N3GOV-48: Merge towards endgoal

Governance City Hall
1

Summary

When launching Nation3, the idea was to leverage Web3’s capital formation to accumulate a massive treasury that would allow the community to negotiate a favorable deal with a host country and create a new nation state.

As the crypto bear market came (and other events like the FTX collapse), any glimpse of such treasury has been erased.

The first pivot was then to creating the internet’s legal system, powered by Nation3’s checks and balances.

After thorough analysis and a deep dive on the problem and solutions space (posted on #agora on Discord), such quest seems overly complicated, with many risky assumptions and ultimately getting us further from the idea of creating a network state.

Baseflow is an OS for sovereign individuals, allowing them to acquire residencies and citizenships with ease, and move where they are treated best.

Such funnel and community of sovereign individuals, as well as close ties with government agents, can be leveraged as a launchpad to negotiate Special Economic Zones with host countries. That was the original idea for Nation3, and we believe it is still the right path to pursue.

A merge with Baseflow would ensure the continuity of such endeavor. Baseflow’s short-term goal is to help sovereign individuals acquire citizenships and residencies with the governments that treat them best. Nation3’s long-term goal is to create Special Economic Zones where they are treated best.

Implementation

  • A new legal entity to be incorporated in Zug, Switzerland (The Network State Company AG).
  • All funds (directly or over time for vested ones) to be transferred to networkstateco.eth.
  • Aragon Ecosystem Association (Aragon DAO’s legal wrapper), the only entity that purchased tokens from the Nation3 DAO (via a swap), will be given a proportional amount of shares in The Network State Company, once incorporated.
  • All citizens with valid passports (>2 $veNATION balance) at block 17690000 are allowed to participate in The Network State Company at the valuation of the merge. Such valuation is the sum of Baseflow Inc.’s valuation plus the Nation3 valuation that the Aragon token swap was done at ($52.069m total valuation). $veNATION holdings, at 1 $veNATION = $100 (roughly market price at writing time) are taken into account for their investment. In other words, a citizen holding 2 $veNATION would get $200 worth of shares “for free”. The minimum ticket is $2,500 (otherwise KYC and other processes aren’t worth it). Founder tokens and tokens from AEA are excluded from participating (since that would be double participation). Although the Nation3 DAO never sold $NATION to citizens or others (apart from AEA), and instead did a massive token airdrop (giving away more than $10m in tokens), we feel this allows aligned citizens to continue being involved, while filtering away those who don’t.
  • $NATION and other smart contracts will continue existing, they are permissionless and cannot stop. The Nation3 Constitution will still be in effect, and the Nation3 DAO won’t lose sovereignty over itself. $veNATION holders will still govern it.
  • North Star metric changes towards GDP of the network state.

North Star metrics alignment

To increase the GDP of a network state, first we need to create a network state.

To do so, this proposal aims to onboard tons of sovereign individuals (high mobility, high wealth) into a platform helping them move to where they are best treated. Then we aim to flag their economic interest in setting up Special Economic Zones to governments, eventually reaching deals with them. After that, sovereign individuals can move and kickstart economic activity within the network state, further increasing its GDP.

PR at N3GOV-48 by luisivan · Pull Request #69 · nation3/gov-proposals · GitHub

1 Like
2

I’ve been following Nation3 since its inception, and I remember the exact moment I read the Manifesto. I felt it was not only an inspiring, innovative approach to how to build a network state – it was also accompanied by world-class execution from the Nation3 team on a space that was (and still mainly is) uncharted territory.

At the same time, I was building Baseflow to help sovereign individuals get new passports and residencies in crypto-friendly nation-states, as I realized money could travel freely around the world thanks to cryptocurrencies, yet humans often end up stuck on borders due to their passports.

If we can mint enough sovereign individuals with leverage and optionality, nation-states will compete in a freer market and yield better governance models. The next iteration of this “market of governance” is not only to allow these sovereign individuals to choose from traditional nation-state offerings but to serve them with better governance models. That’s why it will be incredibly exciting to combine Nation3’s aim to create a better supply of governance, and Baseflow’s pipeline for the aggregation of governance consumers.

