If everyone has the same laws of physics, then one participant getting a slight edge in a compounding loop doesn't matter.

Yes, they are ahead of the others in a compounding loop… but the others could have the exact same compounding loop.

And if the other worked 10% better than the first competitor, they could surpass them quickly.

What's most strategically important is having your own compounding loop.

This effectively changes it so your laws of physics are different than everyone else's.

They invest a linear amount of effort and get linear returns.

You invest a linear amount of effort and get exponential returns.

Network effects give this kind of personal tweak to the laws of physics.