The Network State: Crypto’s End Game
September 18, 2024

The Network State: Crypto’s End Game


TLDR

  • As Nation States falter, Network States – aligned onchain communities with aspirations of statehood – will emerge as the next global political paradigm.
  • Network States offer a path to crypto’s next wave of adoption by integrating onchain infrastructure into the parallel institutions supplanting the global system’s core functions.
  • Praxis is building the world’s first Network State: an onchain community crowdfunding projects aimed at realizing our vision for the future – starting with a new city.

FROM NATION STATES TO NETWORK STATES

In this world, the primary contested space is not land, but the mind. All follows from the mind – the minds of the masses and the minds of those who control strategic assets. Today, we are at an inflection point where power is increasingly determined by the ability to capture mindshare of globally dispersed communities. Traditional Nation States, built on physical territory and top-down governance, are no longer aligned with how people form identities and organize their lives.

Historically, paradigm shifts in political legitimacy have always been preceded by advances in communication technology. Monarchies ruled Earth until a new communications technology escalated the war over the mental stronghold of political legitimacy. The movable-type printing press massively reduced the cost of printing books, pamphlets, and newspapers. Now new ideas could spread cheaply and quickly and compete with widespread oral traditions substantiating the legitimacy of kings.

Liberal ideals captured the imagination of the masses and the castle of legitimacy. Political revolution and the acquisition of territory naturally followed. Over the coming centuries, Nation States would replace monarchies as the new ubiquitous political form, driven by the formation of imagined communities based on new notions of political legitimacy facilitated by cheaper communication.

Today, technology turns the wheel of history once more. The internet unlocked free and instantaneous communication with everyone on earth: the mind is now accessible by all. The internet drove an explosion of ideas, and people began organizing around them. First around niche interests like video games and bodybuilding, later around shared values and shared visions for the future. From the Arab Spring to the Trump campaign, people use social networks to change minds and structures of power.

A new element is supercharging this trend: the permissionless transfer of property. Crypto levels-up internet communities, enabling them to fund and build permanent institutions with long term goals. The monopoly on the formation of communities – up to and including nations – is gone. New regimes do not have to begin with political revolution. They can start with a tweet, and exist above, below, and within nation states.

On July 4th, 2022, Balaji Srinivasan released The Network State, crystallizing a general model for the onchain political paradigm to succeed nation states. ‘Network State’ is defined as, “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.”

Early Network States won’t require full diplomatic recognition to thrive. Instead, they will create real value through their crypto-native economic infrastructure, earning respect and legitimacy by solving problems that traditional Nation States struggle to address – whether in financial access, public services, property rights, or governance innovation. This incremental approach is aligned with the historical evolution of crypto itself: from a fringe technology to an asset class respected by institutional investors.

The modern global system, once the greatest power in the history of man, has become a brittle, jerry-rigged contraption incapable of carrying out the most basic functions. Against a rising tide of crises, Nation States’s managers are scrambling to hold their system together. As these governing institutions continue to degrade, people will come to realize that no one is truly on their side, that they are abandoned by the very systems meant to serve them. In this moment of recognition, they will understand that their survival and prosperity depend not on existing structures, but on banding together with others in an increasingly fractured world. Simultaneously, the internet's tools for alignment, coordination, and funding are only getting more powerful. As Nation States falter, Network States become inevitable.

NETWORK STATES WILL DRIVE CRYPTO ADOPTION

Bitcoin began as a revolutionary technology designed to circumvent government tyranny. 16 years later, we’ve built an entire parallel financial system1.

In “The Casino on Mars,” Matt Huang wrote about this phenomenon. “Today’s casino-like speculation is part of a bootstrapping process. Much like the gold rush of 1849 transformed San Francisco from a quaint village into a major port (and ultimately the heart of tech innovation), today’s speculative frenzy in crypto is attracting the settlers and catalyzing the infrastructure necessary to turn a barren planet into a thriving crypto civilization.”

The Casino’s speculative frenzy did catalyze infrastructure, but crypto is still largely circular and disconnected from real assets. Speculation alone has capped growth potential; the next 10x will not come from 100 million new speculators. The next wave of crypto adoption, on the path to crypto civilization, requires crypto infrastructure’s integration into the core functions of society.

Network States – a crypto-native, full-stack reimplementation of society – provide the path. People seek alignment online; Network States are leveled-up online communities, with the agency to issue currency, manage property, and form institutions to represent their political interests and drive towards their vision for the future. Large aligned communities in Network States will use onchain infrastructure2 to power their payments, contracts, identity, communications, and physical infrastructure3.

