34 - Network State Conference 2025 - Fireside with Vitalik and Balaji on Zuzalu and d/acc

All right, Everybody's caffeinated. This is going to be high tech.

All right. Yay, high tech.

All right, so Ethereum, the Ethereum network states Zeus Lou, the Sons and Daughters Zoo. You've been working on that for a few years now. Where is the status Zoo, Georgia Zoo, Thailand. All these zoos.

Yeah. So after the first one in Montenegro and then a smaller one in Istanbul, we made this decision to decentralize it. Right. So we'll say we basically said no, there isn't going to be like one big Zusulu meta Org that tries to coordinate everything that happens. And so everyone go do your own. And we tried a couple of different mechanisms to like coordinate some technology and coordinates some funding for them, but otherwise just kind of left them to go and pursue their own visions. Right.

And so do they all use Zoo Pass or like does a stack? How does that work exactly?

A lot of them do, but not all. I don't think there's like any single thing that they all agree on. Right. It's much more of a constellation. And so, you know, we saw Edge City go in one direction and do its thing. Then we saw some of the newer ones this year, Switzerland, Zoo Grama Zoo Cash, some interesting kind of adjacent Minoak things. I mean Crescimiento and Buenos Aires, like four Cs in Chiang Mai, another one. It's like a bunch of different projects that are going in a lot of different directions and there's some common themes.

So there's longevity and biotech. Yeah, that's a shared interest that we have. And then I think another thing that popped out to me about what a lot of the Zulu projects work on is public goods of various kinds, various voting mechanisms, government mechanisms. Is that fair? Like passports, registries, that kind of stuff?

Yeah, I mean also, you know what I. What I've called the DIAC philosophy. Right, right.

So explain that.

Yeah, so it's. Well, the, the acronym stands for a lot of things, but mainly Defensive Decentralized acceleration. So accelerating technology that is open source, that is decentralizing both architecturally and designs to not concentrate power. And that at the same time is positive sum. And that is like actually trying to basically do defense rather than offense and keep everything cohesive.

Would you agree that let's say there's ea, effective altruism, effective accelerationism, which started as a parody of EA but then became its own thing and which I'm synthetic to, then DIAC is sort of somewhere in the middle. Ish. Like I said.

Right. I mean, yeah, I mean, I Would call it sort of the middle of a triangle, but yeah, middle of a triangle.

What's the other? What's the other point?

Actually the three that I often talk about is one is kind of European style decel or degrowth, the other is basically eac. And the third is what I call national security. Ack. So this is kind of safety oriented, centralized, big government and big corporate sort of stuff.

I'd only quibble with one word there, which is usually the safety argument is made because you know, versus security argument. So national security will be the security argument and the EU types will be the safety argument. But it's like slightly, I mean it's the same thing but it's just differently.

Right, right, yeah. And like to me the idea of Diack is basically technologies that do very well on things like safety and security. Where. And I think there like Ethereum is a great example. Right. Because you know, it is a blockchain that's keeping a half trillion dollar economy safe and quite stable. And increasingly not even just a layer one, increasingly the application layer. Right. Like the hacks in DEFI as a percentage of TVL have just been dropping like a rock over five years.

Yeah, that's a good graph.

That graph exists. It's in my, I think my second most recent post I put the graph, it dropped from like 5% stock, I think like 0.02% or something this year.

Why do you think that is? Because smart contracts are becoming more audited and people have more experience with them basically.

Yes, more audits, more experience, better understanding of best practices, more reuse of components. And I mean obviously there's still like, there's always the frontier of people doing the crazy things. But you know, the safe bubble keeps getting safer and it keeps growing.

You know, it's funny, you might be able to derive some kind of aging function now that you've gotten almost 10 years of smart contracts. Some sort of almost actuarial function which says what is. That's an interesting machine learning problem. Someone wants to do that.

Right.

It's like what is the risk of this contract based on its age? You know, and you know how many REC news reports are there if you know like the biggest hack we've thought about this.

Like I think Justin Drake had this idea that you could like, I think he called it like the Lindy index. And the index is. Yeah, yeah, yeah. It's the integral of logarithm of TVL over time. And so basically, yeah, you know, you.

Why log tvl?