1 Like
3

I still vividly remember the shock I felt when I first read the manifesto last year. And I’ve been helping the community complete construction and various tasks for a year. But today, I was extremely shocked when I saw this proposal. I fully endorse the re-establishment and restructuring of a new type of nation-state, but Nation3 is a DAO that has always advocated for its own reasonable governance system. However, this complete change, from a cryptocurrency project to a traditional company with equity, absolutely requires discussion with those who have invested and participated out of belief and love.

And then there are some specific questions or suggestions. I see that you wrote at the end of the proposal, ‘$NATION and other smart contracts will continue to exist, they are permissionless and cannot stop. The Nation3 Constitution will still be in effect, and the Nation3 DAO won’t lose sovereignty over itself. $veNATION holders will still govern it.’

  1. So, will there be necessary operating funds left from treasury? If there are no necessary funds left, then the tokens and the DAO will be unable to operate and become meaningless.
  2. What’s the solution for the multi-signature of the treasury?
  3. What’s the solution for the tokens of the initial team?
  4. The issue of contract controller.

I personally believe it is meaningful to retain some funds from treasury in the DAO, letting it operate in the crypto world in the DAO way, making NATION a monument in the cryptocurrency world. Each time others obtain, trade, or even see it, they will remember our attempts, and even the efforts of your startup team. I believe it’s all very meaningful. This is a rebirth of NATION in the crypto world, now with pure symbolic significance.

2 Likes
4

I am sorry to have to say this but I am strongly against of this proposal. To me, it doesn’t read like a pivot, but rather like winding up Nation3 DAO. I firmly believe that our focus should be on establishing revenue streams, ideally through products and services targeted at sovereign individuals. The ideal scenario would involve Nation3 investing in, incubating, and directly creating traditional companies and Web3 solutions.

However, it seems like Nation3 is being rolled into a single company. While I would support an investment round from the DAO, I am strongly against folding Nation3, the DAO, and the community. To me, it appears as the worst of all possible pivots for the DAO and its passport holders. Although the DAO will technically continue to exist, the absence of a treasury will practically render it non-existent.

The financial aspects of this deal too seem especially bad for passport holders if we still have to pay out of pocket for shares in the new company ontop of loosing the DAO but that only marginally affect my primary reason for opposing this proposal. Putting that aside, I fail to see how this proposal aids us in achieving our end goal.

I am 100% with you on this, I just fail to see how handing over our treasury and effectively desolving the DAO. Why could we not invest in Baseflow have a close partnership with them and leverage that to negotiate this SEZ?

As I mentioned in the Discord chat just before you introduced this pivot,

“A Network State != a particular product or service”

A network state is primarily a community of people. Folding the DAO into a company steers us further away from this. IMHO we need to get back to reviving our community, building something people want to pay for, possibly investing in services people need, and ultimatly building our national economy and state

Luis, you are among the most intelligent people I know, and I truly admire you and your ideological commitment. In fact, this is the primary reason I invested in a passport and contribute here. However i have to keep it 100, I can’t support this proposal.

3 Likes
5

Thanks for the kind words Aaron!

Unfortunately, I still think this is the best course of action. The community we built has some bright individuals like you, but is short of the dozens of proactive people that could feel like “founding fathers/mothers”. This proposal is a living proof, where almost no one has actually addressed any of the core issues in the “Nation3 fundamental problems” post. And it’s that way because…

95% of everything that was being done, was done by Solar Guild. 100% of the funds raised were raised because of Solar Guild. All of the big fish that became citizens were personally onboarded by me. Those three facts should tell you enough…

When I started this project I thought it would be different. The tweetdrop was successful, or so I thought at the time, but instead of getting us Web3 builders, we tapped into a different audience altogether. I even lost 100 ETH buying back the NATION that the Sybil attacker accrued, if you remember those times. I bankrolled the DAO and founding team for a while. I never sold a founder token, and right now I’m in fact deep in the reds.

I’m open to finding a way of allowing the Nation3 community to continue the DAO, and all main founders are aligned in giving our tokens back to the DAO. However, from that point on the remaining DAO contributors must build and raise capital of their own.

The new approach is the straightest line to a network state. Help sovereign individuals acquire citizenships and residencies, build strong relationships with host countries in the process, and negotiate Special Economic Zones where your customers can move. Also, this approach would make the company profitable quickly, which is key considering that the endgoal might be many years away. All of this without the (completely insane right now) regulatory risk of having a token out there.

