With this post, we’ve reached Part Three of our four-post series on Kin’s economic architecture and the principles behind it.

After Defining a Healthy Kin Economy in Part One, our last post took a look at the Stages of Ecosystem Development — understanding that there is an important sequence to effectively guide an ecosystem into self-sustaining orbit.

Kin is a digital sharing economy of equal opportunity. The smartphone has become an increasingly powerful tool in the hands of a consumer; both to create and capture value. As consumers, we have an opportunity to connect across borderless digital communities — globalization in its purest form. However, the increasing monopolization of the digital service ecosystem is manufacturing borders. By controlling the flow of information and data, centralized monopolies are inhibiting the ability for users to maximize their potential value creation. Everyone has a unique set of talents and a unique set of needs. The Kin Ecosystem is architected to empower everyone to create value for each other in a truly borderless digital sharing economy. That’s why Kin is not just another marketplace — it’s a marketplace of equal opportunity where unique needs are met by empowered individuals with unique talents to match.

The power of the Kin Ecosystem is that every participant is a micro-entrepreneur, empowered to contribute. Post industrial revolution, the role of producer is concentrated in the hands of a select few with the requisite scale and resources to reach sustainable economies of scale. Even in most decentralized systems today, the network rewards flow to a select class of participants with requisite resources i.e. computing power (POW), wealth (POS), etc. Kin democratizes the opportunity to contribute; no matter how large or small, everyone has value to add, and everyone is fairly compensated.

Below are some high-level design principles for incentive drivers that contribute to a holistic strategy to continue to scale the ecosystem.

Objectives

Set the bar for value creation in the ecosystem

Galvanize a community of creators

Empower influential consumers

Strategy

In order for a new entrant to grow into an active and engaged stakeholder, they need to capture disproportionately high value from their initial participation. For that reason, the ecosystem needs to effectively maximize for consumer surplus (users) and producer surplus (digital services / creators).

To over-deliver on value while maintaining a level of sustainability, the value generating experiences with Kin need to maximize perceived value. That means a $10k investment to develop an experience in the ecosystem should feel like $10M of delivered value to consumers.

This is an important design principle not just for a developer’s cost basis, but because these initial experiences lay the groundwork for future value generation in the ecosystem. These initial experiences will turn initial stakeholders into influencers and value producers, so it is important that they are able to find ways to sustainably produce disproportionally high perceived value themselves, in perpetuity.

By introducing ‘earn’ and ‘spend’ experiences that have high intrinsic value, there is a natural force multiplier in total value generation in the ecosystem. This is a catalyst to move from digital services generating the value creation — to empowered consumers taking on the role of value creators.

This same concept is key to a sustainable path to a decentralized C2C economy, because participants in the Kin Ecosystem will never be able to compete on a cost basis with the giants in the space: Playing by the same rules as large incumbents (and attempting to compete with them using a fiat-based conception of value will only lead to price wars; that approach is unsustainable and doesn’t generate maximum impact.) The only way to reach true sustainability is to empower consumers to generate value that is unique to the digital sharing economy.

With that understanding, a key variable to consider in maximizing for ‘perceived value’ is the importance of intrinsic motivators (i.e.,value that cannot easily be quantified.)

Intrinsic motivators are foundational to Kin given the Kin Ecosystem is inherently social: As a digital sharing economy, the consumer-to-consumer experience makes the transfer of value transfer more impactful than just a transactional relationship. The ability to have influence on a community, and for stakeholders to use their unique talents to deliver value, creates an intrinsic motivation to participate. For this reason, a key design principle of the Kin Ecosystem is an economy where the value in the earn and spend opportunities is decoupled from fiat value in the minds of consumers. This creates a clear path to a C2C economy as consumers experience value creation on the earn side of the ecosystem.

