How does value accrual work?

Value accrual is a multifaceted concept, especially within the context of cryptocurrency and blockchain technologies, where it refers to the process by which value is built up and stored within a digital asset, system, or platform.

1. Network Utility: As explained by Olaf Carlson-Wee, the use of an underlying system can indeed lead to value accrual of the native asset, though it's not always directly proportional. For instance, despite Ethereum having higher use and transactional volume, Bitcoin remains more valuable. This concept extends beyond basic use or speculation, significantly involving transactions and user numbers that directly drive value to the asset 1.

2. Crypto Maximization: The nature of value accrual can also lean towards maximization in the favor of a single asset, such as Bitcoin, especially as networks diversify in utility. Intriguingly, the more various smart contract systems and DeFi systems are bullish, the more they might actually contribute to the accrual of value predominantly to Bitcoin as a speculative asset 2.

3. Integrated Systems and Protocols: The interconnectedness of various blockchain systems, through mechanisms like bridge protocols, can influence where value accrues. For complex systems with multiple chains and bridges, determining where value finally resides becomes a substantial question for investors and users alike, as noted in discussions involving bridge protocols and their economic security impacts on value 1.

4. Organizational Contribution Models: Different organizational structures, such as the Op Collective described by David Hoffman and Ryan Sean Adams, utilize a revenue-sharing model whereby a percentage of income from operations on a platform contributes to a collective endeavor. This model supports public goods and can align network participants to a common financial outcome 3.

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     1

     Value Accrual and Bridge Protocols

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     2

     Value Accrual in Crypto

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     3

     Value Accrual and the Op Collective

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These principles emphasize that value accrual is not merely about transaction volume or system utilization but involves strategic aspects of network design, participant incentives, and the broader economic framework within which these platforms operate.