1 Like
6

The main founders are in agreement to transfer their tokens back to the DAO. Then, if someone wants to pick up the torch, it’s in their hands to build a compelling product and raise funds based on their own merits.

1 Like
7

This is the most on point piece of the discussion so far, especially the blend of trad and Web3 and the opportunities that could bring to citizens here and a all global citizens. I did think I’d see the day when N3 integrations/extensions were coning through the big hackathons, and I dont see why we still couldn’t.

And then these are the facts, but maybe they don’t tell the story that you think they do. That the Solar Guild brings high net worth individuals and raises money seems appropriate and true. That 95% of work was being done by the Solar Guild mayne true recently but seems to be a misrepresentation of history and maybe indicative of mistrist or a lack intent with respect to true decentralisation.

Enough projects are realising that the dogmatic DAO approach is not economic or effective at driving a roadmap to anywhere just yet, and that there is a lot to be learned from what came before rather than throwing it all away in pusuit of an automous Utopia. Maybe we went too far one way and then the pendulum swung too far the other as the founders disengaged from the community, and doubled down on a much more traditional org approach. If the pendulum swung half way back, who knows.

Im not educated enough in the legal and economic side of things to know what options are available. I do know i met two people in a cafe who were passionate about what they were doing and who saw a different future, if they still have that same fire I’d back them to do what’s best.

To me partnering up seems smart (as opposed to rolling up), a network state will thrive off the network. But, I wonder if understandably the fire has gone, it’s been a brutal 18 months and maybe feels isolating. Can the DAO thrive with its heads of state feeling unsupported and having their heads, hearts and pockets out the game? Is it fair to ask them to be all in when few others aren’t? Probably not.

I think maybe (its a leap!) it is only a few who were truly in N3 for the philosophy, there’s a fair amount of self interest in Web3 and that would be misaligned value systems. However the few are more than an ember, and as Ram Dass said

And very gently we fan that ember
Blow on it, it gets brighter
And from that ember we rebuild the fire
Only thing that’s important is that ember

2 Likes
8

@luis To transfer your tokens back to the DAO is very generous of you, thank you. To clarify, “main founders” are Luis, Carlos, Uxio, and Anastasiya?

There were 5 recipients in the initial founder transactions, so am I missing one more person (0x77aA3a2FA11c8590fCc95B9e3DafF0429F91Df7e)?

Also, how will the founders return tokens that have been time-locked in the $veNATION smart contract? Will you be handing over the private keys of those accounts?

Would picking up the torch include full admin access being handed over to the next group of people? Meaning admin access to the domain, hosting, e-mail accounts, Discourse, GitHub, Twitter, Discord, smart contracts, Aragon DAO, multi-sig, etc?

2 Likes
9

To increase the GDP of a network state, first we need to create a network state.

To do so, this proposal aims to onboard tons of sovereign individuals (high mobility, high wealth) into a platform helping them move to where they are best treated. Then we aim to flag their economic interest in setting up Special Economic Zones to governments, eventually reaching deals with them. After that, sovereign individuals can move and kickstart economic activity within the network state, further increasing its GDP.

Partner w/ Baseflow

  • Baseflow brings utility to the DAO|Nation3. I propose instead of a merge, we can leverage this utility of Baseflow to bring more value to the already existing network as we usher in a new set of sovereign individual attracted to us by this new utility.
  • We should collectively draft out a favorable agreement just like how the constitution was created, we can work on a way to have baseflow as an essential infrastructure to Nation3. We are still in the early days, and I know it is difficult, but we should look into an hyperstructure building on top of what we have, not rugging and starting all over again.

Web3 is here, and for the first time in history, the Internet will determine the structure of our society.

  • To me this is fundamental to what Nation3 is, what you are proposing is going to nuke the very core of this.

State of Affairs

When launching Nation3, the idea was to leverage Web3’s capital formation to accumulate a massive treasury that would allow the community to negotiate a favorable deal with a host country and create a new nation state.

As the crypto bear market came (and other events like the FTX collapse), any glimpse of such treasury has been erased.

The first pivot was then to creating the internet’s legal system, powered by Nation3’s checks and balances.

