The "Network State" project Praxis raises $525 million, and the blockchain version of utopia still faces numerous challenges

Author: Jessy, Golden Finance

On October 15, the project Praxis, claiming to be the world's first "network state," announced a financing of $525 million.

Of the $525 million in funding, $500 million comes from GEM Digital, while the remaining $25 million comes from Arch Lending. However, this amount has not all been received; the project needs to transfer some powers and achieve goals at each stage in the future to obtain the full amount.

The Praxis project was founded in 2020, at a time when the concept of the metaverse was booming. Praxis, going against the trend, aims to establish a "nation" or "city" in the real world through the concept of a network state. Will such a utopian practice succeed?

A New Type of Technology Talent Economic Zone

Praxis is starting from scratch to build a city that promotes technological and social progress.

Currently, the project has reached the stage of site selection for the city, with the team exploring potential locations in Latin America and the Mediterranean region, expecting to finalize a choice by 2025. The initial phase of the project covers approximately 1,000 acres and plans to accommodate around 10,000 residents.

Founder Dryden Brow envisions this city not only as a place of technological innovation but also as a core value of creativity and courage.

Currently, Praxis has established an online community of 14,000 people. According to Praxis's official website, anyone can apply to become an initial member of the Praxis project (i.e., Nomad) by filling out an application to join its online community. Currently, its Discord community has about 11,000 members. To become a Praxis Steel Visa Citizenship, one must fill out an application form and pass the project's screening, which generally assesses whether one believes in technological accelerationism, possesses courage and perseverance, and can make practical contributions to the project, among other criteria. According to the project, there are currently about a thousand Steel Visa Citizens. Becoming a Steel Visa Citizen allows participation in more specific aspects of the project and will also earn project points as a reward for contributions.

Praxis aims not only to build a cryptocurrency-friendly city but also to promote the development of various new technologies, such as artificial intelligence and biotechnology.

According to the official website, Praxis has reached collaborations with various emerging technology startups. For instance, it has partnered with the Web3 development community uperteam on Solana. The AI project ShogAI will establish its headquarters in the future city of Praxis. The startup Cryopets, focused on addressing the denial of death through longevity technology, will set up its first cryogenic facility in the future city of Praxis. The neurotechnology company Prophetic Inc. plans to establish its largest Qualia factory in the Praxis city.

In its official announcements, Praxis often compares its vision to the construction of a new type of technology talent economic zone. In the aforementioned collaborations, Praxis has stated that it can provide technical talent to these projects and assist in recruitment. Praxis believes in technological optimism and expects to use new technologies as a foundation for technological and social transformation, aiming to build a better human society.

Success Highly Dependent on the Listing of Project Tokens

In the latest disclosed financing of $525 million, $500 million comes from GEM Digital. According to The Wall Street Journal, obtaining this investment is conditional; Praxis must provide GEM with cryptocurrency representing ownership of the project's real estate development and also needs to list these tokens on an exchange.

According to Praxis's official disclosures, the project has launched a points reward system called Praxis Credits (PRAX), which measures participants' contributions to the development of Praxis. People can earn PRAX by providing Commits, which are specific actions that help the development of Praxis. In other words, this is essentially an incentive mechanism for community members, and according to the development practices of blockchain projects, these points may be redeemable for project tokens in the future.

Additionally, the investment funds will be disbursed in phases, with the release stages depending on the progress of the Praxis project. These stages include obtaining local government permits, purchasing land, marking land ownership, initiating construction, and attracting residents to the city.

The concept of a "network state" originates from the crypto thinker Balaji Srinivasan, embodying people's imagination for a better society today. According to Balaji's description, a network state is a digital nation that initially launches as an online community and then materializes on land when the time is right.

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

Currently, most network state projects are still in the early ideal construction phase. For example, the cryptocurrency-driven smart city project established by rapper Akon in Senegal in 2018 has only built a few buildings. The project launched in 2021, aiming to establish a dedicated service project for crypto industry professionals on an island near Vanuatu, has also seen no significant progress.

The real-world implementation of network states faces many issues that need to be resolved.

Taking Praxis as an example, we can see from its current financing amount and cash-out requirements that the project's success largely depends on the successful listing of its tokens. The project is overly reliant on crypto finance, which itself carries high risks and uncertainties.

When it comes to the actual implementation, finding a piece of land to "establish a nation" faces significant political resistance, as it needs to find support from a sovereign nation that is open to cryptocurrency, leaving very few options. Once the land is selected and construction begins, how will the tokenization of large-scale real estate be achieved? And how should the city and its people be organized according to what rules? Each of these specific implementation issues will pose enormous challenges.

In summary, whether Praxis can turn its vision into reality remains to be seen, but if successful, it may provide a model for future cities and offer a template for addressing some of the issues of our time.