Nation3 court: A backbone to bootstrap a circular economy by increasing trust between citizens

Nation3 is creating a cloud nation where citizens really feel that they belong. We are doing so by creating a shared culture around the values and mission outlined in our manifesto. But we are also doing so by leveraging $NATION, our community currency, as the token that aligns financial incentives between all citizens and Nation3 itself.

Thanks to $NATION, we were able to bootstrap an economy where:

  1. People interested in the vision can lock up $NATION to later become a citizen
  2. By locking up $NATION the token itself becomes more valuable, which in turn funds the DAO
  3. The DAO can use its valuable tokens to fund contributors building our cloud nation
  4. Contributors receive tokens, thus increasing their feeling of agency. As they usually are long-term oriented, they most likely lock those tokens, taking them out of circulation

So far this plan has worked out beautifully. In approximately a month, the Nation3 DAO’s treasury is valued at more than $40m, even after a brutal crash in the middle of a bear market. We had more than 10 individual contributors do meaningful contributions, bootstrapped a good amount of liquidity for $NATION and got more than 30k followers on Twitter.

In a short time we will be releasing passport NFTs, further enhancing Nation3’s governance and $NATION’s utility.

But what comes next? The main token sink is clear: lock $NATION to get $veNATION in order to become a citizen. This provides a filtering mechanism, so citizens have skin-in-the-game. As more citizens come, more $NATION gets locked, therefore creating buying pressure and further funding the Nation3 DAO to grow.

From there on, there are two ways to increase token utility:

  • Provide more services to citizens, therefore making citizenship more appealing, which requires locking a fixed amount of $NATION
  • Provide new services to citizens in which citizens need to lock up more $NATION past the minimum citizenship threshold

These two aren’t exclusive, and the best services for token value accrual are those which combine both approaches.

Increasing token utility and value is important to both fund the DAO and create wealth for citizens, but not the only important goal by any means.

What about enhancing culture inside our nation? That’s even more important than financial means, so it would be ideal if the services provided to citizens achieved that purpose: to unite citizens and enhance their interactions.

If the aforementioned services involve both a cultural element of interaction between citizens and a financial element that underpins such interactions, we achieve a positive growth cycle. Said otherwise, it’s ideal if citizens get both culturally and financially rewarded for pursuing economic activities with other citizens within the nation.

Now over to the proposal…

Enhancing trust between citizens to bootstrap a circular economy

Web3 is quite scary when it comes to interacting with others. Although holding tokens or interacting with smart contract is fairly trustless, interacting with people and making agreements with them that cannot be encoded on-chain is daunting.

I first thought about this problem in 2016 when starting Aragon. I thought about DAO2DAO, and I imagined how we could move tons of interactions to smart contracts, but not all of them. Something so simple as commissioning work to a freelancer can turn into a nightmare quickly. This is as relevant as ever today. We even ran into this issue ourselves while engaging with new contributors. Who can you really trust, when everyone is an anon behind a keyboard?

Permissionless contributions are the essence of DAOs. But for example, we set up the Rewards Guild to execute weekly payouts to contributors. It’s a three out of five, and three are core contributors – precisely because of a trust issue.

Would you just allow people you don’t know to take over a stream of $20,000 per month? Or even more?

It’s not even about trust, it’s just about rationality. Some basic guarantees are needed while transacting on the Internet, and transacting without them is reckless.

So, how can we create an environment where contributors can have privileged access to Discord, or to a multisig, or to other resources? Enter a court system.

The main service that some prosperous nation states provide – like Switzerland – is a system of law, and the correct enforcement of such law. That creates an environment of trust, where companies and individuals know what to expect of the government and of each other. More so, they know they won’t be screwed over if someone misbehaves.

If you want to transact with someone (for example, to commission work), it’s much more likely you will transact with someone who has skin-in-the-game to not screw things up.

Would you rather interact with a random anon, or would you interact with an anon who is a fellow citizen, therefore sharing a common vision of the world and having skin-in-the-game that can be taken away in case of misbehaving?