  • We can acknowledge this as part of our history, and although the second part might seem like a pivot it can serve as an essential infrastructure to the future of our network state. Let’s look towards working with base flow as the second piece to the puzzle.
  • We should also break the barrier in place between the Solar guild and the rest of the DAO. We should all be working together to grow the network state not in silos.

Pass the Touch?

  • Leadership is difficult, and it goes without saying that there is no leader without followers or allies. I for one, love your vision and would support you a thousand percent if I am at full capacity.

I felt it was not only an inspiring, innovative approach to how to build a network state – it was also accompanied by world-class execution from the Nation3 team on a space that was (and still mainly is) uncharted territory.

  • Like @alejandro has mention you are working on uncharted territory and so it is even more difficult, and I see two options here = Pass on the touch or look for ways to empower the current network state as we grow a stronger base together. It is difficult, but there are already people here that want to help you. Help us, support you.

Conclusion

I am strongly against folding Nation3, the DAO, and the community. To me, it appears as the worst of all possible pivots for the DAO and its passport holders. Although the DAO will technically continue to exist, the absence of a treasury will practically render it non-existent.

  • I strongly agree with this point.

We can build better together, we just need to endure the bear market. Focus on infrastructure and together brainstorm ways to grow the network. What y’all have been doing is working in silos with disregard to the existing network.

2 Likes
10

The proposal for adding liquidity is already passed the vote months ago, I don’t know how is reasonable and fair if anyone can ignore the public vote, delay the execution, and do whatever the person who controls want. Between the fundamental problem post and the liquidity proposal, there are no discussions or comments among the community.

During this time, the company invited you to Montenegromean while our courts went online and you even showed confidence about our future in the community. Then all of a sudden, the whole project was denied and a new web2 company came out of nowhere taking all of our funds.

I felt this strange and had enough reason to suspect that there might be well-planned under-table actions that tend to sacrifice the interests of contributors and community investors for the so-called new company.

11

Hey Nation3 fam,

I hope you all are doing great. I wanted to drop a note here about the proposal Luis has put forward about merging with Baseflow.

I won’t lie, when I first read Luis’ analysis on the problems we’re facing with Nation3, it felt like a punch to the gut. As someone who’s spent the last three months at the helm of the Solar Guild, I’ve seen first-hand the dedication and passion that each member of the team has been pouring into building the Nation3 Legal System. So, to suddenly see a shift in focus…yeah, it was a tough pill to swallow.

But once the initial shock faded, I took a hard look at what was in front of me. And, you know what? Luis’ points started to make a whole lot of sense. Trying to construct a fully operational legal system for DAOs in our current legal climate and market conditions, all the while managing a token and keeping the community engaged… it’s not just daunting, it’s like navigating a minefield. That got me thinking - maybe there is merit in shifting the team’s focus to a more direct path towards negotiating Special Economic Zones. Especially with the stablished inroads Baseflow has.

So, here’s where I land - I’m on board with this merger. When I look at the bigger picture, it seems like our best shot at realizing our long-term goals.

But, I also get that there are a lot of questions that we need to answer. And I know that this shift might be hard for some to digest.

The important thing to remember, though, is that Nation3 is a DAO. The founding members stepping back doesn’t mean the end. In fact, I see it as an opportunity - a chance for Nation3 to hit the reset button, redefine its foundations, and refocus on smaller, more achievable victories that could collectively add up to something massive. I want to reassure all of you that I’m committed to facilitating a seamless transition. I’ll do whatever it takes to hand over all services and admin access to whoever steps up to lead the new team.

Lastly, as Luis already said, I plan on returning all the tokens I received as a founding member. It’s a small gesture, but I hope it helps reaffirm my belief in that there is a future for this community, even without us onboard.

Thanks for taking the time to read this. Let’s keep the conversation going. We were in this wild journey together, after all.

Take care,

4 Likes
12

I was referring to myself, Pi and Anastasiya. I’m not sure about the position of Carlos and Owi (who helped with design). I’ll talk to them. Keep in mind some used more than one address to receive the tokens, that’s why it adds up to 6.

The DAO can unlock all veNATION. We would have to use that functionality.

Yeah, it would include admin access to the tools needed. We can discuss more. The Twitter account I want to take to The Network State Company, since I worked on it pretty much by myself. Everything else we are very much open to just donating (by transferring accesses and signing a waiver).

