If we can create financial and social applications and protocols based on decentralized network technology, technology for better states is already here.
I have long concluded that 95% of modern states, to put it mildly, are not good enough. It turns out there is a whole conference on this topic!
On October 30th, "The Network State" took place in Amsterdam.
After reaching a temporary truce with mushrooms and muffins, the author decided to figure out what's what.
In this article, I'll try to provide a summary of the most vital ideas and projects that are worth noting.
Key concepts in this narrative:
"Digital nomads" are a new, rapidly growing, economically active, globally mobile category of people who feel confined within the framework of traditional states (see Plumia project).
"Charter cities" are jurisdictions of a new type with maximum economic freedom and optimal social organization (see Prospera project).
Investment funds that develop this ecosystem (see Pronomos Capital).
Speaker: Sondre Rasch
His original speech:
Key thoughts:
The internet has abolished the link between economic activity and geographical territories.
State social guarantees are limited geographically. Digital nomads are global. Therefore, the social infrastructure offered by states does not meet the challenges of our time.
What's the solution? To build a sovereign state on the internet. That is, create a model of citizenship that provides the opportunity to live, work, and have social protection globally without being tied to a geographical region.
A significant part of the budget of all modern countries is allocated to the social protection of their population. However, for "digital nomads," this function becomes unavailable or limited.
In 2019, at WebSummit, the founder of this project predicted the rise in the popularity of visas for digital nomads as countries compete to attract economically active and globally mobile populations to their territory. Since then, 80 countries have developed "Nomad Visas."
Plumia is developing a product - a passport that will work similarly to the Schengen Agreement but for countries with "Nomad Visa" regimes. Essentially, one passport for any country with a special visa for digital nomads.
The project founder expects that some functions, previously the prerogative of national states, will shift to a supranational level and be globally accessible through new digital states.
Digital nomads population is steadily increasing every year and is already estimated in the tens of millions. Overall, global digital economic mobility is one of the critical social transformations of our time and our generation. Statistics for the USA:
Metrics:
30,000 paying members
$25 million annual revenue
The project is working on two parallel service streams:
SafetyWing - "Network of Safety" - insurance and healthcare for "digital nomads"
Plumia - Passport - visa-free access to various "Nomad Visa" jurisdictions.
Interestingly, the SafetyWing product is already being utilized by several virtual citizenship and decentralized state projects (such as Prospera).#
Speaker: Patri Friedman
His original speech:
This is a fund that invests in "startup cities." Its founder has worked in this industry since the early 2000s and has many interesting thoughts and projects.
In the early 2000s, the speaker was dissatisfied with his country: the United States did not align with his values, and government services were terrible.
If we look at states as an industry - there's something wrong with it: the largest "company" incurs losses every year (budget deficit in the US), and the worst "companies" simply kill millions of their people.
This seems strange: most industries are constantly innovating and improving, but most states, at best, stay put or even degrade.
Most people view states in terms of their "values" and how they align with their personal ethical or cultural preferences. The speaker suggests looking from the angle of a commercial industry. What will we see from this perspective?:
Companies are enormous. The business rule is - the larger the company, the worse it is with adopting innovation.
Entry barrier to entry for competitors in this sector. It's not just huge - it's undefined. There is no known process for creating new states.
The cost of "changing providers" (moving to another country) is high. It decreases over the years but remains very high.
Thus, we conclude that the "state industry" is a cartel of huge companies, each of which has a local monopoly and a high degree of "customer retention" on its "platform." Naturally, there will be poor service and no innovation! This is not a philosophical problem but a structural one.
The solution is obvious: define the processes of creating new jurisdictions and forms of citizenship and create competition in the "state industry" environment. In this light, the task looks understandable and solvable.
Projects mentioned by the speaker:
Seastanding - in the early 2000s - a network of ships - as floating states that outsource the jurisdiction of a specific state on board.
Seasteading Institute is a non-governmental organization that studies the creation of jurisdictions (Peter Thiel).
In 2004, Dubai copied English laws and invited judges from England to launch a progressive legal system there. They wanted to create a global financial center and understood that the local legal system was unsuitable.
In 2009, Paul Romer published the idea of "charter cities," which developed the concept of what was done in Dubai towards "outsourcing" rather than a "hard fork." You may want to check out Paul Romer's speeches on this topic:
Paul Romer: Why the world needs charter cities - YouTube
Paul Romer: The world's first charter city? - YouTube
An initiative group in Honduras's government saw this idea's potential. It launched the first government program of "charter cities" that could operate as public-private partnerships with a company working with Honduras as the recipient country of such a city. The speaker learned about this in 2011, but it was a project without a budget, and it was clear that its implementation would take many years.
Honduras changed the constitution to make such a project possible (!!!).
