@@ -18,7 +18,7 @@ image ="https://media.urbit.org/site/posts/essays/value-of-address-space-pt2.jpg
1818
1919Measuring value
2020
21−Value and price are distinct concepts that often get conflated. In our view, Urbit address space has value for four fundamental reasons: primarily it’s scarce, it has utility; in addition, it’s tradeable with increasing liquidity, and it has network effect. Price, on the other hand, is always a function of supply and demand. Let’s take a look at these fundamentals within the Urbit ecosystem.
21+Value and price are distinct concepts that often get conflated. In our view, Urbit address space has value for four fundamental reasons: it’s scarce; it has utility; it’s tradeable with increasing liquidity; and it has network effect. Price, on the other hand, is always a function of supply and demand. Let’s take a look at these fundamentals within the Urbit ecosystem.
2222
2323
2424
@@ -39,28 +39,28 @@ There are 65,536 total stars on the network. In turn, each star is initialized w
3939
4040We anticipate the relative pricing of stars and planets to align (so to speak) as Tlon and others increase education about Urbit, and as additional planet sellers and hosting providers enter the market.
4141
42−Finally, there are 4,294,967,296 (or 2<sup>32</sup>) planets on the network. Planets currently trade largely in a range of $10 to $15. While we expect planet prices to fluctuate from provider to provider as described in the previous post, we also expect they will ultimately find an equilibrium price somewhere near their current range for two reasons. First, this range is affordable for most purchasers, and second, the cost to configure addresses for distribution is fairly static, and acts as something of a price floor.
42+Finally, there are 4,294,967,296 (or 2<sup>32</sup>) planets on the network. Planets currently trade largely in a range of $10 to $15. While we expect planet prices to fluctuate from provider to provider as described in the previous post, we also expect they will ultimately find an equilibrium price somewhere near their current range for two reasons. First, this range is affordable for most purchasers, and second, the cost to configure addresses for distribution is fairly static and acts as something of a price floor.
4343
44−That said, we also anticipate that planet prices will be abstracted away from most purchasers and will be included in bundled annual packages of hosting and data routing services. For this reason, infrastructure service providers (i.e. hosting providers) will likely be the best positioned parties to capture value from planet distribution.
44+That said, we also anticipate that planet prices will be abstracted away from most purchasers, and will be included in bundled annual packages of hosting and data routing services. For this reason, infrastructure service providers (i.e. hosting providers) will likely be the best positioned parties to capture value from planet distribution.
4545
46−While an increase in the supply of Urbit address space is a technical possibility, it would run counter to the economic incentives of Urbit address space owners. For this reason, we see a galaxy vote to dilute address space as improbable.
46+While an increase in the supply of Urbit address space is a technical possibility, it would run counter to the economic incentives of Urbit address space owners. This is why we view a galaxy vote to dilute address space as improbable.
4747
4848Scarcity may be sufficient alone to drive value, but it’s much more impactful when the unit has some underlying purpose, which brings us to utility.
4949
5050## Utility
51−Utility (i.e. what Urbit addresses can be used for) has largely been addressed in the previous installation of this series. Briefly, our view is that stars and galaxies are useful for more than simply selling their subsidiary address space. Their usevalue encompasses their unique functionality on the network and the business models that functionality represents.
51+Utility (i.e. what Urbit addresses can be used for) has largely been addressed in the previous installation of this series. Briefly, our view is that stars and galaxies are useful for more than simply selling their subsidiary address space. Their use value encompasses their unique functionality on the network and the business models that functionality represents.
5252
5353As a refresher, this use value falls in five broad categories.
54−1. Authentication technology is broadly useful. All Urbit identities — planets, stars, and galaxies — can be used for authenticating one’s Urbit computer, and authentication in general. Urbit ID was designed for Urbit-specific authentication, but a lot of general functionality can be built on top of this infrastructure. Urbit ID is simple, extensible, and easy to use, making PGP style claims much more useful than they are today.