Network States will not only tokenize existing assets but also natively build entire economies onchain. All functional societies use asset registries to track property ownership. By establishing onchain asset registries, Network States can seamlessly track ownership of real estate, businesses, and other high-value assets. These registries will be integrated with crypto financial infrastructure, allowing for the creation of markets where property can be bought, sold, lent, and borrowed – entirely onchain, bypassing traditional systems. This is already being signaled by institutions like BlackRock4, which is moving to tokenize real assets, showing appetite for the regulatory risk associated with crypto-native financing of large real projects. Network States will drive the next wave of crypto adoption by unlocking trillions in real-world capital and bringing it onchain.

As local communities dissolve and Nation States stumble, Network States will ascend. Soon, Network States will be your most important group affiliation, passport, and community. Network States will represent Citizens controlling trillions dollars of assets, represented on their native asset registries. We’ll watch the flippening of Network States over Nation States in real time. Network States will coalesce neighborhoods and build cities. The next global superpower will be a Network State. The next America will be onchain.

PRAXIS: BUILDING THE FIRST NETWORK STATE

Praxis is building the world’s first Network State: an on-chain community with a national consciousness, developing a shared way of life, and crowdfunding projects aimed at realizing our vision for the future – starting with a new city.

The project started in 2020 with no existing market, driven by conviction in the insight that crypto enables the permissionless coordination and incentivization of large, aligned communities to achieve more than previously imagined. With the backdrop of accelerating institutional decay, we built Galt’s Gulch online, prefiguring its materialization on Earth.

Today, we are 13k Praxians living in over 80 countries and 400 cities, and have founded companies worth over $400B. Praxis assembled a coalition of financial backers including Paradigm, Bedrock, Apollo Projects (Max and Sam Altman), Robot Ventures, Fred Ehrsam, Joe Lonsdale, Balaji Srinivasan, Shervin Pishevar, and more.

Our community is building a real society online using off-the-shelf tech. Citizens use Discord, Signal, and Telegram to meet, collaborate, hire, fundraise, live with, and (in one case so far) get married to each other. They have climbed the highest peaks with the Praxis flag, convened work out groups and reading groups, and hundreds of meetups. Citizens created a magazine, movies, and Praxis co-living houses.

A shared way of life emerged, drawing on the wisdom of great civilizations, to pursue heroism and exploration, sun and steel. Our collective purpose is to restore Western Civilization and pursue our ultimate destiny of life among the stars.

In partnership with experienced new city developers and former heads of state, the project has developed a portfolio of site and special zone opportunities negotiated with land owners and governments. No information has been publicly shared on site details; doing so will increase the community’s cost basis on land, and potentially derail political conversations that our government counterparties want to announce themselves. Finally, the team has collaborated with government-led new city projects and infrastructure funds to develop crypto-native financing mechanisms specifically for RWAs including city-scale developments.

With this in place, we are imminently releasing updates on three projects:

Network State Platform:
Learning from the ways our Citizens use existing tools, we are building infrastructure to improve their social and economic coordination towards our collective aims. This starts with an identity system building on Steel Visas. An underlying asset registry will immediately enable onchain census dashboards, and eventually integrate with financial services.
Pop-Up City:
Successful Network States will build cities as economic and political engines, and to more fully provide for the needs of their Citizens. They are events that bring together large numbers of people in a single location to simulate a city with that community, serving the functions of assessing the viability of locations, and strengthening community bonds. Praxis will soon announce a series of pop-up city events.
City:
We are in the final stage of site selection. Citizens are excited at the prospect of living with the values-aligned community they have built through Praxis, and using the city to accelerate their techno-optimist / Western Civ restorationist vision for the future. Further, the city gives us the opportunity to deeply integrate crypto into Citizens’ lives. It’s possible to put an entire city – its assets and transactions – onchain. In the 17th century Manhattan was bought for $24 worth of trinkets; now the land is worth $3T. Singapore created $2T in land value in just a few decades. Network States will compress these timelines even further.

As Nation States face mounting challenges, Network States offer a pragmatic, technologically superior alternative. By addressing real-world problems and integrating crypto into the fundamental operations of society, Network States will attract capital, talent, and legitimacy. This vision is ambitious, but the biggest opportunities lie at the intersection of technological innovation and societal need. Network States represent the future of crypto adoption – and the future of global organization. Praxis exists to spearhead this mission. Join us on our quest to build the next America.


1 Reflexer, Uniswap, MakerDAO, Polymarket, and Lido.

2 For example, ZK and FHE may find scaled use cases with Network State IDs and payment systems using privacy pools.

3 Decentralized physical infrastructure (DePIN) will play an important role in securing the resilience of the infrastructure that supports Network States operations.

4 Securitize partnered with BlackRock on BUIDL, their first tokenized fund on Ethereum.

PRAXIS
PRAXISPRAXIS