We would just need to be careful about the narrative if Nation3 continues in a different shape, and communicate clearly the boundaries between the projects.

13

I would consider myself as one of the more active members of the Nation, but I did come a bit late. I could be wrong I thought the solar guild was something new. I mean obviously, you guys are the founders and there is no denying that you were the faces and driving force behind getting us to where we were. But when i first arrived there seemed to be a small but relatively engaged developer guild.

Also worth pointing out the solar guild was funded over a million dollars in stables to do their work. That came from the DAOs treasury. They were paid to do their work and they still have not executed

Dont get me wrong, the activity was not massive but thats understandable. But after the solar guild got funded, It killed off the rest of the activity and engagement. And I get why you guys locked yourselves away and just tried to ship, I genuinely do, but the consequence of that is there is no space for anyone to grow into those founding fathers or mothers

When it all comes down to it, This is the reality. if a DAO is to be successful, it needs to outgrow the founders, Are we ready for that? probably not. Is it fair to Ask them to be all in with their pockets and more importantly, with their energy, defiantly not!

All moonshots, especially something like trying to start a cloud nation need that beneficial dictator. And you did that. Massive amounts of energy, spent and lost alot of funds, brought in a bunch of high profile people. You have been a great. And if there is to be some kind of split, merger or something else then so be it.

However this proposal still seems incredibly unfair. Even with all the unbalanced effort and work that you have put in, Nation3 IS A DAO. It was sold on the fact of being a passport holder as equal to being citizenship in a nation of equals. The Nations treasury should belong to its citizens, whether people got their passports for free in the tweet drop or they paid close to $4k like some did. This should mean something

even if you leave aside all the people that bought NATION thinking it was going to have significance in a new Nation, It seems crazy to me that as a citizen, the treasury of their nation will go to some private company and they get

To me, that seems insane! That cant be right. I have no doubt this will probably pass In any case, but I do ask that if this is to happen we take a pause and come up with a solution that at the very least gives the DAO a realistic chance to move forward and give those who want to step up to the plate a chance to figure out if we can continue the project

5 Likes
14

I calmly contemplated various potential future scenarios and analyzed the rationale for starting a new company. Gradually, I began to see the significance of merging with Baseflow, at least for the team of founders who have put in the most effort. This seems to be the most appropriate path, because if the individuals investing the most time and energy are not in alignment with the community’s anticipated development direction and goals, it would leave both sides unsatisfied. Perhaps pursuing the same goal in different ways, one in the form of crypto and the other as a Web 2.0 company, is a worthy attempt. There seems to be nothing wrong with that. However, how to handle the eventual peaceful separation is still a crucial part. It is essential to retain all the control and authority in the crypto world, and to maintain a minimal amount of funds obtained through token exchanges, allowing the DAO to have minimal operation and thought capacity in the short term. I am giving you a rational analysis, and I hope you would consider it.

  1. The main subjects of token exchange and financing have always been the DAO, and the medium has always been TOKEN. TOKEN holders share risk and benefits, so it’s unreasonable for them to bear all the risks of token exchange and secondary circulation without enjoying the benefits generated by the progress of the project after financing. From the perspective of a traditional company, as you must be aware, when a company finances through equity, even if the company ends up bankrupt or restructured, every shareholder should be considered in the allocation of financing assets, regardless of the proportion. It’s unreasonable to only bear risks and not enjoy benefits, or to not have any allocation of financing gained from the risk one takes.

  2. I think this is a way to balance the contradictions within the community, even a practical ‘happy ending.’ In publicity and announcements, it would be framed as ‘two teams trying to reach the same goal in different fields.’ This fund is a blessing and expectation, signifying that the founding team has properly handled all the loose ends in the crypto realm. It implies an organized start and finish, and also a possible basis for future collaboration. As you said, no one knows if their current direction is correct. Retaining some expectation and goodwill for the crypto side, in my view, is quite a beautiful thing.

  3. This is an act of goodwill, which is vital for both the community and the market. WE agree with your statement that “95% of the outcome belongs to Solar Guild.” However, the only point of contention is that transferring 100% of the funds seems unreasonable and lacks a safety net or goodwill.

