Web3 and its Role in Network State Governance – Crypto 2023 – CoinDesk

He thought about how, for centuries, the countries of Africa were created by outside forces – often through violence. European powers carved up the continent. Africans rarely had a voice. He thought about how, as he would later put it, “African American brothers and sisters feel like second-class citizens in the U.S.”

But he knew that across the globe Africans had economic muscle. He knew that in 2019, in what’s called the “Year of Return” – which marked 400 years since the first slaves arrived in Jamestown, Virginia – more than one million people from the African diaspora visited Ghana, and drove $2 billion in economic activity.

Emole kept pacing in that hotel room, his partner still asleep. He thought about how, since he was a law student at U.C. Hastings in 2016, he had been organizing events, concerts, and parties that celebrated African culture, launching the group “Afropolitan,” which now has 200,000 informal members. He knew the group had clout. He knew the group had money. They might be scattered across the globe but they had shared values, shared roots and the potential for collective action.

And in that late-night bout of insomnia, Emole even thought about Alexander Hamilton, the Federalist Papers and the birth of the United States. In Federalist Paper #1, Hamilton wrote, “The important question [is] whether societies of men are really capable or not, of establishing good government from reflection and choice, or whether they are forever destined to depend, for their political constitutions, on accident and force.”

It was then that he had the wild idea. What if Africans across the globe could somehow, through collective action, create some kind of network that truly leveraged their power? What if they could act – with their own agency – out of reflection and choice?

Stripped down to the basics, the idea is you start with an online community – one that’s economically prosperous, engaged and has shared values – and then manifest it into the physical world. Srinivasen considers the current nations of the world to be “geographically centralized” but “ideologically disaligned,” and given the entrenched polarizations of the United States, for example, this is a tough point to argue. The network state is the inverse: “ideologically aligned but geographically decentralized.”

Crypto is essential to this. A network state, Srinivasan explains, can use Web3 for governance – such as conducting their census on-chain, and using cryptocurrency wallets to prove their economic viability. And where would the network state actually exist? Srinivasan acknowledges that, realistically, a network state is unlikely to obtain a swath of real-estate that’s large enough for a homeland. But it can begin with distributed clusters of actual in-real-life properties. “It can connect a thousand apartments, a hundred houses and a dozen cul-de-sacs in different cities into a new kind of fractal polity with its capital in the cloud,” Srinivasen writes.

All of this, of course, can sound a bit half-baked. How can a bunch of internet geeks actually make a country? Although it might require fewer geeks than you’d think. “A new state with a population of 1 million to 10 million would actually be comparable to most existing states,” Srinivasan explains. The data bears this out. Of the 193 United Nations-recognized sovereign states, writes Srinivasan, “20% have a population of less than 1 million and 55% have a population of less than 10 million.” The list of these smaller nations includes countries we think of as legitimate and even thriving – Ireland, New Zealand and Singapore.

Srinivasan points out that Facebook has 3 billion users, Twitter has 300 million users and plenty of individual influencers have more than 1 million followers. So “it starts to be not too crazy to imagine we can build a 1 million to 10 million startup society with a genuine sense of national consciousness, an integrated cryptocurrency, and a plan to crowdfund many pieces of territory around the world.”

Perhaps this isn’t “too crazy,” but what will strike some as even crazier is that the network state is no longer just an abstract idea – the network states are already here. Or at least they’re getting started.

On an online dashboard, Srinivasan keeps track of start-up societies that have already begun the journey. As of now there are 26. These include Emole’s Afropolitan; Satoshi Island, which is “Building a crypto community in Vanuatu”; Culdesac, which is “building a car-free neighborhood” in Tempe, Arizona; Kift, which is “building a van-life community”; Cabin, which is “building a decentralized city for creators”; Figment, which is “building a club in the metaverse;” and W3ST, “building a solarpunk society.”

It’s tough to tell what’s legitimate and what’s vaporware. (A common problem in crypto.) And these 26 projects, of course, are not the world’s first “startup societies,” and the lure of a new utopia did not begin with Web3. In 1804, a religious zealot named George Rapp convinced 600 believers to start a new, independent, God-fearing society in Pennsylvania. In the 1830s, the religious “Shakers” – which practiced both celibacy and ecstatic (shaking) dancing – formed 18 bubble communities scattered throughout the United States. Then 30,000 Mormons, in the 1840s, formed their own utopia in Nauvoo, Illinois.