So obviously, you know, you accumulate Lengthiness. Over time you accumulate more lengthiness, the more, the bigger something is. Because if something's bigger than you know, it has actual real opponents, like it has to face real threats. And I think it has to be less than linear, basically, because the number of new threats that you get going up from 1 million and 10 million. It's kind of similar to the number of new threats that you get going from 1 billion to 10 billion. Right. It's not like you get the Same number from 1 million to 10 as you do from 1 billion to 1.009.

So. Meaning once it gets on people's radar, they start trying to hack it. And so the extra amount doesn't matter that much. Is that why that function?

Right. Basically, it's like every new order of magnitude, it gives you a fairly similar number of new issues that you have to deal with. Yeah, I mean, looking just like Ethereum's own history, it feels pretty intuitive.

Yeah. I mean, one of the things that's very interesting about smart contracts is, as you know, historically, formal verification was always computationally infeasible and it was like breaking, what's it saying, like a butterfly on a wheel. And then suddenly with smart contracts, the programs were small enough that it was feasible and they were valuable enough that it was worth doing. And so now you have Satora and you have all these tools that try to do formal verification. Do you feel that that has been working or, I mean, is that a contributing factor as well in your view?

I think so.

So okay, so Ethereum network seeds. So you've got the longevity parts, you've got the governance parts. It's coming back to that. What did you learn for the last 2, 2 ish years of social experiments?

So I think this whole network state movement and then the free cities movement and all these things that came before it, they started from a particular set of ideas. And then when a set of ideas kind of collides with reality, there's the question of what is the portion that really sticks. The thing that I found is it feels like there are individual zoo nodes that are turning into persistent product market fit. I believe Edge is already basically breakeven, at least. And to me some of the frontier towers getting there already, as I understand, and the others make sense from that perspective. But then the questions that are always in the back of my mind, right, it's like one is there's always been this long running emphasis on getting some kind of government autonomy and a lot of the time get that like that product market fit, like it at least in the short term. You know, it feels like that's a thing that's hard to ask for and it has like a lower immediate value. And so, you know, we're seeing people just not ask, ask for it so far.

Well, there is, I think the, the new salon economic zones and so on are like one step towards that because they've got like a deal with Kazakhsan and whatnot. So I think we're finally starting to see some, you know, and then obviously Prospera got the mini circle jurisdiction. So I think, I think there are some fruitful moves. There's Palau has RNS id, which actually you've got, I think. Right. So there's some fruitful moves towards getting jurisdictions to do novel things. Would you.

Yeah, I mean, what, what would you say? Yeah, out of all of those is like a type of jurisdict, like jurisdictional property that's like both really meaningful and at the same time is like actually pragmatically valuable for people.

Definitely mini circle or rather, here's why the. So the Prospera story was they changed the law, they got a biotech free zone, they set up somebody set up mini circle, various people invested. Then there's a treatment that Patrick Friedman, who, you know, spoke, has used and he really. I'm only talking about their self report. Right. So Patrick self report was really good. Farb Nevy self report was really good. You know, I'm not making any medical claims, just saying that. And then actually Bezos saw Farb Nevi's tweet and interacted with it and so on because he is on the lookout for the things that money can't buy. Right. And so this thing that radically. So that's, that's what I consider going all the way, right from change the law, start the company, make the treatment, give the treatment, have it bubble up to the, you know, levels, right? Like that is something that I consider a success. It's like a needle where it's only like n of 1 or n of 2 that's gone all the way through. But it's a little clue as to what could happen if we could increase that. That's my, I think best case study right now.

I mean, I can actually give an answer from a totally different area, immigration and visas. So like, you know, there's a lot of this economic research that says that like specifically immigration restriction is the like the one type of government regulation that like actually prevents the most economic activity.

And this is a Bryan Caplan style argument.

Yeah, exactly.

I disagree with that. But, but I'll explain, but go give.

And like the usual counterargument is basically like, there's all of these people coming from all these places around the world and we don't know who they are and we don't trust them. And the synthesis to me is basically the idea that governments could regulate groups rather than individuals. Basically that if you have a group and we could call it a network state, we could call it something else, and then, and then that group acquires a reputation for doing a good job of containing people who are high quality contributors, who are not likely to go commit crimes, who are not likely to go right off into the forest and so on. Then like from the perspective of a government's own interests, it's pragmatic for them to just let people from that group come because you know, they're at the like, if you already offer visa free to like, people from like some low income European country, like realistically, you're already at least as low risk as that. Right. So I think especially in the age of things like the whole H1B situation, we need to figure out new solutions to that kind of problem. And I think something group level intuitively really feels right.