55−2. Network infrastructure services represent a revenue stream. Stars and galaxies specifically should be understood primarily as revenue-generating network infrastructure. We anticipate that stars and galaxies will eventually charge for infrastructure related services like hosting and packet routing, and will distinguish themselves on quality and service.
56−3. Stars and galaxies are well positioned to offer additional services. Because of their role as high level network nodes, stars and galaxies are uniquely positioned to offer additional services including content delivery networks (CDNs), Bitcoin and other blockchain-related nodes, 0x relays, Tor exit nodes, etc.
54+1. Authentication technology is broadly useful. All Urbit identities — planets, stars, and galaxies — can be used for authenticating one’s Urbit computer, and for authentication in general. Urbit ID was designed for Urbit-specific authentication, but a lot of general functionality can be built on top of this infrastructure. Urbit ID is simple, extensible, and easy to use, making PGP style claims much more useful than they are today.
55+2. Network infrastructure services represent a revenue stream. Stars and galaxies specifically should be understood primarily as revenue-generating network infrastructure. We anticipate that stars and galaxies will eventually charge for infrastructure related services, like hosting and packet routing, and will distinguish themselves on quality and service.
56+3. Stars and galaxies are well positioned to offer additional services. Because of their role as high level network nodes, stars and galaxies are uniquely positioned to offer additional services, including content delivery networks (CDNs), Bitcoin and other blockchain-related nodes, 0x relays, and Tor exit nodes.
57574. Schelling points have value. Because stars and galaxies hold a certain authority on the network (by dint of their relationship to their subsidiary nodes), they act as [Schelling points](https://nav.al/schelling-point), or default hubs, for various activities that will arise as the network grows. Already various groups and communities are beginning to collect around stars. This gravity has value and will eventually be priced.
58−5. Voting has value. Galaxies exclusively hold a vote on the network. This voting right can be separated from the galaxy itself and transferred, and we anticipate this will happen eventually. The value of this right has not yet been priced into the market, though as Urbit adoption grows, the value of a vote will emerge and increase.
58+5. Voting has value. Galaxies exclusively hold a vote on the network. This voting right can be separated from the galaxy itself and transferred, and we anticipate that this will happen eventually. The value of this right has not yet been priced into the market, though as Urbit adoption grows, the value of a vote will emerge and increase.
5959
6060Utility is only one component of a value calculation. To further develop the inquiry into value, let’s move on to trading factors.
6161
6262## Trading, volume, and liquidity
63−Urbit IDs are individually represented by non-fungible ERC-721 tokens, and are therefore tradable on the open market by any platform that supports this token standard. Currently there are three known Urbit-exclusive sales platforms, and one generalized ERC-721 trading platform that list Urbit IDs. Aggregate market prices for stars and planets are readily available. Volume is low as no effort has been made to promote the fact of availability, yet the number of [total transactions](https://azimuth.network/stats/events.txt) has increased steadily since the network was launched to Ethereum in 2019, even absent public messaging.
63+Urbit IDs are individually represented by non-fungible ERC-721 tokens, and are therefore tradable on the open market by any platform that supports this token standard. Currently there are three known Urbit-exclusive sales platforms and one generalized ERC-721 trading platform that list Urbit IDs. Aggregate market prices for stars and planets are readily available. Volume is low, as no effort has been made to promote the fact of availability, yet the number of [total transactions](https://azimuth.network/stats/events.txt) has increased steadily since the network was launched to Ethereum in 2019, even absent public messaging.
6464
6565<br>
6666<img class="" src="https://media.urbit.org/site/posts/essays/value-of-address-space-pt2-tps.svg">
@@ -70,7 +70,7 @@ Urbit IDs are individually represented by non-fungible ERC-721 tokens, and are t
7070<img class="" src="https://media.urbit.org/site/posts/essays/value-of-address-space-pt2-tss.svg">
7171<br>
7272
73−Trading non-fungible tokens like Urbit IDs is rather different than trading quasi-fungible tokens like Bitcoin (even setting aside the issue of volume). Each Urbit ID is unique, and so they tend to be purchased by end users for their specific characteristics, rather than generically. As an example, the planet `~parret-barret` sold for about $1,000 at a time when most planets were selling for $10-20, perhaps due to it’s rhyming name. Planets with circular sigils also often sell for significantly above market rate — we’re not entirely sure why this is the case.
