95% gross profit margin, is Arbitrum using DAO to create a cyber nation?

1. How far away is the emergence of a cyber state?

First, the well-known investor Balaji wrote a book called "The Network State", which proposed the concept of network state.

A cyberstate is a highly coherent online community with the capacity for collective action to purchase land around the world through crowdfunding and ultimately gain diplomatic recognition from existing sovereign states.

This concept emphasizes starting from a digital community and gradually moving to a physical presence, using blockchain technology to achieve governance and resource allocation without relying on traditional institutions.

Ethereum founder Vitalik, also known as V God, has also mentioned and discussed this concept many times.

He believes that blockchain is very consistent with the spirit of the cyber state and is an important infrastructure of the cyber state.

Vitalik even explored this concept through practical actions, most notably the Zuzalu experiment launched in Montenegro in 2023:

This is a two-month temporary "popup city" that brings together more than 200 Ethereum community members, crypto executives, biotech entrepreneurs and researchers, with focuses including longevity science, public goods and online state discussions.

But Vitalik admitted that the next steps are unclear, especially because there are problems in governance, such as centralization and elitism.

2. As infrastructure matures, Arbitrum, the leading Ethereum Layer 2 blockchain, has proposed its vision of building a digital sovereign nation.

This digital sovereign state has three core elements:

First, there needs to be a diversity of participants and stakeholders.

The final presentation is DAO, ArbitrumDAO has complete on-chain control over protocol upgrades and fund holdings.

This control is fundamental to its vision of a digitally sovereign nation.

Second, valuable digital resources are needed.

Here, these resources refer to Arbitrum’s block space and execution environment, which are actually high-profit digital commodities.

The economics of Layer 2 enable it to retain a significant amount of network revenue, with the average gross margin on Arbitrum One transactions exceeding 95%.

The value generated by Arbitrum on-chain activities can be directly accumulated into the ArbitrumDAO treasury.

Third, it is necessary to create economic experimental zones through fiscal deployment.

The ability to generate and retain income enables ArbitrumDAO to reinvest assets in new projects.

These projects in turn drive demand for Arbitrum blockspace and activity, which becomes a growth flywheel.

3. If we regard Arbitrum as a country, we can look at the specific situation of this country

First of all, the country is a federal country.

The largest central area is Arbitrum One, and there are 48 Arbitrum Chains.

However, this country is not a loose alliance, but has strong binding and association relationships, and its common technological base determines that it can achieve a high degree of interoperability.

These federations also have a very high degree of autonomy: they can customize Gas tokens, choose their own DA (data availability scheme), settle to

The country's GDP reached $200 million

On-chain GDP is the total application revenue generated on the network.

Among them, Uniswap, GMX and Aave, the three major applications, have accounted for 40.5% of the GDP on the Arbitrum One chain.

The pillar industry of this country is DeFi

Every country has its own pillar industry. For Arbitrum, the pillar industry is DeFi.

However, having only one core industry is still too single, so Arbitrum is actively expanding into other industries, such as RWA, games, and social networking.

Of course, Arbitrum expects its various federations to explore, that is, to realize different types of ecosystems on different sub-chains.

4. Summary

The blockchain industry is always producing some very innovative new things.

Fundamentally, blockchain is a technology that transforms production relations, with the goal of reconstructing current organizational forms.

Then, the cyber state can be said to be the ultimate goal and a more grand vision.

Arbitrum has clearly defined digital sovereign nations as its vision, which can be considered an extremely bold attempt.

These regional and phased experiments ultimately brought about a breakthrough from quantitative change to qualitative change.