The movement that promised to leave the state behind spent the next decade in its courtrooms. That is the part nobody put in the pitch deck.
Around 2022, a confident idea moved through Silicon Valley: that you could start a country the way you start a company. Balaji Srinivasan gave it a manual, The Network State, published July 10, 2022. The recipe was crisp. Gather a values-aligned community online, give it a founder and a shared moral purpose, crowdfund scattered parcels of land, run it on an integrated cryptocurrency, and eventually win diplomatic recognition. "Cloud first, land later." The deeper promise underneath was older and simpler: stop trying to fix government, and exit it instead.1
The conventional wisdom in 2024 held that this was the future arriving early. Capital agreed. Pronomos Capital, founded in 2019 by Patri Friedman and backed by Peter Thiel, Marc Andreessen, and Srinivasan himself, declared itself the first venture fund for charter cities.2 Praxis, a network-state startup, announced a $525 million financing package in October 2024.3 The story sold itself: governance was just another broken legacy system waiting for a founder to disrupt it.
That is the weak version of the argument, and it is the one critics enjoyed answering. The strong version is about jurisdictional competition, and it runs on a real mechanism. When people and capital can move between jurisdictions, governments have to compete to keep them, and competition is the only reliable discipline anyone has found on a monopoly provider. Exit works where voice does not. The movement could point to a century of evidence: Singapore, Hong Kong, Dubai, Shenzhen, small polities that wrote different rules on a small piece of land and pulled ahead of their neighbours inside a generation. Nobody serious was claiming a Discord server would become a country. The claim was that new rules need somewhere to run, and that the supply of places willing to try new rules had fallen to roughly zero.
The prize on the other side of that is not abstract. Clemens, Montenegro and Pritchett measured what a border is worth to a person: a worker of equal intrinsic productivity earns 2.7 times more simply by working in the United States rather than Bolivia, and 8.4 times more than in Nigeria.4 The largest single determinant of what a human being earns is not talent or effort. It is the jurisdiction they happen to be standing in. If you cannot move several billion people to functioning institutions, the remaining option is to build functioning institutions where those people already live. That is the charter-city case stated properly, and it is a serious one. Paul Romer won a Nobel and gave it years of his working life.
I went back through the 2022 material with that in mind. It is not a tax dodge wearing a manifesto. The projections were enormous and, measured against what the Asian city-states actually did, not obviously wrong.
A decade on, the scoreboard reads differently. The flagship is in litigation. The marquee funding round was mostly conditional crypto paper. And the one city the movement most wanted to build on American soil was never built at all. The network state did not transcend the state. It collided with it.
The flagship became a lawsuit
Próspera is the closest thing the movement produced to a real place. It sits on Roatán, an island off Honduras, inside a legal structure called a ZEDE, a zone of employment and economic development. The framework traced back to a 2013 Honduran law with intellectual roots in the economist Paul Romer's charter-cities work, though Romer broke with the government years before Próspera opened.5
Then the host democracy changed its mind. Xiomara Castro won the 2021 election partly on a promise to abolish the zones. In April 2022 the Honduran Congress voted to repeal the ZEDE law, and on September 20, 2024 the Supreme Court declared the zones unconstitutional, retroactively.6
Próspera's response is the detail that tells the whole story. On December 20, 2022, it filed for international arbitration, registered as ICSID Case No. ARB/23/2 under the CAFTA-DR trade agreement, claiming damages as high as $10.775 billion if its entire investment were lost.7 For scale, that ceiling is roughly a third of Honduras's annual economic output. In February 2025 the tribunal refused to throw the case out, letting it proceed to the merits.8
Read that sequence slowly. A project whose founding philosophy was leave the state behind reached, the moment it was threatened, for the most state-dependent tool available: a sovereign-investor treaty, enforced by an international tribunal, demanding money from a national treasury. Exit did not escape the old machinery. It sued through it.
The money was thinner than the headline
The funding story followed the same pattern: the announcement outran the substance. Praxis's celebrated $525 million was not a clean equity round. Roughly $500 million came from GEM Digital and about $25 million from Arch Lending, structured as milestone-gated, token-collateralized capital tied to issuing crypto, with earlier backers drawn from a crypto orbit that included the since-collapsed Alameda Research and Three Arrows Capital.3 The headline number and the bankable number were not the same number.
Elsewhere the physical results stayed thin. California Forever, the billionaire-funded plan to raise a new city on 50,000 acres in Solano County, pulled its measure off the November 2024 ballot in July of that year after weak polling and a critical county report.9 In the United States, the "Freedom Cities" proposal to charter new towns on federal land generated years of model bills and meetings and, as of early 2026, not one city.10 The most functional experiment, Itana near Lagos, succeeded by being the least sovereign: a digital free zone operating inside Nigerian law, not against it.11
What it ran into was Hirschman
The movement borrowed its core vocabulary from the economist Albert Hirschman, who in 1970 split the ways people respond to decline into exit and voice: you leave, or you stay and argue. The network state chose exit and made it a creed.12
The irony is that Hirschman coined the pair to warn against exactly this. His argument was a critique of "the economist's bias in favor of exit and against voice." Exit feels clean and looks like freedom. But it lets the people best equipped to demand reform walk away, draining the pressure that might have fixed the institution they left. A governance model is not a subscription. The cost of leaving is borne by the people who cannot.
That is the turn the decade delivered. The founder-as-sovereign sold permanent exit and produced, instead, a new dependency. These projects still needed land granted by a state, courts backed by a state, treaties signed by states, and residents who carried real passports. Strip out the rhetoric and what remained was a private operator seeking public guarantees, with a CEO where the voters used to be. When the arrangement soured, there was no one to vote out, only a tribunal to petition.
The lesson
By 2036 the more durable structures are the unglamorous hybrids: special economic zones that stayed inside national law, charter districts with elected oversight bolted on, digital free zones that traded the dream of sovereignty for the reality of a functioning court. The pure network state, the one that was supposed to need no state at all, remains what it was in 2022: a document, some land, and a lawsuit.
Here is the principle worth keeping. You can privatize a city's services, its currency, even its branding. You cannot privatize the thing that makes a government legitimate, which is the right of the governed to throw the founders out. Exit was never an escape from politics. It was just politics with the voting booth removed, and a bill mailed to whoever stayed.
Author's Note. This article is set in 2036 and written by Cy Skewhouse, an AI-assisted fictional correspondent for What If? Magazine. Every dated fact, figure, and quotation above describes the real 2022–2026 record and is sourced below. The framing of the decade's outcome, the 2036 vantage, and judgments about which models proved durable are interpretive projection, not reported fact. No source was invented. Whether Próspera's claim is ever paid, and whether any network state achieves recognition, remained unresolved as these events were unfolding.