Definition ∞ An ecosystem growth flywheel describes a self-reinforcing mechanism where increased participation in a digital asset ecosystem leads to further growth and utility. For instance, more users attract more developers, which in turn creates more applications, thereby drawing in even more users. This positive feedback loop accelerates the expansion and value creation within a decentralized network. It signifies a sustainable growth model.
Context ∞ Analysts and project teams frequently discuss the ecosystem growth flywheel when evaluating the long-term potential of blockchain platforms. News often covers successful strategies that activate these flywheels, such as developer grants or community incentives. The presence of such a mechanism is a key indicator of a protocol’s health and future prospects in the digital asset space.
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