In 2022, Balaji Srinivasan, serial entrepreneur and former Chief Technology Officer at Coinbase, published his seminal book entitled “The Network State: How To Start a New Country”, which presents a revolutionary idea in the realm of governance. The book challenges the traditional notions of nation-states, proposing a future where online communities can crowdfund territory and transform into sovereign entities – so called Network States.
As Balaji condenses the idea in one sentence, “a network state is a highly aligned online community with a capacity for collective action that crowdfunds territory around the world and eventually gains diplomatic recognition from pre-existing states”.
At its core, the Network State is a digital-first entity. Unlike traditional states defined by geographical boundaries, a Network State is formed on the basis of shared ideas, interests, and goals, primarily cultivated through online platforms. It’s a community that starts virtually but has the potential to acquire physical characteristics, such as land and governance structures. These states are not merely theoretical constructs; they represent a practical reimagining of how communities can organize and govern themselves in the digital age. In practical terms, this would require an online community to form a DAO
DAO , or a decentralized autonomous organisation (sometimes referred to as a chat-group with a shared bank account) crowdfund enough capital to be able to set up a physical presence and from there work towards becoming a nation state pursuing sovereign recognition. Everyone can agree that it sounds simpler than the actual endeavour, but in today’s chaotic world – with geopolitical clashes, wars and an increasing digital economy – it sounds more realistic than ever before.
Without going too much into the thought-provoking ideas of the book, in this article I wanted to highlight some of the projects that are working towards that vision, albeit in very different ways, and speak about some of the developments of this emerging ecosystem and potential new digital asset class, as have been discussed as part of the inaugural Network State Conference in October.
There are now various companies and individuals working towards the idea of a network state, with initiatives ranging from building a decentralized court system like the team at Nation3 is envisioning to network-gated communities organising events from supper clubs to annual festivals, as the DAO FriendsWithBenefits has been pursuing, as well as Vitalik Buterin’s “pop-up-village”, Zuzalu, focused on bringing together a like-minded community across countries.
From Idea to Reality
These initiatives are not just theorizing but actively working towards realizing such digital-first sovereign communities – some of the leading network state initiatives, include:
1. Praxis: Praxis is looking to build a new city on the Mediterranean coast, governed and built by the community. The team has already gained significant traction with over 12,000 community members, significant funding from the likes of Winklevoss Capital, Benchmark Ventures, Paradigm and others, and hired a leading team including a former G7 prime minister to support negotiations and city planning. The aim is to have the first citizens move to the new city of Praxis this decade.
2. Zuzalu: A project incubated by Ethereum
ETH co-founder Vitalik Buterin, which created a pop-up village to bring together leading innovators in crypto, AI, governance, decentralized science and culture to co-work, breakdown siloes and socialise. Zuzalu already hosted its first pop-up village in Montenegro and a second instance in Istanbul in 2023 alone.
3. Prospera: Located on Roatán Island in Honduras, Prospera is a special economic zone that experiments with autonomous governance. It offers a legal and regulatory environment distinct from the Honduran government, aiming to attract businesses and residents. Prospera is an example of how network state principles can be applied within the jurisdiction of a traditional state.
4. Nation3: Led by Aragon
ANT founder Luise Cuende, Nation3 aims to create a new nation state on the cloud, aimed at launching an online-first, zero-tax nation with its own internet-native jurisdiction and solarpunk society powered by Web3 technology. The project allows individuals to acquire “citizenship” and a digital passport by committing Ether to the nation’s treasury and staking the projects native $Nation token.
5. AnotherNation: The mission of AnotherNation is to bring fully fledged network states closer to reality by running a social experiment aimed at proving that governance of physical infrastructure can be scaled through a decentralized community. The idea is to lay the foundation of a network state, by incubating spaces that are created, owned and governed by the community, for the community. The aim for these spaces is to act as a network of global embassies and to provide a platform for Web3 communities to come together to work, socialise and connect, in cities like Dubai, London and Miami, whilst benefitting from the city’s existing infrastructure, removing the need to go greenfield and build new cities in remote locations, which requires significantly more capital, time, and commitment. The project is planning to go live in 2024 with its first embassy.
Building the future of governance
These are some of the proliferating examples that illustrate the varied approaches to realizing the concept of Network States. From blockchain-based governance platforms to special economic zones, each project contributes to the evolving narrative of decentralized, digital-first communities with a physical nexus. While they are at different stages of development and still face unique challenges, their collective efforts signify a growing interest in redefining governance in the digital era. As these initiatives progress, they offer valuable insights into the feasibility and impact of the revolutionary idea behind the Network State.
Disclosure: I am actively researching and investing in Network State initiatives, hold a Nation3 passport & am personally affiliated to AnotherNation.