The idea is that citizens would prefer to interact with fellow citizens, bootstrapping a circular economy which in turn would make both citizens and Nation3 itself wealthier.

And this would be without even considering added incentives, like a cashback on successful interactions without disputes, which can align incentives even more.

National court

The idea is to use locked $NATION as some collateral that can be slashed in case of breach of contract between two or more citizens. It would work like this:

  1. Two or more parties enter into an agreement, which is a blob of text in English
  2. They agree on a maximum amount of NATION to be slashed in case of a breach
  3. In case of dispute, they can provide evidence of such dispute off-chain and encrypted to the jurors
  4. After that, jurors make their decision, and resolve the matter in favor of one or more parties
  5. There’s a time delay between the jury decision and enforcement in which $veNATION holders can veto it. This is a safeguarding mechanism in case the majority of jurors go rogue

The third point is a key difference with court systems that aim to be protocols, like Aragon Court and Kleros. Those two are neutral protocols which are fully decentralized. They need to elect sets of jurors randomly in order to achieve decentralization, which forces evidence to be fully public. These protocols are valuable and, in my opinion, their short-term killer use case is public content moderation. After all, evidence there is public anyway.

But when it comes to a private court system for a community (not a generalized protocol) having private evidence is paramount. Therefore what I’m proposing here is not a dispute resolution protocol , but more akin to a dispute resolution service for citizens. Because of being a service, it can be more opinionated (e.g. enforce a constitution as a base layer for a contract) and doesn’t need to compromise usability for full decentralization (e.g. allows evidence to remain private).

To sum it up, having a national court would enable:

  • Easier contributor onboarding: For roles with responsibility, the DAO itself could have an agreement with the contributors, which put collateral on the line to undertake such roles
  • Creating a circular economy: Interacting with fellow citizens offers more guarantees than interacting with random anons
  • Token demand: This is a big incentive to lock up NATION. As more economic activity happens between members, more agreements get created to safeguard those transactions, and therefore there is a direct correlation between NATION locked up and the economic activity inside the nation. Boom.

Specs

If this sounds interesting to the community, I will soon publish some specs that I have been working on.

I have found a quite elegant way to implement this system quite quickly. After releasing the NFT passport and introducing the concept of citizens, kickstarting an internal economy sounds like the next logical step.

Dogfooding

One of the reasons that I’m really excited about the Nation3 court is that we need it ourselves. As mentioned above, having this court would enable us to onboard contributors way faster, and to meaningfully engage with those contributors that are long-term oriented.

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It is a great proposal! The nation court is so important because the cornerstone of the Cloud Nation’s existence is justice and fairness. I hope we have an efficient and fair nation court, which will be the basis of other economic activities in the cloud country. I’m curious, do we have to lock up a certain number of $Nation to prove our responsibility to be a juror?

2 Likes

separation of powers in nation3

I think that’s why Nation3 was created, to have more freedom and identity

I think that the direction is spot on, especially as I am new to the community and when contributing in GitHub could feel the “er, do we just give this random permissions” energy in the air. It is interesting that you mention Aragon, would this literally use Aragon Court, do you see differences or is it that this is a very specific use case for the technology?

Whatever the answer I would be interested in seeing the specs.

It wouldn’t use Aragon Court because of its neutral/permissionless nature. We want something less neutral/more opinionated towards our community, and also supporting private/encrypted evidence.

Most of the complexity in Aragon Court/Kleros comes from having to choose the juror set randomly, and having an appeals system that grows over time to more and more of the juror set.

With the specs I have in mind, it would look more like a set of trusted members (with massive $veNATION stakes) plus a failsafe mechanism allowing $veNATION holders to stop any misbehaving and also allowing citizens to replace the jury and slash their stake.

3 Likes

Last year, I did a lot of researches about the Kleros. I found there was a little situation and space which could use this court system. However, the court system is very important and significant part in decentralized world especially in DAO. I am so excited to see that Nation3 try to create this new ecosystem which can makes the court system to become a normal and usual requirement. This means a lot.

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Look forward to Nation3 success

Trust instructed us to move forward step by step, at the same time, sustainable development, the construction of our country of cloud