Referring specifically to this new batch of network states, Rushkoff says they’re “pre-colonizing a virtual space – but it’s not a society. It’s closer to a website. It has no topsoil … It’s about pretending you can escape. The utopia is more like [novel] ‘Ready Player One,’ with people in the real world living in stacked trailers.” Ultimately, these remind Rushkoff of when “the Little Rascals would build a little clubhouse and put up a sign saying ‘No Girlz Allowed.’”

Colin O’Donnell, for example, launched the KiftDAO as an experimental mix of digital nomadism, van life, co-living, Web3 and decentralized cities. This began when COVID-19 normalized remote work.“We saw this opportunity for letting people live better lives, frankly,” says O’Donnell. The people in the KiftDAO are not just on a website; they’re living together, cooking together, hiking together.

Roughly two hours north of San Francisco, Kift members co-live in a sprawling house called the “Octolodge.” They each pay less than $500 a month for lodging, food, internet, utilities. There are also Kift locations in Joshua Tree, California, and Discovery Bay in Washington state, and the plan is to keep expanding as the community grows.

The real lure of the KiftDAO? “We have this connection that cities once provided and don’t anymore,” says O’Donnell. Unlike a typical co-living space, he explains, Kift could wed the connective tissue of the internet with the warmth of in-person companionship – and do it in a way that modern cities can’t. “Cities have not done a good job with human connection,” says O’Donnell. “If you ask a kid to draw a picture of a city, they draw a skyline. And those are office buildings. That isn’t a community. They’re not drawing a park bench. They’re not drawing a piazza where people come together.”

Some are launching startup societies to find community, some are trying to create a better and Web3-ier version of cities. Take Scott Fitsimones, who started a parking garage company while in college. This gave him a crash course on how cities actually worked – zoning, land use and the minutiae of bureaucracy. He felt like the process could be improved. Then Wyoming passed legislation that allowed DAOs to be classified as LLCs, and this gave Fitsimones an idea. “Okay, a DAO can govern an LLC, and an LLC can buy and lease property,” says Fitsimones. “So there’s probably a lot of cool stuff we can do here.”

The cool stuff would eventually become CityDAO, which now has 7,000 members and raised $5 million in its treasury. CityDAO purchased 40 acres of land in Wyoming, which is collectively owned and managed by the DAO. Anyone can camp on it and visit it, and the plan is to eventually build out infrastructure and a Web3 city.

A Web3-imbued city, says Fitsimones, will be more transparent and efficient than normal cities. Like many champions of the network state, he’s drawn to the idea of experimenting with new modes of government. That’s something we rarely get to do. “Right now we have around 190 countries,” says Fitsimones. He thinks of these as “little miniature monopolies” that define the rules of life. Some of them are dictatorships, some are democracies and many of them look quite similar. “Really, 190 isn’t that many options,” says Fitsimones. “Imagine if it was easier to create these little governments and self-organizing systems?”

Much of this philosophy is shared by Jon Hillis, a former product designer at Instacart who, in 2021, wanted to build a cabin in the woods and do some science fiction writing. So he built a makeshift home out of a shipping container. Hillis invited a group of friends (part of his “creator co-op”) to the cabin just outside of Austin, Texas, and this evolved into a creative residency program which eventually spawned CabinDAO – “an experiment in decentralized cities.”

CabinDAO is up and running. If you’re a member of the DAO, you can drop into a cabin and work and live there for as long as you want (with payment varying accordingly). The original cabin is in “Neighborhood Zero” by Austin, and the DAO’s plans for expansion include Puerto Rico and Portugal and Bangalore. Like O’Donnell and Fitsimones, Hillis feels that traditional governments are, to borrow a tech cliche, ripe for disruption. “The last century was all about car-based cities. We believe that the next century is about internet-based cities,” says Hillis. “The internet’s not in one place, and so we’re not all in one place. That’s sort of the high-level vision.”

Not all are going that route. One of the projects on Srinivasan’s dashboard is Porta Norte, described as “Building a European town integrated with nature.” The initiative is starting in Panama. “There are very few public spaces in the majority of Panama City,” says Henry Faarup, the founder of Porta Norte. So Faarup’s team is trying to create a new city-within-a-city – one with more trees, more sidewalks, more nature.