73+Trading non-fungible tokens like Urbit IDs is rather different than trading quasi-fungible tokens like Bitcoin (even setting aside the issue of volume). Each Urbit ID is unique, and so they tend to be purchased by end users for their specific characteristics, rather than generically. As an example, the planet `~parret-barret` sold for about $1,000 at a time when most planets were selling for $10-20, perhaps due to its rhyming name. Planets with circular sigils also often sell for significantly above market rate — we’re not entirely sure why this is the case.
7474
7575## Planet Sales
7676
@@ -100,11 +100,11 @@ Trading non-fungible tokens like Urbit IDs is rather different than trading quas
100100<img class="" src="https://media.urbit.org/site/posts/essays/value-of-address-space-pt2d-price-eth.svg">
101101<br>
102102
103−This ID-specific trading pattern is generally appropriate in our view: Urbit ID isn’t designed to be rapidly traded at high volume. Urbit is much more like a house than a fungible good like a currency.
103+This ID-specific trading pattern is generally appropriate in our view: Urbit ID isn’t designed to be rapidly traded at high volume. Urbit is more like a house than a fungible good like a currency.
104104
105−That said, it would be theoretically possible to create a more traditional orderbook for unstarted addresses. Unstarted addresses have different names and sigils, but they’re functionally the same in every other way, so they could be collateralized to a specific token to encourage price discovery. This hasn’t happened, and Tlon has no intention of releasing such functionality, but it’s worth mentioning in a discussion of liquidity.
105+Nevertheless, it would be theoretically possible to create a more traditional orderbook for unstarted addresses. Unstarted addresses have different names and sigils, but they’re functionally the same in every other way, so they could be collateralized to a specific token to encourage price discovery. This hasn’t happened, and Tlon has no intention of releasing such functionality, but it’s worth mentioning in a discussion of liquidity.
106106
107−For the time being, trading of Urbit IDs happens through auctions on specific platforms, and via person-to-person transactions, because each trade is for a _specific_ Urbit ID. Again, Urbit ID is designed in the spirit of property titles rather than currencies, so this makes sense.
107+For the time being trading of Urbit IDs happens through auctions on specific platforms, and via person-to-person transactions, because each trade is for a _specific_ Urbit ID. Again, Urbit ID is designed in the spirit of property titles, rather than currencies, so this makes sense.
108108
109109Strictly speaking, liquidity is a measure of the degree to which a given asset will change in value due to a given transaction. In that sense, Urbit address space is likely fairly illiquid. But liquidity can’t be properly understood without volume. As noted above, the volume of transactions on the network has been steadily increasing since inception, and yet the price has remained fairly constant. This seems to indicate a healthy ratio.
110110
@@ -133,7 +133,7 @@ Digging deeper, Urbit is unusual as a network for the following interrelated rea
1331335. customization and autonomy are nearly limitless; and yet
1341346. the number of possible groups and node connections is essentially unbounded.
135135
136−The upshot is that Urbit can serve as the meta-network for many different kinds of individual networks, each with their own value. Urbit is much more akin to the internet itself, than it is to, say, Facebook. Reed’s and Metcalf’s laws therefore apply to Urbit in some very interesting ways.
136+The upshot is that Urbit can serve as the meta-network for many different kinds of individual networks, each with their own value. Urbit is much more akin to the internet itself than it is to, say, Facebook. Reed’s and Metcalf’s laws therefore apply to Urbit in some very interesting ways.
137137
138138## Network laws
139139Three laws are typically cited to express the value of a network:
@@ -145,21 +145,21 @@ Reed’s law captures the notion that groups vastly increase the density of conn
145145
146146Urbit is a network of networks, and so is best described by Reed’s law.
147147
148−Urbit’s unique approach to groups also helps to resolve two other problems which lead to value loss in many networks. Urbit’s design significantly reduces both network pollution (i.e. irrelevant feeds) and network congestion (clogged bandwidth), as individual clusters can easily separate their activity from other networks on the platform.
148+Urbit’s unique approach to groups also helps resolve two other problems which lead to value loss in many networks: Urbit’s design significantly reduces both network pollution (i.e. irrelevant feeds) and network congestion (clogged bandwidth), as individual clusters can easily separate their activity from other networks on the platform.
149149
150150## Urbit is a platform network
151−It’s important to note that Urbit has utility absent the network, as Urbit OS is in fact a Turing-complete virtual computer. Though the system is designed around communities, individuals can use Urbit to create personal documents, archive data, and write code for the system. This is how Urbit’s total network size can be relatively small and still provide value for individual users and clusters. That said, Urbit already has users, and for many of these, critical mass — the point at which the network is more valuable than its cost — has already been reached. In addition, as each of these individual clusters writes code for the platform, positive indirect network effects increase (more utility arises from these individual development efforts).
151+It’s important to note that Urbit has utility absent the network, as Urbit OS is in fact a Turing-complete virtual computer. Though the system is designed around communities, individuals can use Urbit to create personal documents, archive data, and write code for the system. This is how Urbit’s total network size can be relatively small and still provide value for individual users and clusters. However, Urbit already has users, and for many of these, critical mass — the point at which the network is more valuable than its cost — has already been reached. In addition, as each of these individual clusters writes code for the platform, positive indirect network effects increase (more utility arises from these individual development efforts).
152152
153153This combination of effects makes Urbit significantly more robust than non-platform networks which can’t rely on this intrinsic utility.
154154
155−That said, we do not intend to ever rely simply on this individuated computing utility alone. Urbit is for communities, and Tlon’s primary focus is to increase adoption of the system as a whole, including the network. To this end, we’re working steadily to increase functionality of the system, improve messaging, and actively onboard communities.
155+That said, we do not intend to ever rely simply on this individuated computing utility alone. Urbit is for communities, and Tlon’s primary focus is to increase adoption of the system as a whole, including the network. To this end we’re working steadily to increase functionality of the system, improve messaging, and actively onboard communities.
156156
157157## Network identity
158158Another distinguishing characteristic of Urbit is that identities are pseudonymous but can easily be de-pseudonymized by users at will (though not by outside authorities). This flexibility combined with identity reputation accrual means people can behave in different ways depending on the social context. People can communicate privately, publicly, or in small groups, and they can do it anonymously or otherwise. This natural and extensible approach to social engagement results in personal comfort and drives adoption.
159159
160160## Extensibility
161−Because Urbit is vastly customizable, and because it’s a network platform for other networks, it can and should grow in ways we can’t predict. Each new use case that develops creates a new market, new communities, and new hubs. Each of these contributes to the diversity of the overall ecosystem, making it vastly more interesting and varied than anything we might create alone. We expect this extensibility to contribute greatly to retention as users are able to build the world they want to inhabit.
161+Because Urbit is vastly customizable, and because it’s a network platform for other networks, it can and should grow in ways we can’t predict. Each new use case that develops creates a new market, new communities, and new hubs. Each of these contributes to the diversity of the overall ecosystem, making it vastly more interesting and diverse than anything we might create alone. We expect this extensibility to contribute greatly to retention as users are able to build the world they want to inhabit.
162162
163163Urbit is a deeply extensible platform for communities: it’s a network of networks. Users join to be part of communities, then launch communities of their own, further driving growth and engagement in a virtuous cycle.
164164
165−In the next installment of this series, we’ll describe lockups and availability in more detail and will share the data we’ve managed to compile about address space distribution.
165+In the next installment of this series, we’ll describe lockups and availability in more detail and will share the data we’ve managed to compile about address space distribution.