Most desired spend opportunities

In the last post (Stages of Ecosystem Development) we discussed the importance of developing a ‘beachhead’ of influential users to help drive the growth of the economy. The beachhead we are focusing on at the outset are mobile native users. Below are the key areas that have been identified as the most desired spend opportunities for this segment

Community driven experiences i.e. things that are shared not necessarily consumed

Status generating experiences; ability to display status to the community

Exclusive access i.e. experiences only possible in the Kin Ecosystem

Connecting with key influencers

Donation to charity; gifts to peers

Based on these insights we can identify three primary drivers of high perceived value. Drivers and example opportunities are listed below.

1. Access: Experiences or goods typically inaccessible due to scarcity or a barrier

Limited-time private chat group with a key influencer (e.g. a celebrity)

Limited edition shoes or apparel from a favorite brand, influencer, or team

VIP tickets and exclusive meet-and-greets

2. Social Status: Markers of recognition among community members, peers, or strangers

Exclusive / custom user experience i.e. themes

Badges of achievement that show progression

Status symbol next to a user’s name

Special, shareable stickers that can only be earned for a limit time

Leaderboards, competition and recognition amongst peers

3. Instant gratification: Ephemeral doses of fun

Congratulatory messages (gamification)

1-for-1 models with friends (e.g., buy 1 sword in a game and get 2 shields to gift to your clan members)

Spend on social causes — opportunity to for matching contributions from other stakeholders (brands, digital services, communities)

Donations or ‘pledges’ to projects or people, which unlock content, songs, bots, and so on (like the Kick-starter model)

Working from that understanding, we see three pricing models that capture high value from the ecosystem at low cost to the foundation

Bidding fee auctions: Users buy credits to bid; good goes to the last person to bid; and every bid pushes up the timer. This generates higher perceived value as consumer surplus is maximized, and the total proceeds also outweigh the underlying cost.

Elements of chance: value to the winner outweighs the cost of entry

Micro: Offer goods and services at a quantity that is not available in the real world (e.g., divvy up a full season or subscription’s worth of programming into micro pieces of content). Acts as a penetration strategy for partners to offer micro-doses of content which can be converted into full subscribers.

Additional ways to maximize perceived value

Status: Offer badges of honor and other forms of social recognition that can act as force multipliers for community driven engagement to drive social commerce in the C2C economy. This leverages social constructs to drive high value to consumers without a cost basis.

Gamification: Offer leaderboards and competitions in which the intrinsic value of being a ‘leader’ optimizes for high perceived value.

Urgency: Ephemeral offers drive a healthy anxiety to the consumer, who feels satisfaction in capturing a ‘limited time only’ offer. This lends itself to the status construct as it adds a level of exclusivity.

Examples

Below are some quick examples of what these ‘high perceived value’ experiences could look like. Yet even though these (very rough) mock-ups simply overlay images onto a Kik Messenger interface, the potential experiences they represent could be replicated in other digital services.

Note: These are meant to be imaginative examples and are in no way an indication of active partnerships or experiences.

Exclusive group chat with a celebrity

Leverage a pricing strategy above to grant exclusive access to a group chat hosted by a celebrity e.g., Kanye West (I love Kanye)

Top 49 bids get in

Buy a lottery ticket for a chance to enter

Pay to have questions asked — opportunity to empower C2C by paying a user to moderate the conversation.

Users outside the chat can pay to have their questions asked

Influencer provides exclusive, shareable content in the group

This is a powerful tool because even after the influencer leaves the chat, there is an established community still present and actively engaged around a central topic or experience.

Custom Product Experience

Consumers get access to a custom product, or exclusive access to a new product roll-out. Consumers also involved in product ideation and creation. For example:

Nike runs a sneaker competition through their Nike ID platform

Entries are voted on by the community; winners get paid in Kin for designing these sneakers and get a pair of their exclusive design — opportunity to empower C2C by turning consumers into influencers within their communities (i.e., sneakerheads)

Top products on display to community

Opportunity to spend Kin on user generated product designs

Consumers are able to establish themselves as influencers within their community, recognizing high intrinsic value; brands and digital services gain high value through a community engaged in their product process.