Faarup plans to invest in fiber-optic cables that will provide “the best internet in Panama.” He wants to do a normal city, but better. “We’re basically taking the role of the government and municipality, and providing first-class infrastructure and security,” Faarup says.

This sounds an awful lot like the other network states, but he’s doing it without crypto. Porta Norte is not a DAO, it’s a company. Faarup raised capital through a joint venture with 50 shareholders. Faarup says he’s open to experimenting with DAOs and blockchain in the future, but “we haven’t gone that route, as of yet.”

Perhaps Faarup can get away with this because the project (at least as of now) is completely centralized, focused on a hyper-local section of Panama City. For that you don’t really need a DAO. The real superpower of the network state, in contrast, is harnessing all of the talents, resources and creativity of those who are scattered across the planet – and then manifesting that vision into the physical world.

Emole grew up in Lagos, Nigeria, and he moved to the San Francisco Bay Area just before high school. He was the only Black kid in his class. He moved from a country where “race was nothing” (because all his peers were Black) to a world where “it’s staring me in the face.” His new classmates assumed that, as he puts it now, “I knew everything that has to do with blackness.” He knew Nigerian culture but not African American culture. Kids would ask him about Jay-Z and other rappers and, he now says with a laugh, “I didn’t know who these people are.”

This nudged Emole to do research. He watched videos, listened to music, read books and learned everything he could about African American history. These interests snowballed. In college and later at U.C. Hastings Law School, he organized African festivals, concerts, parties and events that would help bring Afrobeats (such as Burna Boy) to a mainstream American audience. These events would coalesce into Afropolitan, founded in 2016. Now the concept of Afropolitan, the sovereign country, has $2.1 million in early seed-funding, including an investment from Srinivasan himself.

These citizens will then launch the DAO and the sub-DAOs. That’s Phase 2. “We want to build our own tech stack. What would it look like to have an Afropolitan super-stack where you’re able to do things like remittances powered by crypto?” Phase 2 also involves setting up the tokenomics, agreeing upon the rules and norms, and signing the Afropolitan Constitution.

Phase 3 is what Emole calls the “minimum viable state.” What needs to happen for them to obtain diplomatic recognition? There are already glimmers of progress. On Sept. 13, Afropolitan was recognized by the New York Stock Exchange as the first ever internet country. As Emole says, “So today it’s the New York Stock Exchange, tomorrow it’s the United Nations.”

As Uwazie points out, the investment rate for Black founders is lower than the industry average. “Tech companies have been trying to diversify, and they’ve barely made a dent in it,” says Uwazie. “The system is going to take a very long time to change.”

With an Afropolitan network state, members could have easier access to loans – through DeFi and the DAO – refinancing, or investment capital. Maybe they could make payments with Afropolitan tokens. “My number one goal is to empower my community economically,” says Uwazie. “That’s how things changed. When you’re economically empowered, it changes people’s lives. It changes generations.”

Emole knows that “utopia” projects court skeptics. “I’m aware of those projects,” says Emole. One thing he thinks separates Afropolitan from others is that “in the West, it feels like a nice-to-have. In Africa it’s a need to have.” Then he gets more candid. “We don’t have [stuff] that works,” he says, contrasting the infrastructure of Africa to that of, say, Switzerland. He says that if he’s a citizen of Switzerland and wanted to start a new country, the first reaction would be, “What’s wrong with this one? Why do you need to start a whole new country?” But when he brings this up to other Africans, the reaction is always, “It’s needed.”

And what will it take for Afropolitan to actually become a reality? Ultimately, says Emole, the biggest hurdle is not tech or capital or politics. The biggest challenge is getting people to believe. “People get scared when they hear this vision,” says Emole. He wants Africans to be more audacious. To believe. “I’m used to African founders coming to Silicon Valley and saying, ‘Hey, I’m building Stripe for Africa’ or “I’m building Uber for Africa””

His message is this: Why can’t Africans do something entirely new? Instead of bringing San Francisco ideas to Africa, why not be the first to truly execute this bold idea? “We’re used to playing it very, very safe,” says Emole. “We need to shoot for the stars.”