How do Web3-based network nations achieve a community vision from theory to practice?

Author: Jessy, Chain Catcher

Is it possible for a country to be established not based on a fixed territory and ethnicity, not through revolution, referendum, or war, but rather on shared values, visions, and goals of its people?

In human history, the practice of establishing such "countries" is not uncommon; they are referred to as "utopian" experiments and, in modern times, as "micro-nations." People gather together out of dissatisfaction with the real world, united by a common vision, to experiment with creating a better society.

The climax of such experiments occurred in the 1840s to 1890s, when various community-based "startups" sprang up like mushrooms after rain, coinciding with economic downturns. Historically, widespread dissatisfaction with industrial society led people to turn to communes, utopias, and various means of spiritual settlement. For example, people sought to build sustainable living through eco-villages and "return to the land" lifestyles, strengthening their connection with nature; or they turned to communities based on spiritual or idealistic visions, attempting to renew humanity and explore blueprints for a new society.

Economic depression, a slide into totalitarianism, and anti-globalization characterize the current state of the world, and people are exploring ways to change existing political systems. New technologies can bring about transformations in organizational methods and production relationships, and blockchain enthusiasts place their hopes for revolution on this technology.

Such experiments began with DAOs, where people hope to establish a decentralized and more democratic organization through changes in production relationships. What is the further development of DAOs? Perhaps the definition of a network state using blockchain technology in the new book "The Network State" by crypto thinker Balaji Srinivasan represents the next step in this evolution: "It is a highly cohesive online community with the ability for collective action, capable of crowdfunding globally and ultimately gaining diplomatic recognition from existing states."

From DAO to Network State

A network state may not be a country with a physical entity; people connect through blockchain technology, while past nations were constructed through legal and political systems. In contrast, a network state establishes rules through smart contracts. Compared to DAOs, it is akin to the difference between community organizations and nations in real society; the political aspirations of a network state are higher, ultimately hoping to become a political entity recognized by other countries.

In April 2021, Balaji wrote an article titled "How to Create a New Country in the 21st Century."

His view is that this new world, the "network state," will provide millions of people with a new social and financial starting point, freeing them from the historical constraints presented by the current world. According to Balaji, a network state is a digital nation that initially launches as an online community and then materializes on land when the time is right.

In July of this year, Vitalik shared his understanding of the ideas about network states described in Balaji's new book. He believes that, politically, the network state recognized by Balaji differs from the "micro-nation" experiments conducted by past liberals. Most liberals view attempts at micro-nations as akin to "Zionism without Judaism," while the network state he endorses emphasizes the importance of social norms for cohesion, with members having a religious-like attachment to the network state, representing shared values.

How does blockchain technology help in the establishment of network states? From a technical perspective: issuing tokens, creating CityDAO-style citizen NFTs, combining blockchain with zero-knowledge cryptography for secure privacy-protecting voting, etc. Blockchain acts like the Lego blocks of crypto finance and governance: they are very effective tools for implementing transparent protocols to manage public resources, assets, and incentives.

On a deeper level, blockchain and network states share a common attribute: they both attempt to "create a new cornerstone." Companies are not cornerstones: if disputes arise within a company, they are ultimately resolved by the national court system. On the other hand, blockchain and network states are trying to become new cornerstones, which does not mean needing some absolute ideal of sovereignty where "no one can catch me," something that perhaps only about five countries with highly self-sufficient national economies or nuclear weapons can truly achieve. Individual blockchain participants are certainly susceptible to state regulation. However, blockchain is the only infrastructure system that at least attempts to resolve final disputes at a non-state level (through on-chain smart contract logic or through forking freedom). This makes them an ideal infrastructure for network states.

The concept of a network state has also been practiced in the internet age, such as the Free Republic of Liberland, the Vanuatu Empire, and the Republic of Polville. Network states built on blockchain technology inherit the spirit of decentralization. The political systems of network states established during the web 2.0 era can be categorized into: monarchy, constitutional monarchy, republics, etc. Network states under Web 3.0 have even greater ambitions, hoping that the political entities they build can gain recognition from real states.