Money often symbolizes attitude. If 100% of the funds are withdrawn, even if someone else takes over the project, the market interpretation will still be that the previous team has completely given up, that they have utterly failed. It’s not a choice of a new path but a total failure.

This inevitably increases the difficulty for the successor, presenting a barrier and leaving a bad mark on both the DAO and the traditional startup Baseflow. Given the shared ideals and goals of the teams, the total failure of one project would undoubtedly impact the next. I believe you wouldn’t want to see this. However, leaving 5-10% of the funds would be interpreted by the market as completely reasonable and positive. The operational cost of a DAO is far lower than that of a physical company, and the split between the two sides is merely due to differing ideas, not a failure. I fully believe in the potential for ‘network state’ in the crypto world, and labeling it a failure seems harsh. Internally, everyone would understand, which would prevent bad rumors like sacm and RUG from spreading. I believe this is a reasonable financial range, leaving a glimmer of hope for the future. If nothing is left, and if the DAO indeed develops some market influence and products in the future, I wouldn’t want to hear that there are no relationship with the original team. That wouldn’t be good…

I believe that in the past year, those who have persisted until now have not profited. In fact, they have suffered severe losses, a lot of community members buy bunch of TOKEN from CEX and DEX. This is also one of the reason we can use stable $1000 per $NATION to get our fund.

Those who remain are those who believe in you, believe in the project. As long as you give them a glimmer of hope and show goodwill, I believe they can understand and even make further attempts. Both sides could cooperate well in the future. Hurting those who believe in you and rewarding those who are uncertain is not the right way to go.

3 Likes
15

@0xGallego Thank you for offering your time to help with the transition. Our time is the most valuable resource!

A question about the vote-escrowed $NATION contract, and the possibility to return founder tokens that have been time-locked:

My understanding is that the withdraw() function can only be called after the time lock has expired.

And it was mentioned above that the DAO can unlock all $veNATION, which I assume is this part of the smart contract:

# Allows to unlock all deposits at once in exceptional scenarios
depositsLocked: public(bool)

Does this mean that the DAO would have to call set_depositsLocked(false), and then each founding member would have to manually call the withdraw() function? Maybe you have a better solution in mind?

16

Hey Aahna, you’re right. We’d need to unlock all the deposits first so we can give back the tokens manually. Because of the limitations in the VotingEscrow contract about contract relaying, there’s no other way around. But there’s a bright side. The DAO can choose a new governance system with the unlock. I think that might be a good call, honestly.

1 Like
17

I mean this goes without saying! when a founder can make a proposal to drain the funds that were acquired in a strategic relationship to build a court and supercharge DAOs (by giving them 51% attack prevention), and then the same founder 51% attacks the DAO. OBVIOUSLY we need a system where minority rights are protected. The irony is insane!

1 Like
18

@0xGallego Got it. The only solution I can think of for doing this automatically would be to get the private key of each founder account, and code a script that unlocks deposits, withdraws locked tokens, and then locks deposits. But I believe some (if not most) of the founders use the same accounts in multiple places (not only for Nation3 governance), so that’s probably not a viable route.

Just so that I make sure I understand: What you are suggesting here is to unlock the vote-escrowed $NATION tokens not just for the founders, but for all Nation3 citizens, correct?

19

Woah. :astonished: Last I remember a few months ago the solar guild was head down working out building out the legal court system, then suddenly there’s a post which doesn’t sound like a pivot but actually the treasury getting moved to a new company and the core team moving there. This was extremely surprising to read about and feels like it came out of nowhere.

While it might make sense for the core team to pivot to something else, this action will likely lead to a lot of bad reputation among token holders who feel “abandoned” and from the outside will look like “Luis/core team Rugged Nation3 community”. This is going to damage both Nation3 and BaseFlow’s reputation.

I like the offer of equity in the new company, but as @AbuUsama has said, it appears insanely low compared to the financial losses we’ve taken on the project.

My hot take after reading all this is there has to be a better solution than this.

  • Why can’t we on-board tons of sovereign individuals into Nation3 and use their investment to speed up development of Special Economic Zones?
  • Why can’t we create a partnership agreement with Baseflow to work together?

If the proposed plan by Luis goes through I and many others are going to be incredibly disappointed.

2 Likes