Yes. So I think, let me give a quick argument against open borders and then tentatively in the digital way. So the argument against is just you don't have open borders for your house, for your wallet, for anything that you really care about. You don't just allow anybody to come in there. So you know, if there's a bunch of people trampling through your living room, you'd say, you know, this and that extends your apartment and your, and this, that, the other out. And so that's the argument for controlling some degree of, in migration. With that said, in the digital world, like Facebook, you know, Reddit or what have you, all these platforms, all the crypto platforms want every, everybody to become a user eventually, right?

Yeah.

So the difference. Why is there a difference? And I'd say in the digital realm, state capacity can scale almost independently of the number of people who are coming through, right? Yes. There's blockchain scalability and so on. So. But it's not like the ability of Facebook to, you know, deal with malware, spam scams, people attacking each other. That only very slowly scales with the, with the population. Right. So they can actually admit enormous millions, billions of people and govern them. On the software side, the interesting question is how much that scales. And I think until that scales outside of software, you couldn't do that in the physical world. Maybe one wouldn't want to.

Yeah. And I think, you know, there has to be some kind of synthesis. Right. And I think the whole point of this kind of online to offline thing that to me is at the core of this movement, right. Is that if like, if your function is basically, you know, like you want to accept some number of people and you have some risk function, then you like there are far better ways of making the decision of who than just basically discriminating based on which country someone comes from. Right? Yeah, like that's, yeah, like that's like a very low bandwidth signal. Right.

It's like during COVID they were trying to block borders in the US based on like Rhode island versus New York or something like that, which is very, very, very poor as a signal.

Yeah. And I think in general, right, like there's going to be a lot of these situations where like individuals wants to do various things, companies wants to do various things, and then governments are like both interested, but then, you know, they have their own risk calculation and if you have some kind of entity in the middle that's like basically able to acquire reputation for saying, you know what? These are people that we think are reasonably low risk. Right. Like it feels like something that's actually pragmatic from both sides.

Yeah, so. So, so I do agree. It's funny because on the one hand I'd say I think like what mini circle is, is something humans have never done before, whereas immigrations, visas are something people have done. On the other hand, I think B might be a prerequisite for A. Because being able to set up an area where you can bring smart people from all over is becoming more and more and more valuable. There's a lot of places become more and more nationalist and what have you. Right. So I agree with you there. There are a bunch of countries doing digital nomad visas though, and a lot of these small countries. Have you observed this? You know, I was talking about this with a few other folks. Small countries are more pro crypto and more pro in general. Have you found that?

I think so.

Do you have a thesis? I mean, I have a thesis on why, but I'd love to hear if you have any thoughts.

Yeah, I mean, I think if you're a large country then you're big enough to where you think that you stand a chance of contributing. Controlling the stack. If you're a small country, you don't. Right. And so I think the, the open stack is like that, that is the alternative that makes sense for you.

That's right. That's why I think network states subsidize, can work with small states and actually strengthen them. You can bring talent, you bring capital there. I mean then whenever you go, like all the zoos probably bring quite a lot of investment money to their local thing or they could eventually over time at least devcon DEFCON did, did it not? Yeah, it did, yeah. So that shows like this cloud entities bring a lot of capital locally. So there's a positive, some trade to be had potentially.

Exactly, yeah. So one other thing that's like always interested me about the network state concept is it's not just about innovation in jurisdictional properties, it's also about innovation in culture. Right. And to me that's also at the core of the like, I think the response to like, are we just inventing co working spaces and accelerators?

I have a one liner, I have two one liners on that. Okay. That's not one liner, it's a two liner. But fine. Okay. So first is, why is. Why is like a strip side university? Why is it not just co working? Because community is about connectivity. And the thing that differentiates a Starbucks society from a Starbucks is if you put on your augmented reality glasses and everybody in a Starbucks society would have edges between them because that's a community of friends. And all the people at the Starbucks would be a community of strangers. It might be friendly, cordial strangers, but strangers nonetheless. Right. So that I think is the difference. Community means connectivity and a lot of people use the word community to mean like oak benches and. Go ahead.

