The $LIVES payment token program, referenced in this essay, continues operating in a limited manner, since Infinita is focusing on biotech advancements. Infinita considers it a successful project with traction, and they’re open for people interested in continuing its development.
Abstract
The implementation of native payment tokens or stablecoins has been proposed as a viable growth model for startup societies and intentional communities, inspired by Balaji Srinivasan’s The Network State: How to Start a New Country, as this tech-based approach to decentralized governance finds its footing and best practices are being developed.
While there isn’t a formulaic method to how blockchain-based societies can achieve legal recognition and autonomy, good practices have surfaced related to the issuance of native tokens for community transactions. The development of onchain infrastructure can provide visibility for the existing economic dynamics in each specific community, providing important information for both their promoters and would-be residents, while furthering the group’s cohesion around values of transparency and decentralization. It could also represent an income source and business model, as more sophisticated financial products mature around the token. The adoption and legal compliance of these projects may be central for developing a startup society’s legitimacy and reputation.
These new organizational structures could provide residents with higher value governance services, providing platforms for the implementation of institutional refinement and exercise of sovereignty. Feasible in nature, startup societies could create de facto economic zones on the cloud, with Rule of Law that favors experimentation and growth, while respecting rights of residents or members.
Considering the first-hand experiences from hubs like Infinita City in Honduras and Crecimiento in Argentina, this essay will present insights related to the evolution of the implementation of payment tokens, and some of the legal routes that can be taken for replicating the experience in other startup societies in a compliant and efficient manner.
Introduction
The concept of a network state was introduced by the prominent entrepreneur and author Balaji Srinivasan, in his 2022 book The Network State: How to Start a New Country. The idea builds on the intersection of technology, cryptography, and social organization, proposing a new way to form societies in the digital age.
Srinivasan defines it as a social network with an agreed-upon leader, an integrated cryptocurrency, a definite purpose, a sense of national consciousness, and a plan to crowdfund territory. It starts digitally but evolves into a physical organization, serving as a modern successor or complement to the nation-state. Unlike conventional countries bound by geography, a network state would fundamentally be digital-first, leveraging the internet to connect people globally based on shared values rather than physical proximity.
The proposed network states have several distinguishing features that set them apart from nation-states, companies, or loose online communities:
Digital-First Structure.
Non-Contiguous Territory (Archipelago Model).
Invisible and Decentralized
Cryptographic Integration
Dynamic and Fluid Geography
Purpose-Driven Alignment
Non-violent and Acquirable
Accessible Founding
The author recognizes that the definition references “the final form of a diplomatically recognized network state”. Before achieving that, the online startup society paves the way, working towards scaling. Between a startup society and a network state, there may be at least two other stages: a network union and a network archipelago. Srinivasan expands, “turning a startup society into a network union makes it a digital community capable of collective action. Turning that network union into a network archipelago manifests that collective action in the real world, as the community crowdfunds physical properties around the world and connects them via the internet. Finally, an impressive enough network archipelago can achieve diplomatic recognition from an existing government, thereby becoming a true network state.”
Other authors have used the term “Startup Society” more broadly, such as Mark Fraizer and Joseph McKinney, as to include other governance experiments, ranging from onchain groups, to free economic zones, and private residential communities. For purposes of this essay, “Startup Society” will retain the intention used in The Network State: How to Start a New Country.
The Network State is in itself an updated proposal, part of a long intellectual tradition that advocates for governance designs that prioritize flexibility and decentralization, with communitarian efforts and local decision-making. It takes inspiration from historic phenomena such as the Silk Road, the Hanseatic League, or the American revolution.
More recently, it echoes the influential The Sovereign Individual by James Dale Davidson and Lord William Rees-Mogg. Originally published in 1997, it offers a provocative forecast of how the digital revolution will transform nation-states, empower individuals through technology, and usher in a new era of personal sovereignty.
The book predicts a world where individuals operate as extranational sovereigns, unbound by geography and loyal only to contractual arrangements. The grip that governments maintain over the monopoly of violence will be dramatically reduced as microtechnology (e.g., encryption, cybercurrencies) erodes their ability to coerce. Traditional politics would be replaced by private services consuming fewer resources. In this future, provinces or cities would more openly compete like businesses to attract residents with low costs and high efficiency.
It foretells that individuals will choose jurisdictions based on value, implementing encrypted cyber-economies and digital assets. This economy will render borders obsolete, with organizations operating beyond geography. Digital currencies and encryption will protect wealth from state seizure, making “returns to violence” negative for governments.
I’ve argued in the past that the advent of network states, and more broadly of autonomous special economic zones, also represents the creation of new spaces for the exercise of the sovereignty of individuals. Physical special economic zones or charter societies need to be recognized by a host country’s authorities for them to be able to formally operate their regulations, which is in itself an exercise of delegated sovereignty by a nation’s representatives. Once physically established, these societies are opt-in, meaning that they don’t affect the sovereignty of those that don’t choose to join them. Yet, the choice represents an exercise of individual sovereignty from those that do decide to be a part of them.