Exclusive Brand Engagement

Provide consumers with exclusive content experiences with brands. Users earn through engagement and can spend on exclusive offers. For example:

McDonald’s secret menu or new product sampling

Opportunity to empower C2C by driving user generated content/experiences

Users submit entries; top entries are surfaced to the community

Top entries granted Kin, but also have a status symbol

Brands and digital services recognize disproportionately high value to their typical marketing spend as they are engaging with a community of influential consumers who will be brand advocates, empowered through their stake in the branded experience.

Digital Goods

Digital goods generate disproportionately high perceived value as their capabilities and status are the key value drivers, with low underlying cost. For example, Ownage is a blockchain company that tracks the flow of digital goods in online games to trace which ‘legendary players’ had once owned this transferable good

Opportunity to create a C2C marketplace for digital goods.

Users can buy and sell goods for Kin

Users can create digital goods

Social Causes

What really gets me the most excited about community driven value creation is the opportunity to work together to create value for others. Providing social causes for consumers to contribute Kin to maximizes social impact of the ecosystem, while also providing high intrinsic value. These experiences can be community driven in nature. For example:

A community of users works together to raise enough funds in Kin to outfit a classroom

Opportunity to provide earn opportunities that directly impact social causes

Users perform socially driven activities to earn Kin and those funds are directed to social causes on their behalf or in conjunction with a partner

Foundation or partner does a matching program for consumer donations

Implementing a one-for-one model on consumer spend opportunities; leveraging social scalability and overall impact

These types of experiences have high impact for consumers, brands, and the ecosystem as a whole. This is especially exciting because it empowers ecosystem participants to make an impact outside of their own experiences, and it utilizes the power of Kin to make others’ lives a little bit better.

Digital Services: Community Driven Development

The true power of a decentralized incentive platform is the democratization of innovation. With the right incentives, digital services are aligned to maximize for value creation within the ecosystem — not necessarily within their service exclusively. A decentralized ecosystem is most efficient when the goal is to collaborate on ideas and launch the best consumer products to maximize for consumer transaction velocity.

By implementing the appropriate incentives, the Kin Foundation will be able to incite this behaviour at the genesis of ecosystem development. The investment in community driven development will render disproportionate returns on the output from the requisite input to generate activity. Two key implementation strategies:

1. Development challenges (X-Prize model)

Crowdsource the development goals for the Kin Ecosystem and put a reward out for the team(s) that create the best experiences under these constructs.

Impact:

Coordinated development effort to achieve a common objective

Incentivizes collaboration across developer network

KIN bounty will drive development of multiple, often complementary projects

Developer groups who don’t win still capture the benefit of having an in-market product at the genesis of the ecosystem

Collaboration Opportunities: Working with existing development communities and/or incubators to unite developer groups to work together to capture the bounty.

2. Hackathon

Centralized (in-person) and decentralized (global; remote submissions) hackathons for a unified development objective.

Impact:

Rapid development, rapid iteration, real-time feedback loop

Teams who participate get an opportunity to build scalable solutions that have real impact

Opportunity for the community to self organize around common objectives — aligning complementary resources to achieve a common goal

Collaboration Opportunities: jointly solve problems leveraging new tech, insights, etc. This is a natural intersection of scrappy start-ups, incumbents, academics, and everything in between.

What makes the Kin Ecosystem so impactful is that it is a digital sharing economy of equal opportunity. Every single participant has some unique value they bring, whether they are a consumer, a developer, a creator, or a brand. By aligning the value generation around strong intrinsic motivators with high perceived value, it lays the groundwork for anyone to come and create value.

As discussed in a previous post (Aligning Incentives), a decentralized system maximizes for total value creation for the end user. In a digital sharing economy this fosters grassroots development that empowers every stakeholder to be a contributor. In an environment that cuts through the walled-garden approach to innovation, everyone is incentivized to share ideas and work together to bring those to life. Even if you aren’t a developer or creator, there’s value in having your voice heard. There is a great opportunity to aggregate ideation and creation — a community of developers hearing from users, generating great product ideas and validating along the way.

We’re fortunate to have an amazing community with an incredible group of people actively curating a moderating. I’d encourage everyone to connect across our Reddit and Telegram channels and provide as much feedback as possible.