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Customers, users and loyalty in the web3 world

In web2 platforms operate as closed silos. There is no composability and the platform owns your data. This means that a platform with significant size enjoys a massive advantage due to the datasets it owns. It has richer information that it can employ to outcompete other platforms, using it as a significant moat.

In the web3 world, users own their own data. Tokens are composable, there are either no walls to the garden or the walls are fairly easy to surmount if they exist. Users can take their business wherever they can extract the most amount of value without any sort of loyalty to the platform. The open source nature of the code also means that it is easy to replicate a service once it has done the hard yards to battle test its code and proven the product market fit. As Uniswap learned to its chagrin, users were happy to migrate to Sushiswap to make a few dollars more.

So how does a platform secure its long term future? The answer to this question is especially important to the long term success of the OPEN project.

Before we answer this question, lets first try to understand who the users of the platform are and who the customers are. The answer to this question will likely evolve as the platform itself evolves, but it is worth assessing the answer based on current circumstances.

At its very core the platform is a market place with various different players.

You have various partner projects whose tokens are used as collateral to mint USDO. It is in their best interest that holders of their tokens dont sell them and borrow a stable coin such as USDO so that they can use the cash as needed rather than selling it.

Then you have the token holders themselves, who can stake their tokens, and borrow USDO.

And finally you have those who own USDO, note that they can be a subset of the above (those who minted) as well as those who bought USDO from the market directly without necessarily minting it first.

Who among the above 3 are our customers?

The answer is those who mint USDO.

When they mint they are effectively paying a fee to do so as well as an ongoing interest while they continue to hold USDO.

The Customer is the one who pays, so the borrowers/minters of USDO are the customer.

The USDO holders are the users and if they are deriving value from the usage of USDO then that is what will drive incentives for USDO borrowers as well.

An analogy with web2 would be the users of FB and the advertisers. The advertisers are the customers, but without users FB will not be able to attract them. They need an ecosystem of active and engaged users which they can monetize using their customers.

USDO needs to be usable in various applications such as swaps to other stables, trading, speculation, lending/borrowing etc. We are working on all these fronts and over time we will be able to chip away progressively creating the necessary utility.

However the success of a platform in the long run is a direct function of its “stickiness”.

You need to have “accruing benefits” by staying in the platform and “mounting losses” if you leave the platform.

When you are in a web3 world with open source code, this stickiness is hard to achieve as discussed earlier.

However stickiness can be achieved by giving utility to USDO in ways that are hard to replicate.

These are

  1. Onchain applications where USDO is used directly. This is defensible especially if it is your own application or your token needs to cross a certain threshold of credibility before it is adopted by others.
  2. Offchain applications: If USDO is accepted as a mode of payment by offchain users that is extremely hard to displace over time. This is because the credibility barrier is even higher to replicate for a copy cat.
  3. Building applications using USDO. This is more of an onchain use case, where USDO becomes the basis on top of which other projects build their applications. This can be incentivized by grants and direct funding.

Our ultimate aim has to be to make USDO useful. Focus on delivering the best user experience, which will in turn make it useful for our customers and in turn solve for everything else as well.



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