance of friends, social proof, and homophily in tomorrow’s article.

If you ask the average Web3 person today: “what led them into crypto?” The two answers are either: “I heard my friend made a fortune trading coin [xyz]” or “I saw on social media that you can make a 10x flipping JPEGs/cryptocurrencies.”

While this model has worked great for the first decade of crypto to lure in investors, retail traders, and technology enthusiasts; it has come with a variety of negative side effects. Financial incentives do not lead to intrinsic motivation instead they lead to greed.

Financial incentives have resulted in a variety of unpleasant cultural norms. It creates an everyone for themselves mentality. Either you are here to make money or here to lose money. Next, it has attracted an incredible amount of scammers, Ponzi schemes and cut-throat mechanics. These do not only rob simple people of their hard earned money (no one said investing/trading was easy or fair), but it has also created a wave of negative first impressions that result in a high amount of new user churn.

If you have read our article about Solomon, you understand why first impressions are crucial to build intrinsic motivation that ultimately leads to unconditional support. Financial incentives result not only in negative individual behavior, but (similar to all collective behaviors) it translates into culture as well.

Additionally, while we have a culture of innovation, community, and compassion on one side of the spectrum; we also have the flippers, the fomo-ers (fear of missing out) and the get rich quick schemers. Even more unfortunate is the fact that crypto role models, our influencers, have adapted this culture which results in more social proof and more people adapting said culture.

This is incredibly damaging to the the crypto space is general. It emphasizes gains over value creation, manipulation over transparency, and old money versus new money. This brings us to a tricky situation: we all want more adoption, more new people coming in, and more recognition as a better alternative to the incumbents. However, our whole culture is beginner-unfriendly, survival of the fittest, and made up of scams, meme coins, and rug pulls.

Do you really think that this culture will convince the mainstream that we are better than the established institutions?

Financial incentives can only be part of the answer to our problems, they cannot be the sole answer. This is why the next phase of Web3 will be incredibly important. We need value propositions, usability, and use cases. After a decade of luring people in with financial incentives, we need to start focusing on getting people in through the only way that is healthy and sustainable; by solving problems. Web3 is special because the economic layer is integrated into applications through ownership and token economies. They will help to keep the users engaged and give them a voice in moving forward. Nevertheless, financial incentives alone will not cut it anymore. We are still giving them out, but it is not enough.

This brings us to our own project. How is Solomon going to approach user acquisition and how will we integrate the economic layer into our network?

Our approach: get people in with usability and functionality, keep them engaged by making them part-owners, and reward behavior that benefits the network/community.

How will that look like? We are thinking about how to engineer viral growth loops into our product. Usually, these loops take one of two forms. Users create content and share that content with their broader network using third-party services (from email to social media or messengers). Other people then interact with the shared content and a percentage of them sign up. Or people get incentivized to invite their friends and family which ends up making the product more valuable to them and creates more value for the entire network.

But the reality is that through manipulative tactics and invite spam mechanisms in Web2, most people have gotten numb to invites even if they are financially incentivized. However, we have developed an approach that might improve the conversion/invite rate. This approach comes down to two solutions.

First variable rewards, we will not just reward our users for inviting, we will make the size of the rewards dependent on how engaged the new user becomes within the first 14 days. Why 14 days? Because a rule of thumb for network businesses is that if the new user does not show engagement within the first 5–14 Days, then they will most likely not come back to the service at all. If the new user gets activated/signs up, then the old user will be entitled to a base rate of tokens. If the user gets engaged and logs in twice within the first week, then the old user gets a multiple of the base rate. If the new user is active more than 5 times in the first 14 days, then the multiple will be even higher.

Secondly, we will make the sign-up process for the invited person as easy as possible. No email needed, no personal information needed. We will give the person that invites their friend the option to fill out a temporary username for their friend and their friend will only need to choose a password. Or additionally, they can opt to change the pre-chosen username. That is two clicks before you are signed in. Furthermore, we will make login APIs like Google, Facebook, Apple, etc, available to make the sign-up for new users as easy as in Web2. Wallet addresses will be found within the profile. Seed phrases will be shown to the new users 3 times within the first week to give them enough time to write them down.

Today, invite mechanisms are a lot less powerful than viral loops through sharing. This is why we will focus heavily on getting, “ how to share your content across other platforms,” properly. Additionally, if new users sign-up through a shared link, the same reward system detailed above will apply.

One metric that was found to be incredibly important in almost every social network that exists today is the number of connections a new user makes within the first days/weeks after signup. We will provide recommendations based on friends, region, and interests to make this process easier. The golden rule at Facebook and Instagram is that a user that makes 7 or more friends within the first 10 days will have dramatically higher chances of coming back than without them. This is the key to achieving high retention.

What does that mean for our community? Especially at the beginning of Solomon it is crucial to connect with new users on the platform. We need to help them find profiles, people to follow, and get their friends on the platform as soon as possible. We might even require new people to get two or more invites before they will be able to join. This will increase the rate of retention dramatically.

For our community members, it will be easy. You will have many people you know on the platform right from the beginning. But new people will not have that existing network. To achieve strong growth we need high retention. We can only achieve high retention by connecting new users with like-minded people as soon as possible. Homophily (the principle that contact between similar people occurs at a higher rate than among dissimilar people) is an important factor in that equation. Therefore it is not just important to connect people in general but to connect them with like-minded individuals. For example, newbies with newbies, degens with degens, artists with other artists, and so on.

Financial incentives alone will not result in growth. Neither with Solomon nor with Web3. Moving forward, it is all going to come down to delivering value to the user. Our value proposition comes from the network we create, therefore our focus needs to be to connect new users with as many other users in the network as fast as possible, to deliver as much value as possible.

We will expand on the importance of friends, social proof, and homophily in tomorrow’s article.