Integrating cryptoassets
A level of autonomy for a startup society to develop its own financial system would enable the community to continue maturing, with those development capabilities either directly exercised or through synthetic solutions. The implication is to natively grow financial markets that ease capital allocation in the collective projects, implementing good financial practices, while attracting potential new residents, investors, and founders. It would also foster the surgence of vernacular social institutions and a sense of belonging to a community.
Introducing a payment token or stablecoin may be a first step for developing a financial system, and broader blockchain-based infrastructure for a crypto-native society. With appropriate incentives, a payment token could be a key for residents to adopt the native technology, use the startup society’s tech stack, and for them to immerse themselves in the different products and features available, including governance-related registries, ZK identity solutions, and laws embedded onchain.
For societies that have already become network archipelagos, that have acquired or somehow secured the use of physical space, it would also be a powerful tool for channeling transparent crowdfunding real-estate efforts, developing financial instruments like standard loans and mortgages for the community members, while providing a live snapshot of its economic activity. Eventually the startup society could develop more sophisticated solutions, being able to borrow against real assets and cashflow. Such infrastructure may provide the project with both valuable live data and an income-generating business model.
If the startup society is able to issue their own community tokens by exercise of their own legally recognized authority and using its own framework, whether the tokens be used for payments, utilities, or other communal interests, that’s an indication of an exercise of sovereignty by the community’s members. It entails that the society either achieved the final desired diplomatic recognition, or obtained a substantial level of enforceable autonomy and legal jurisdiction. Conditions of competition between startup societies, or of competing options within one startup society, would embolden individual sovereignty, similar to phenomena studied in federalist setups.
Srinivasan concurs, stating that “without a sovereign digital currency (and, more generally, a sovereign system of record) there is no sovereignty.” Furthermore, he maintains that an integrated cryptocurrency would be “the digital backbone of the network state. It manages the internal digital assets, the smart contracts, the web3 citizen logins, the birth and marriage certificates, the property registries, the public national statistics, and essentially every other bureaucratic process that a nation state manages via pieces of paper. Because it’s protected by encryption, it can coordinate all the functions of a state across the borders of legacy nation states.”
In any case, a startup society that doesn’t yet have the legal capacity to enact their own financial system could start deploying their payment token and other solutions using existing legal options. They may anchor their infrastructure in either a host country or using crypto-friendly jurisdictions that would allow for such an issuance. This is all very feasible from a practical and technological standpoint, even if it requires legal engineering for the compliance and refinement of each specific project.
Supervision measures could be embedded onchain, implementing regulatory instruments into the technological infrastructure, as has been proposed for DeFi solutions. This is aside from formal compliance obligations in the startup society’s host country or the jurisdiction used for issuing tokens.
In a way, some of these dynamics already exist, in a limited supranational, supralegal manner, through existing blockchains. When you interact with the Bitcoin or Ethereum blockchain, you do so while opting-in to their framework, agreeing to the rules established onchain. Your operations onchain exist and manifest without the need for state support, or even for legal recognition.
Aside from utilizing social strategies and Public Choice Theory for policy change that attains the approval of an appropriate legal framework for network states, would-be founders of startup societies could also explore the establishment of a Synthetic Jurisdiction. A synthetic jurisdiction can be understood as a constructed, non-territorial legal domain that governs physical assets and/or persons globally through enforceable, technology-mediated rules and agreements. It operates as an opt-in system, leveraging international enforcement of contracts, and potentially adopting fractional services from existing jurisdictions to frame their governance offering. It would be a legal engineering feat, managing it all contractually, without the need for the recognition from a government. While some implementations have arisen with valuable lessons, I believe that the full potential of the Synthetic Jurisdiction approach is far from having been achieved. Designing a Synthetic Jurisdiction remains an ambitious opportunity for founders and attorneys in the industry.
Mechanisms for implementing native blockchain infrastructure
The implementation of stablecoins has been proposed as a potential business model for startup societies by Niklas Anzinger, Founder and CEO of Infinita City, considering the issuance of its native payment token in Próspera ZEDE, $LIVES. It’s a community token at this point, with around 500 token holders and users, and 1700 transactions per month, as of October 2025. Accepted by over 40 businesses and organizations, it can be used for paying medical treatments, rent and mortgages, car rentals and leasings, diverse services, and of course retail establishments like restaurants. It has an exchange rate of 1:1 with USD.
Anzinger maintains that with the “US enabling legislation, the world is becoming multi-stablecoin. Stablecoins resemble private banks: they hold deposits, issue a currency, and earn yield on reserves. Historically, central banks displaced private banks. Startup societies can reclaim that role by offering opt-in alternatives.”
Some of the reasons considered for the adoption of stablecoins or payment tokens by startup societies:
1.- Issuing a stablecoin is straightforward.
2.- You can show early traction through onchain analytics
3.- Vendor adoption is easy, since you bring them business.
4.- The vault can become the basis of your financial system.
