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This past week, many folks in the crypto community have been in Singapore attending the second annual Network State Conference.
I wasn't able to make it out there myself because being a full time writer is barely covering rent right now. But, lucky for me, there was a livestream of the entire conference.
My knowledge of Network States is very limited. I just know Balaji wrote a book on the concept in 2022, the first Network State conference was last year, and that there is a growing community of "startup city enthusiasts" that are working diligently to bring the grand vision to life.
Today, I listened to 6-7 different talks from the conference. Watching these speakers helped clarify my thinking a ton on Network States and I gained a new level of respect for this whole movement. I wrote up my key insights below.
Instead of making this post my usual essay format, I decided to share my takeaways in list form below. I don't think I'm qualified enough on this subject just yet to form hard conclusions. The nature of this post is more exploratory rather than analytical.
Let's dive in.
1) 21st Century Hanseatic League
Noah Smith, writer of Noahpinion (Economics newsletter that you should definitely subscribe to), provided - in my opinion - the most interesting 1-liner of the conference:
"Maybe the real network state is a network not necessarily of people but cities. Cities provide public goods really well. An idea of a distributed network of cities around the world that cooperate with each other....A global Hanseatic League that I think could work."
For those of you that need a quick refresher on the Hanseatic League:
Decentralized alliance of over 200 Northern European cities from the 12th to the 17th century. Self-governing cities that collaborated without central authority
Each city retained its independence but benefited from being part of a larger cooperative network. They dominated maritime trade in the Baltic and North Seas.
The League declined due to the rise of nation-states, technological advancements in global maritime trade, and shifting political and religious dynamics in Europe
Why is this relevant?
For me, Noah's point particularly clicked because up until now I thought the general premise of the Network State school of thought was to start a new country.
And for most people, even for those of us working in tech, the idea sounds a bit odd. New country? What does that even mean? And while that may be the grand vision, my guess is that it's a turnoff for many folks just like how "rebuild the financial system" doesn't make defi feel inviting. The scope is too large, there's no clear starting point, and it doesn't feel immediately applicable.
But with this Hanseatic League analogy, things start to seem more approachable. Now it's not about starting a new country but rather for a few community leaders focusing on organizing what are effectively longer duration conferences.
The Network State movement isn’t about immediately creating new nations and competing against the G7 next year.
It's about building a global network of micro-communities, each with its own unique flavor, working together to develop parallel societal infrastructure.
Devon Zuegel, founder of Esmeralda, sums it up perfectly: the goal is to "build the ladder of commitment" for a concept as bizarre as network states.
2) Testing with Pop-Ups
So, how does this new Hanseatic League actually get started?
Through pop-ups!
Popups are "network state proof-of-concepts". Think of them as an experiment to test the potential of a proposed network state.
The most famous example of this, at least within the crypto community, was Zuzalu which was hosted in Montenegro for 2 months last year. It was heavily championed by Vitalik (who was a co-creator) and the organizers were successful in bringing a cohort of 200 people to the popup.
Vitalik had a fantastic slide in his presentation that emphasized the need for more experimentation such as Zuzalu. Today, we're all used to the idea of online communities and understand how to participate in them. But bringing URL to IRL is a completely new paradigm and has non-trivial costs.
So, the best approach is to try something along the lines of an extended conference: events, workshops, research focus, a shared mission, meals, etc. But instead of it being just a week, the time frame for popups are along the lines of 1-2 months in order to collect meaningful data.
3) Fast Experimentation, Tight feedback loops
These popups are not only a great way to prototype future cities but also to test high agency environments.
A common theme throughout the talks is that it was amazing for community leaders to see how open and willing members were to try out new projects, give developers active feedback, have rigorous debates, etc.
Vitalik mentioned one unexpected learning he's had is that it's not just crypto helping Network States but also the other way around. He gives the example of ZuPass, which is a "cryptographic passport"developed at Zuzalu. It was only possible because the popup environment made it a lot simpler to test out a zero knowledge identity solution.
In another talk, Niklas Anzinger discusses how Vitalia, a biotech focused popup, was able to get the brightest minds in the longevity space to work together on a gene therapy experiment at a timeline literally not possible in normal countries.
And many other popups in the past year discussed a similar excitement of pushing the brightest minds in different sectors of tech to work together and produce inspiring results.
By reducing the friction of collaboration and coordination, popup organizers are seeing innovation and product development across the board at jaw-dropping speeds.
4) Bringing Popups to the Edge
One reality with popups is that most people don't have the luxury to get up and leave their lives for 2 months. Maybe some university students or young adults in their 20s can, but the majority of folks have family commitments and children they need to also consider.
That's why, unlike the one-off popups you've heard about in Montenegro or the Caribbean, there's been a recent push to bring the same experience to major tech cities such as San Francisco, Denver, and New York. By having a popup an hour or so away from the bay, the friction to sign-up goes down tenfold and the quality of applicants gets significantly better.
And the last point to mention is the fact that these popups are aiming to improve the multi-generational experience. One speaker mentioned that a popup had everyone from the age ranges of 6 weeks old to 86 years old!
Over the next few years, as the utility for all family members at these popups get better (i.e. schools, people not interested in tech), the diversity will increase as well. This will be great not only for marketing purposes to general audiences, but also to test the constraints of network states with a more realistic composition of people.
5) The L1 & L2 of Network States
In the points above, I made it clear that the road to a 21st century Hanseatic League is a need for a variety of successful popups around the world. Of course - achieving this mission takes a ton of effort, resources, capital, etc. For example, just to get started, you have to think about talking to the right regulators, finding and purchasing land, figuring out real estate infrastructure, etc.
How can we simplify the process so that the path to start a popup is a lot less intimidating to curious community managers?
That's exactly where companies like Prospera come into play. Erick Brimen explains in his talk how Prospera is working hard to offer governance as a service. They are trying to partner up with forward looking nation states and create a standard for new network states around the world. In fact, their team is studying the US Constiution and the Hong Kong charter to better understand what governance models make sense for the next evolution of "countries".
And the goal is for them to serve as an "L1 for Network States". Then L2s, such as Vitalia, can come and build their communities on top of Prospera.
To be clear, Prospera is simply a start. Governance and regulation is just one prong of the whole system. Over time, we'll see the network state infra grow to help new community leaders quickly spin up proof of concepts around the world.
Overall, the key takeaway is that Network States will just take a ton of experimentation over the next few decades!
The whole points of these popups are to iterate on different governance, identity, and coordination mechanisms.
At the end of the day, the goal here is to convince people to drop their current lives and start a new one in a network state. That means the value proposition needs to be high enough for people to do so.
Right now, network states are at version 0.1 or like Ethereum in 2016. Over the next decade, through fast feedback loops and improved network state infrastructure, it'll be amazing to see what these popups evolve into.
What will the next step after these popups be in order to realize the full vision of Network States?
If you have any thoughts on Network States, I'd love to hear them in the TOC Farcaster channel. I'll gift 1 free month of TOC Pro ($15) to anyone who shares a meaningful take 🤝
That's all for today's post!
See you all on Friday, hope everyone has a great rest of the week :)
- YB