It's interesting you say that because that's like exactly a response I gave when someone asked me about the Estonia E residency thing. Right. Because like, I think, you know, there are a lot of these beautiful kind of idealistic ideals there of like, hey, you know, we are going to become a digital nation.

Yeah. It's actually one of the first three Estonian residents along with.

Yeah, it's like, it's like, yeah, it's a cool thing and it's a useful thing. Right. There's a lot of like, for example, you know, Chinese people for whom it's an excellent way of getting like European E banking.

Right.

But then like to me, ultimately a company is. It's a hub and spoke thing. It's a single entity with relationships to each person.

Exactly.

And a community is people who all do things for each to.

Exactly. That's right. So that was my first. And then on the second one, because you said, how do you know it's just not just co working? And so on so like cultural innovation is. There's usually somebody, there's something you're doing where you're thinking it's good and the rest of the world thinks it's bad. Right. And that. So like, I'm not saying to be controversial for the sake of it. Minimum necessary controversy, but minimum necessary controversy if you need to do something good, you know, then. So like a coworking space isn't, quote, controversial in that sense. Right. So I think those would be the two answers. Connectivity and some small degree of controversy.

Right? Yeah. Or sometimes like something where you think that it's good, but then other people just kind of don't care or not interested.

Right. System as a service.

Exactly. I mean even like I think like Brian Johnson is a good example of this. Right. And like he has a lot of these longevity ideas and like sometimes like you can't just go one step forward and you can't just make what you want happen through a single isolated product. That makes sense in the context of everyone's preexisting lifestyles. And to his credit he has made versions of that and his powders are good. But sometimes you also have to go deep, right? Yeah. Actually I think this is also kind of my thinking in the context of some of these zoo nodes. It's something that a lot of them wants to do as well. Right. They want to go deep on what I call DX technology, which includes cryptography, it includes blockchain things. It also includes a lot of health actually. So this thing I have over here, this is a fun gadget actually. A group that we give grants to out of BALVI funds that it's a clean air Tamagotchi. So it's basically a kind of Tamagotchi style game where. But it's attached to air quality monitors. And so here you have the CO2 meter, you have PM 2.5. And so this is basically a way of measuring how good this room is in terms of how healthy the air is, people not getting sick and so on. And so effectively we're actually bringing the, the dream of, you know, the decentralized FDA thing.

Exactly. I'm going to get there. That's right. Like basically these sensors, because ultimately regulation is information. Like I say, they're giving star ratings on, you know, the quality of an actor and they're banning bad actors. And if you had really great sensors that were impartial and that fed data and you had chain of custody in both the chain of custody and blockchain of custody sense, and you could, you Know, crypto cameras for example, or crypto sensors where they hash it as they're uploading it.

Yeah.

Then you could come up with reports that were actually more trustworthy. Right?

Yeah, yeah, exactly. That's the plan. You know, basically hook up some sensors together with, you know, cryptography and you know, and interesting.

Most of the time FDA might be too sensitive, but sometimes they're actually not enough. For example, like the, the body scanners in the US airports, like TSA ran them through even though some people objected to FDA because there's a fellow government agency who's able to ram them through. So sometimes you can audit them and actually find they're more risky than FDA would approve. And you might not want that risk.

Right, yeah. And like, I think, you know, you can, you can go around saying words about the clean air topic, but then you can also just like go and create a demonstration and show people like look, this is an entire community where everything is.

And that's a great example of something for a community because there's so much economy of scale in having those things everywhere rather than, I mean you can wear them around yourself, but then you decentralize and you recentralize to have like some industrial strength thing and it's hooked to sensors and it tracks everything and so on and so forth. Right, the.

Exactly.

Sensors. Yeah, yeah. Cool. Okay, so you've seen you. You got Zulu going. Switching gears for a second. What other kinds of communities would you like to see? Or are you just happy to sit back and watch the Zusulu's? Or are there things that holds startup societies you'd like to see?

Yeah, I mean I think out of the different Zoosulus, you know, I think there's two categories that at least of these like very small scale nodes that I think are interesting. There's sort of what I would call embassies and monasteries. Right. And embassies are basically.

That's a good term. I immediately get it. It's like, are you receiving lots of people versus your cloistered?

