Using Token Incentives to Beat the Chicken and Egg Problem

How Web3 platforms can use tokens to build positive network effects and get to critical mass without raising capital.

What came first, the chicken or the egg?

This is a question that has plagued both biologists and startup founders for centuries (okay, maybe not centuries for the founders).

An early business example of this problem was the advent of barcodes in the 1970s.

While an ingenious way of enforcing universal inventory control, barcodes without RF scanners have little value.

And as a retail proprietor in the 1970s, investing in expensive scanning technology when only a subset of products had barcodes didn’t make sense. In fact, in order for cost savings from better inventory management to kick in, retailers needed about 75% of their products to be tagged. It also didn’t make sense for manufacturers to tag their products if most retailers weren’t investing in RF scanners.

Chicken meet egg.