Related Reading: "Vitalik Buterin: My Views on Network States"

Practical Case: Afropolitan and Nation3DAO

At this stage, most projects related to network states are still in the early ideal construction phase. They generally have an ideal vision. The project Afropolitan, invested in by Balaji himself, is a typical example that highly aligns with the concept of a "network state" in social and political ideals. The project's vision is to create a network state where all Africans can live prosperous lives. They aim to provide the best opportunities in art, finance, technology, health, energy, sports, and media for local residents and expatriates in Africa.

Afropolitan has now secured $2.1 million in seed funding. Its predecessor was merely a company providing various opportunities for Africans and African expatriates, such as events and travel.

Afropolitan divides the realization of their vision into four phases. The first phase involves continuing its existing media and events, conveying its vision through activities and podcasts. After that, Afropolitan plans to mint 10,000 NFT passports to activate the DAO and grant its members access to events and physical spaces.

The second phase will see Afropolitan launch a super app that consolidates all utilities within its ecosystem under one roof. Members will be able to make cross-border remittances, raise venture capital, merge their companies, apply for e-residency, and access "learn-to-earn" programs.

The third phase prepares for the transition from digital to virtual. The goal is to establish Afropolitan's legitimacy through national capabilities. Afropolitan will create a network of seed institutions to manage its network, including affiliated funds, organizations, and an evolving internal economy.

In the fourth phase, Afropolitan will leverage the networks, capital, and legitimacy accumulated over the past three phases to negotiate with partner governments for land. This land will resemble a "Chinatown/African city," where Afropolitan members can establish a physical presence and create economic opportunities. At this stage, the network state will serve as "digital capital" managing our physical areas. Ultimately, Afropolitan will establish a broader network of charter cities, similar to Singapore and Hong Kong.

Although these four phases are outlined, Afropolitan's future development path still needs exploration, and this new project's development stage is still in the first phase. However, I believe it maintains the interests of a community in the real world, possessing a stronger vitality compared to other network state projects.

The earlier established Nation3DAO is a prominent project in the practice of the "network state" concept. It was founded in April this year, and its token NATION once saw a surge of up to 2399%. Compared to Afropolitan, Nation3DAO has already built an economic model and established some rules.

Related Reading: "Nation3 DAO Launches 'Cloud Nation' Experiment"

Users staking the issued token $NATION can receive $veNATION. The $veNATION token is non-transferable and can only be obtained by staking $NATION for a period ranging from 1 week to 4 years; as the staking time increases, the amount of $veNATION will decrease. To become a citizen of Nation3, one must hold at least 2 $veNATION to claim a Genesis NFT passport. The NFT passport is non-transferable and can only be minted by those holding the required amount of $veNATION. If $veNATION holders fail to update their locked tokens $NATION in real-time and allow their $veNATION balance to decrease, this will be seen as a lack of long-term commitment to the project, and the NFT passport will be burned.

This is a clever design; citizenship in Nation3 has a time limit, meaning that to become a permanent citizen, one must continuously purchase the tokens issued by it.

The project's declaration is quite grand: "Traditional nation-states with centralized power possess greater strength; they can control the media, incite public sentiment, spread hatred, or provoke endless wars, plunging nations into dark ages and making citizens victims. Such a state system needs to be broken; we need new tools to build communities, understand laws to protect citizens from violence, and we need new governance models to fund public goods; the emergence of Bitcoin, Ethereum, and DAOs can support the realization of this idea." However, it does not seem to genuinely uphold the interests of a true community, appearing to attract attention with a vague concept while designing a sophisticated economic model that encourages people to continuously spend money on Nation3.

Compared to these projects explicitly labeled as "network states," some DAO projects have previously conducted similar experiments. CityDAO, a blockchain city project that bought 40 acres of land in the United States. Theoretically, holding a citizen NFT grants ownership within the CityDAO community, allowing for land NFT issuance, settlement on the land, and voting on community decisions; while also bearing community responsibilities such as land management, conflict resolution, and taxation. However, the basic conditions of the purchased land are not ideal, and discussions on how to build the community are ongoing.

Whether network states can succeed may depend on having a firm commitment to uphold the interests of a specific group from the outset, representing a shared vision of a certain type of people with common needs in the real world, thus forming a community. This should be the spiritual cornerstone of network states, the "Dao" part. The application of blockchain technology, and how to specifically construct this "state," is the "Shu" part, testing the understanding of technology and the consensus reached by the founders of the "state" and its citizens to co-create together.