Exactly. Like Frontier Towers, I mean like one in SF and like I would call it an embassy. Right. They like, they actually are pretty smart. You know, they bought up this apartment building that's like actually in the area that's you know, historically known as being the crime den. And then they bought it up like basically just before it started getting cleaned up. So it's actually a very.

Timing is.

Yeah, a very good deal. But you know, it's like they have 16 floors and then there's you know, a floor For Ethereum, there's a floor for biotech, a floor for AI. And they're just creating this environment that just really makes all of these technologies available at a high density. And like you, I think you could, you know, go even further in terms of like focusing on specific philosophies. Like I would say, yeah, you know, there should be one of these that's like purely open source and then you know, for monasteries, like, you know, basically a monastery is just something that's like further away and it's more about this kind of holistic lifestyle. But then like historically speaking, you know, like actual monasteries, like the words just like monks kind of praying and doing things themselves. Right. They did things.

The tricky part about a monastery is it's hard to imagine, I mean, almost by definition that growing because since it's closer from the world, it's not recruiting, it's not scaling advertising. And so the embassies would seem to grow much more than the monasteries unless there's something. And that would just have a natural, selective.

You know, it's interesting because I would actually categorize Network School as being more like a monastery.

Interesting. I think there's aspects of both because Stanford has aspects of both.

Right.

So the thing is you, we do receive lots of people, but by having it somewhat air gapped then it's its own community. Whereas if it's right in the middle of the city, then it doesn't have its own community. So I think there's, there's some combination. But a pure monastery wouldn't work at least.

Yeah, I mean that sounds right, I think. Yeah. I mean what I have in mind by the word is definitely something that's like at least reachable for people.

Actually though, you're right though, there's a trade off of two terms, which is accessibility goes up as you're closer to the city center, but community goes up as you're further from the city center. Or connectivity. Very roughly.

Right, yeah. And it's all about the graph structure, Right. You know, community as people could do things for each other. And then if that community is like right beside a much bigger thing, like you know, the graph is just going to naturally look like that. Right?

Yeah. So maybe the ideal would be it was very accessible, but it was a road that nobody ever wants to travel down.

Yeah.

Then it's got the combination of high accessibility. That's interesting. I could think about mentioning that. Okay, so anything else on your mind? I think you want audience to know. I should know.

Yeah. I think the other thing I would want to see is experimentation more on the culture side. Right. I think culture is something that's really important. Right.

And the one commandment Sapphire was writing about, like the keto kosher and stuff like that offline in particular.

Exactly. Yeah. No, the whole thing that you guys are doing in terms of like having explicitly offline spaces, like, I think that's great. Right. I think, you know, there's a valuable role that culture plays in just like creating and like creating local consensus and like standardizing answers on just big important questions of how to live life. And I think that needs to be like really updated for the 21st century.

I think so in particular. Yeah. So on the offline thing, so this is something you and I have talked about maybe worth. Right. So with cars, we are advancing cars still with self driving cars, electric cars, even flying cars. We can also subtract cars and build totally walkable spaces.

Right.

And so we can advance tech with AI and crypto and all this stuff. We can also subtract tech. And this is what we're doing at network school is what we're talking about where totally offline offices, pencil and paper, install phone lockers in like half the building so that you have to lock your phone when you walk into the building and you're just present and you're offline and so on and so forth and just start to have offline spaces as walkable spaces where it's like almost like not getting hit by a car as you're walking along. You don't get hit by a push notification in an offline space, you know?

Yeah. I mean, knock you off course has like, who almost feels PTSD from like just peacefully living my life and then randomly having minute long clips of me doing things pop up on Xiaohong show. Like I'm. Yes.

Yeah. Yeah. I mean, the thing is, it's funny, I realize that some people don't turn on do not disturb all the time on their computer.

Yeah.

And I'm like, oh my God, they must get barrage with notifications all. I can't. I couldn't imagine even thinking like that. Right.

Yeah.

And so the way these things are set up by the defaults, we have to change the defaults on this stuff and make it more friendly.

Yeah, no, I mean that's. I mean, I'm just excited to see where this movement goes and just like the first, what, 10 of these things turn into something that I. Yeah. That I would feel really excited not just to visit, but to live in.

Awesome. Great. Thank you very much.

Thank you too. Balaji. Thanks.