In time, we may see the rise of different community tokens supported by various onchain societies, ushering accelerated competition through online means. They wouldn’t be built to compete initially with multi-billion dollar stablecoins like USDC or USDT on market penetration, but they could be valuable for the local community and value-aligned groups. These community currencies would compete on incentives and stability, as well as purchasing power. Nobel Laureate Freidrich Hayek has proposed that competing proprietary currency may be backed by commodity indices, which could include Bitcoin and Ether.
In any case, a startup society interested in pursuing this would need to analyze the legal implications of the potential stablecoin or token. They’d have to consider the requirements in the host country, aside from the potential obligations for the project’s Founders and the administrators of the financial infrastructure.
There are some prominent jurisdictions that could be used to anchor the financial activities, in case it’s both allowed in the host country, and that doing it offshore offers better conditions than doing it in the host country, considering political implications and long-term plans and commitments. These include the British Virgin Islands, the Emirate of Dubai with the Dubai International Financial Center and the Dubai Multi Commodities Center, Switzerland, and Próspera ZEDE.
Additional places with reasonable environments for token launches include the Cayman Islands, Hong Kong, Liechtenstein, Singapore, and other territories part of the United Kingdom. There are also regional options with available sandboxes, such as in Australia, Argentina, El Salvador, the European Union, or SEZ Astana. We should also expect a growing preference for the United States, as new norms are approved that allow for greater certainty in the crypto industry.
Infinita City chose Próspera ZEDE for launching its payment token. It’s not only the host jurisdiction for Infinita and its main physical anchor, but it also offers a competitive legal environment for crypto endeavors in the world. Its legal autonomy allows it to recognize BTC, ETH, USDC, USDT, and DAI as if they were legal tender, and offers unparalleled legal flexibility. Companies from regulated industries, including finances, can select between different regulatory options. Different companies from the same industry can be licensed and operational under different frameworks. Próspera ZEDE applies Polycentric Law, fostering competition between regulations.
The main drawbacks for Próspera ZEDE are that, since it’s a very new jurisdiction (started building in 2020), there is a limited amount of financial services providers for Próspera-based companies, the regulatory bodies are still improving, and there are ongoing political tensions with the incumbent Honduran central government; the upcoming elections are on November, 2025.
Other startup societies and pop-up cities have also started to develop onchain infrastructures, including Edge City, Ipe City, and Zuitzerland. It’s worth highlighting Crecimiento’s approach during its August 2024 Aleph pop-up city, implementing Morfi Tokens for retail payments, with a 1 to 1,000 exchange rate with Argentinian pesos. While it wasn’t issued by Crecimiento, it showcased the potential as designed by the SimpleFi developers, allowing for a seamless experience for users.
Good practices
Startup societies may want to keep the infrastructure open and permissionless, when possible. Part of the success of startup cities and their managers will come from their ability to implement a vision, while allowing for the community to grow in the environment that has been created, and develop organically. NYU economist Alain Bertaud notes some important insights for community developers in his book Order Without Design. After all, cities are organic, complex, and grow in ways that designers often can’t imagine.
As we’ve also learned from traditional systems, promoting financial and monetary competition within a network state would prevent knowledge gaps for decision makers, averting disequilibria.
Compliance with their own recognized terms and regulations, embedded on code or otherwise, will be key for ensuring predictability within the network state, affecting the trust from residents. Code as law, governed by code and law, not by whims of society managers. The more the network state can be governed by cryptographic and mathematical rules, the more predictable it would be.
Being mindful of the development of complex dynamics between evolving universal governance services and other more private-sector endeavors of the network state promoters, between the general operations of the network state’s governance legal vehicle, and the financial activities of its promoters (one being more akin to a public county or municipality, a public or universal ecosystem, and the other being the private counterpart that operates within that ecosystem). Complex implications will arise as the projects mature and governance services are provided. If their financial ecosystems grow successful, there’s a risk of an overexposition of the network state, the universal governance services provider, to the financial products from its private counterpart. A monetary policy for the community could only remain independent from internal financial policies of the private operator and potential issuer of financial assets, as long as the issuer’s expenditures constitute a comparatively manageable percentage of all transactions to the financial system. As has been studied in governments from nation-states, it’s easier to protect that independence as long as the network state’s debt (and particularly its short-term debt) constitutes only a reasonable part of all credit instruments issued within the society. This is separate from implications of using financial products from other private parties anchored in the network state; the risk refers to using financial instruments from private parties directly linked to the operators of the network state, “state companies”.
If an overexposition scenario happens, the team responsible for the financial products may need to adjust their policy to that of the governance provider, giving less importance to their residents, generating risks for long-term inflation or non-agile services.
Conclusion
The network state isn’t just a theoretical exercise, it’s a response to limitations of existing systems: bureaucratic nation-states, polarized politics, and outdated governance. By enabling online societies, it could foster innovation through competition and relatively low costs of entry and exit. It democratizes power, allowing billions to participate in state-building.
While best practices are still being developed, with only a handful of existing startup societies, developing a native blockchain infrastructure and financial solutions may be a way for these communities to gain legitimacy and traction. This would also allow for the exercise of sovereignty of its members, and the development of a more robust income-generating model.