In 2017, Prospera implemented such a project in Honduras based on a revised regulatory framework since 2011 that allowed its implementation.
In addition to Prospera and Praxis, the fund invests in similar projects in Africa in several countries and free economic zones. As well as on the islands of Palau, where it is possible to create an offshore entity based on the legislative framework of Singapore, Taiwan, or Delaware, USA.
There is a solid lineup of personalities who support this fund and the idea itself:
Speaker: Erick Brimen
His original speech:
Prospera is a governance platform for parallel communities. Its mission is to build cities with an optimal regulatory and legal environment for free enterprise and the collective prosperity of citizen communities.
Their prototype settlement is located on the island of Roatan in the Caribbean basin (Roatan, St. John's Bay City). They organize the regulatory and legal environment for their settlements by signing partnership agreements with sovereign nations in whose territory they are located. This involves establishing special economic zones on mutually beneficial terms with the respective country where the settlement is situated.
The pilot project on Roatan has passed through all these stages and is already receiving its first waves of settlers. Interestingly, the project's founder himself lives there with his family, so the "skin in the game" test is passed in this case.
Their next goal is to reach a critical mass of settlers for the project to become operationally profitable. This is built on legal, regulatory, tax, judicial, infrastructural, and security components. The Prospera platform fulfills all these functions, essentially serving as a government-as-a-service.
If this settlement prototype on Roatan proves its effectiveness and viability, they plan to expand the network of similar settlements to other countries.
Real KPIs at the moment include:
$100+ million in investments
1469 residents/e-residents
1100 acres of land
163 registered companies
4000+ jobs created
The settlement pitch, what is there, and what is happening:
I have outlined Plumia, Prospera, and Pronomos as key projects based on my subjective opinion, but there is also a general ecosystem landscape map:
Here are summaries of a few more projects I took the time to write about:
Speaker: Zach Milburn
His original speech:
They are building a global coliving ecosystem comprising numerous standardized and optimized settlements scattered worldwide. Members of this community will have the opportunity to live and work from any location within this network.
The membership model is under development, but one of the options involves investing in constructing such settlements.
The Node: The "housing unit" - a basic block for creating settlements within this concept.
The first coworking/coliving of this kind is in the USA (Raleigh, USA).
The second settlement is under construction in the Caribbean, on the island of Roatan. They are building it jointly with the Prospera project.
Speaker: Shervin Pishevar
His original speech:
This project resembles Prospera in some aspects, but I have a feeling they might lean towards digital feudalism since the project is based on the fact that wealthy wallets from the US bought an island that previously belonged to Escobar and turned it into their sandbox.
I may be biased in this particular case, but I believe that digital feudalism will materialize in some form. This should be considered when researching network state concepts and projects.
Speaker: Zach Andersen
His original speech:
As an expert in building network effects within community organizations and project teams, Zach launched the Coordinape platform. Essentially, the platform addresses three tasks for organizing remote work within the P2P economy:
Understanding context - who is working on what and each team member's contribution
Task setting and project organization
Rewarding participants in the work process
The Coordinape project began within Yearn Finance (!) since the collective consisted of numerous anonymous, remote specialists/teams. It posed the challenge of effectively organizing work, feedback, etc. Many other (known and successful) DAOs gradually started using this approach to manage project work.
The organization's participants in the work process are divided into subsets/groups based on projects and teams.
Tokenized Project Economy:
Task Completion Feed: Members of specific groups post their accomplishments to ensure everyone understands the context (who is working on what).
Gratitude Points: Group members allocate gratitude points to each other (each has a limited number of such points), giving an idea of each participant's contribution to the work process.
Budget Allocation: The project's payroll budget is automatically distributed based on the number of gratitude points a participant receives from other team members.
On-chain Work Profile: Each participant's activity and contribution within this platform are stored as an on-chain profile, which serves as a more advanced version of a LinkedIn profile.
Speaker: Vitalik Buterin
His original speech: this, for some reason, is missing from the conference recording. So, here's the link to an alternative video about Zuzalu:
Vitalik Buterin Discusses The 2-Month Zuzalu Experiment - YouTube
The gist:
Two hundred crypto enthusiasts lived together and hung out in Montenegro for two months. The next gathering is planned in Prospera in January-February 2024."
The fact that my fantasies about alternatives to classical nation-states turned out to be not entirely detached from reality has greatly inspired me. It appears that people contemplate this topic, organize conferences, and even have projects with working prototypes.
My to-do list resulting from this conference:
Monitor progress in this field and attend "The Network State" conference annually
Take a vacation in Roatan
Explore the idea of becoming an e-resident in Prospera
At the conference, there were streams dedicated to biotech, decentralized media, and overall macroeconomic instability.
For those interested, here is the full recording of the online broadcast (7 hours):
Great Book by Balajis: