What Are “Network Effects” in the Context of a Blockchain Ecosystem?

Network effects occur when the value of a product or service increases as more people use it. In a blockchain ecosystem, as more users and developers adopt the token and the underlying platform, the utility and security of the network grow.

For example, a larger user base attracts more applications, which in turn attracts even more users. This virtuous cycle drives exponential growth in the token's demand and value.