Is the ultimate goal of the Web3 industry to build a networked nation?

Author: Yue Xiaoyu, Source: X, @yuexiaoyu111

1. How far are we from the emergence of networked nations?

Initially, well-known investor Balaji wrote a book called "The Network State," introducing the concept of a network state.

A networked nation refers to a highly cohesive online community that possesses the capacity for collective action, able to purchase land globally through crowdfunding, and ultimately gain diplomatic recognition from existing sovereign states.

In this concept, a networked nation starts from a digital community, gradually transitioning to a physical presence, utilizing blockchain technology for governance and resource allocation, independent of traditional institutions.

The founder of Ethereum, Vitalik, also known as V God, has mentioned and discussed this concept multiple times.

He believes that the spirit of blockchain and network states is very compatible and is an important infrastructure for network states.

Vitalik Buterin even explored this concept through practical actions, most notably the Zuzalu experiment initiated in 2023 in the Republic of Montenegro:

This is a two-month temporary "popup city" that brings together over 200 members of the Ethereum community, crypto executives, biotech entrepreneurs, and researchers, focusing on discussions around longevity science, public goods, and network nations.

But Vitalik admitted that the subsequent steps are unclear, especially regarding governance issues, such as centralization and elitism.

2. With the maturity of infrastructure, the leading Ethereum Layer 2 project Arbitrum has proposed its vision to build a Digital Sovereign Nation (.

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This digital sovereign state mainly has three core elements:

First, it is necessary to have diversified participants and stakeholders.

The final presentation method is DAO, ArbitrumDAO has complete on-chain control over protocol upgrades and fund holdings.

This control is the basis for realizing the vision of a digital sovereign nation.

Second, valuable digital resources are needed.

Here, these resources refer to the block space and execution environment of Arbitrum, which are actually high-profit digital commodities.

The economics of Layer 2 allow it to retain a large portion of network revenue, with an average gross profit margin of over 95% for Arbitrum One transactions.

The value generated from on-chain activities on Arbitrum can be directly accumulated into the ArbitrumDAO treasury.

Third, it is necessary to create economic experimental zones through fiscal deployment.

The ability to generate and retain income allows ArbitrumDAO to reinvest assets into new projects.

These projects, in turn, will drive demand for Arbitrum's block space and activity, creating a growth flywheel.

) 3. If we consider Arbitrum as a country, we can look at the specific situation of this country.

(1) First of all, this country is a federal system

The largest central area is Arbitrum One, along with 48 Arbitrum Chains.

However, this country is not a loose alliance, but has strong bindings and associations, and its common technological foundation determines the ability to achieve a high degree of interoperability.

These federations also have a very high degree of autonomy: they can customize Gas tokens, choose their own DA (Data Availability scheme), and settle to

(2) The GDP of this country reached 200 million dollars

On-chain GDP, which refers to the total revenue generated by applications on the network.

Among them, the three major applications Uniswap, GMX, and Aave have accounted for 40.5% of the GDP on the Arbitrum One chain.

(3) The pillar industry of this country is DeFi

Every country has its own pillar industries, and for Arbitrum, the pillar industry is DeFi.

However, having only one core industry is still too singular, so Arbitrum is actively expanding into other industries such as RWA, gaming, and social.

Of course, Arbitrum expects its various federations to explore, that is, to implement different types of ecosystems on different sub-chains.

4. To summarize

The blockchain industry is always continuously giving birth to some highly innovative new things.

At its core, blockchain is a technology that transforms production relations, aiming to reconstruct current organizational forms.

Thus, a networked nation can be said to be the ultimate goal, a grander vision.

Arbitrum clearly positions digital sovereign nations as its vision, which can be described as a bold attempt.

These regional and phased experiments ultimately lead to breakthroughs from quantitative changes to qualitative changes.