Nation3: Comments on Nation3’s dispute resolution system
This article comments on Nation3’s dispute resolution system. It is part of a series of articles that explore how verdicts with veracity can be achieved wholly within the nym nation and how a common law will evolve in the nym nation, unencumbered by nation-state legislative rules-based distortions.
Nation3 offers ‘web3’ dispute resolution services in a broader context of “building a zero-tax, Web3-powered, solarpunk society.” Nation3’s model for incentivizing parties’ adherence to dispute verdicts relies on the specter of confiscation of a bond, requiring both parties to deposit up-front (financial) damages bonds held at-risk subject to the outcome of the verdict. Though this provides some compulsion to adhere to verdicts, it has a number of shortcomings. These include:
Does not employ reputation: There is no long-term recognition of honest actors’ behavior which can be leveraged in the future to enter into contracts of increasing value and there is no recognition of a bad actor’s behavior that can be used by others to shape terms when contracting with them. i.e. Reputation is not employed as an incentive for parties to uphold terms of verdicts.
Reliance on capital-inefficient damage bonds: Given there is no notion of reputation within the Nation3 model, reputation can not be employed to augment collateral requirements.. Instead, a financial damages bond is employed as the sole enforcement mechanism. Damages bonds represent locked capital, so cannot be deployed by parties whilst they are held in bond.
Compulsion to adhere to a Nation3 verdict is time-limited in that once a verdict is made and a certain time period is passed where damages are awarded and damages bonds are released, there is no further compulsion for parties to perform. This limits the scope of disputes that can be addressed by Nation3.
Nation3 requires use of their token to participate in the Nation3 ecosystem. This represents added friction for users to participate.
Also, Nation3 proposes that unresolved disputes escalate to nation-state courts and arbitration forums, and therefore Nation3’s dispute resolution is not wholly within the nym nation. With Nation3’s model, for nym entities to be recognised by nation-state courts, the nym entities must discard their pseudonymity. This is wholly incompatible with the censorship-resistant value proposition of the nym nation and why its participants operate pseudonymously. Censorship-resistant cryptocurrencies and non-custodial censorship-resistant decentralized finance technologies enables the nym nation, and therefore Nation3’s model that requires doxxing of nym entities is incongruent. This is a material flaw in Nation3’s model.
More broadly, discussion of Nation3’s dispute resolution system necessitates consideration of Nation3’s overarching model given its dispute resolution system is a derivative. Nation3’s overarching proposal depends first on establishing a virtual ‘nation’ with elaborate governance structures and self-selected constitutional imperatives. These self-selected imperatives include things such as a socialist-inspired universal basic income, for which the mechanism is yet to be clearly defined by Nation3. Nation3’s notion of UBI seems to conflict with other Nation3 objectives such as not being parasitic on productive elements of the Nation3 nation.
Nation3 depends on individuals becoming a ‘citizen’ of Nation3 to fully participate in the Nation3 nation. Nation3 citizenship requires purchase of Nation3 tokens at a cost that equates to several months’ wages for most of the world’s individuals, which is unnecessarily exclusionary.
Nation3 expressly states they are compliant with and defer to nation-state rules-based legal and governance systems. This renders Nation3 subordinate to existing nation-state domains, and therefore is incompatible with Nation3’s stated aim to be a “...Web3-powered, solarpunk society.” With this dependency on nation-state regulations, Nation3 is a sort of club operating within nation-state jurisdictions.
Nation3 promotes the solarpunk ideology, which primarily appeals to individuals who are statist and socialist-minded. By design, this excludes many individuals who choose not to accept such ideology. This is in contrast to a nym nation model which allows nym entities to exercise their own philosophy as they see fit without Nation3’s central ideological command paradigm. Societies comprise individuals who have their own preferences. Therefore, enabling modularity is necessary to allow those preferences to be expressed. Nation3’s prescription of a single model of society prevents expression of preferences and perpetuates the existing inefficient and coercive nation-state monopolistic paradigm.
Nation3’s deference to nation-state rules-based legal and governance systems means that Nation3’s model will prevent a universal ‘natural’ nym nation common law to emerge. Rather, Nation3’s self-selected constitution and inheritance of nation-state laws will perpetuate rules-based orders. Legal frameworks based on legislation (i.e. rules) are distorted by the imperatives by the actors who establish or influence the legislation. Such legislation is therefore arbitrary. This is distinct from allowing a common law to emerge, which will reflect common-sense approaches to resolving disputes without the distortions of arbitrary legislation.
Some of Nation3’s shortcomings could be addressed, such as introduction of a reputation system to improve incentives of parties to a dispute. But because of Nation3’s underlying rules-based, statist and socialist presuppositions, addressing any superficial shortcomings may be incompatible with Nation3’s core framework and would not resolve its more fundamental issues.
Despite this, Nation3 could be viable as a stand-alone voluntary society that exists within a more overarching nym-nation model. Instead of unresolved Nation3 disputes being escalated to a nation-state forum, unresolved Nation3 disputes could be escalated for resolution to a wholly-nym-nation dispute forum. And disputes between Nation3 entities and other non-Nation3 nym entities could be heard in this overarching nym-nation dispute forum. This wholly-nym-nation dispute forum would need to be able to deliver verdicts which have veracity wholly within the nym nation and not depend on nation-state legal systems. And it is exactly this that this series of articles will reveal.
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Cryptocurrencies give entities the ability to permissionless transfer value between themselves. Censorship resistance. Dispute resolution systems for the nym nation must also allow disputes to be resolved in a manner that is unencumbered by state actors, wholly within the nym nation. The nym nation does not have the utility of force to assure veracity of verdicts as do nation states. Without forceful dispute verdicts, there will be severe limits to the value nym entities will be willing to contract with one another and, accordingly, there will be severe limits to the scalability of the nym nation. Subscribe to this blog as we unfold how this ideal of verdicts with veracity can be achieved wholly within the nym nation and how a common law will evolve in the nym nation, unencumbered by nation-state legislative rules-based distortions.
This is a new frontier.