A Practical Application of Free Market Ecology for Maintaining Solidarity in Network States and other Private Clubs.

J.W. Sher
June 23, 2025

It would seem unrealistic to implement Free Market Ecology all at once. The question is how to build something practical for the grassroots that anyone with the ability to build blockchain apps can implement today. This article demonstrates that by creating a small but fundamental component of a future Free Market Ecology system, we can implement a Universal Basic Income (UBI), ID verification, mitigate fraudulent rule violations, externalities, and mitigate Sybil attacks, where bots create many fake identities to take over a system.

We could utilize WorldCoin and a World ID to identify individuals within a network state. However, what if multiple roots of trust determine who can be a person? What if there is a need for pseudo-anonymity not tied to biometrics? Perhaps sub-organizations want to grant individuals specific privileges. Maybe a person wants to be a member of numerous jurisdictions, possibly hundreds of different jurisdictions.

Furthermore, Worldcoin doesn’t integrate Universal Basic Income (UBI) or deal with externality mitigation. It’s just an ID layer. What if those mitigation requirements and UBI come from multiple different jurisdictions?

If you want an ID in the United States, you have to show up at the DMV in person and do a biometric scan. As an aside, this is why the crowd at the DMV is so unusual; it’s a cross-section of everyone who lives in the area, regardless of distinctions in wealth or other distinctions.

What is the equivalent for all of this using Free Market Ecology? For this full example, let’s imagine how this would work in a network state context based on patterns developed in The Financial System of Free Market Ecology.

1. The founders of a network state would create an Ecological Central Bank.

2. In their role at the Ecological Central Bank, the founders would allocate a total of 100 “validation event” resource usage rights over a specified period. The two founders would grant themselves citizenship by creating and having the Ecological Central Bank accept their initiation NFTs by fiat, thereby bootstrapping the system. Additionally, they would provide themselves with a universal basic income of one “validation event” resource usage right per month, also by fiat.

3. An organizer, probably one of the founders, would create a “validation event” for people who wanted to participate in a network state event.

4. The organizer would count the number of members who attended. Let’s say 10 participated in a “validation event.” The organizer would borrow 10 resource usage rights from a private ecological bank, probably started by a founder, which posted their initiation NFT as collateral for the loan of those resource usage rights from the Ecological Central Bank, ensuring the event was legitimate according to the network’s rules. For example, organizers might have to conduct it in person.

5. Two of the attendees were existing citizens, the founders, who could attend an event monthly, utilizing their “validation event” resource usage rights, which they received as citizens through the Universal Basic Income (UBI).

6. What about the new members? Citizenship in the network state and the corresponding Universal Basic Income would be at the discretion of the founders. Perhaps people would have to attend 2 or 3 “validation event” meetings before they would get citizenship and receive the “validation event” UBI so they could participate in subsequent meetings without having to purchase validation event resource usage rights. How would new members get involved and receive the “validation event” resource usage rights to attend their first meeting properly and be on their way to citizenship? Because they are new and unknown, their attendance is like an emission. They would need something like a carbon credit that mitigated their disruption to the group. The mitigation of their disruption, similar to planting trees to mitigate carbon emissions, would be for them to complete some sort of onboarding or initiation.

7. Ecological Private Finance would generate a “new member” validation event mitigation NFT after ensuring that the person had completed the initiation correctly, which the mitigator would perform. The system would generate the NFT such that it tied it to the new person’s sign-up information, and thus, it would be useful only to the individual whom the mitigator initiated.

8. The initiate would purchase the NFT for a previously agreed-upon value in cryptocurrency. The mitigator and ecological private finance would share in the profits for that. They would bear the risk of having performed an initiation and not being able to defer the costs if the initiate did not pay them upfront.

9. The purchased NFT would be transferred to the “validation event” organizer by the initiator to allow them to repay their loan for “validation event” resource usage rights. The use of this for the “validation event” organizer to repay their loan to Ecological Private Finance and for Ecological Private Finance to repay the Ecological Central Bank, as well as both parties’ acceptance of the NFTs as payment, would validate the initiate as being accepted into the organization.

The “validation event” may have other costs that attendees can pay for in traditional currency. People receiving UBI who didn’t attend could profit from their unused “validation event” resource usage rights by transferring them to others, allowing them to participate in events without having to go through the initiation process.

“Validation event” organizers and private ecological finance might also mark up the “validation event” resource usage rights, allowing them to collect extra “validation event” resource usage rights to distribute or sell to others for event attendance or to deal with situations where the validation event organizer did not accept the attendees to the meeting because of lack of proper vetting by the “validation event” organizer before borrowing the “validation event” resource usage rights.

Ecological Private Finance and Validation Event Organizers could post their initiation NFTs as collateral, which the Ecological Central Bank could revoke if it found that their validation events or initiations were fraudulent, as determined by the Ecological Central Bank’s founders.

Economic Notes

The incentive to post the NFT as collateral is that Ecological Private Finance and the initiation mitigator both receive compensation for performing the initiation by the initiate buying the NFT they produced from them. The validation event organizer also receives compensation in the markup of the validation event resource usage rights he charges to the event attendees. Economic forces would constrain the markup by organizers on validation event RURs charged because UBI is not unlimited.

Non-citizens lacking UBI aren’t allowed to attend meetings of private clubs unless they mitigate this restriction by purchasing their initiation NFT or acquiring the necessary validation event resource usage rights from UBI holders who don’t attend events. The validation event organizer can choose to price discriminate and allow initiates or non-citizens at events. They might charge them a higher cost in traditional currency for other event costs.

Price Discrimination against initiates or non-citizens isn’t an issue. Nobody is forcing people to attend these events; just like any other event they would go to, they can choose to go based on the cost or not. The organizers of the club can decide on whatever standards they want to pass the onboarding. If people don’t like it, they can start a different club. Validation Event RURs may be scarce or plentiful; the market will determine the price accordingly. Initiators can decide if the price is fair for a validation event and opt for a different one if the price is too high. The market will determine what is fair. Other jurisdictions can choose to accept or not initiation NFTs from other jurisdictions, depending on their preference.

Time to Implement!

If you’d like to implement this, please tweet at me, @undeservingfut on X. I’d like to see various implementations, but please link back to this blog and mention Free Market Ecology somewhere so the movement and ideas can grow. Thanks!