The founding fathers of the United States may not have had access to blockchain technology. But they did stan lotteries. Benjamin Franklin proposed a lottery for funding military efforts during the War of Independence. And once independence had been won, they continued to leverage draws, with ticket sales funding major infrastructure projects, like roads, railroads or bridges, as well as schools and churches.

Thomas Jefferson himself referred to lotteries as a ‘voluntary tax’. Borrowing this take, and updating it for web3, LottoPGF sees lotteries as forming part of a composable financial layer that sustains collectively-managed societies through non-coercive means.

In this piece, we get into how network states (and the public goods they are built upon) can be funded through blockchain native lotteries - and how LottoPGF is piloting that model with Zuzalu.city.

How fortune favours the bold: In search of new, digital horizons

Part treatise, part manifesto, Balaji Srinivasan’s ‘The Network State: How to Start a New Country’ didn’t just set Crypto Twitter (rip) on fire for a hot minute; It also helped spark the imagination of builders and visionaries from across the web3 ecosystem. For the first time, the question of whether the Nation State, with its roots in mid-1600s Europe, could be reinvented for the Internet era, took a foothold in the public consciousness.

Since the book’s 2022 release (on the 4th of July, no less), there has been a proliferation of think pieces and events around the concept, as well as hot takes, with alternative iterations, like ‘Coordi-Nations’ or ‘Pop-up Cities’, also gaining traction*.

*Just so you know, we might occasionally switch things up, but we’ll mainly talk about ‘network states’ here (in lower case), as an umbrella term that covers a diversity of projects.

Whether defined as a Network State, a Coordi-Nation, or something else, one question seems to arise over and over again: How do we fund these new, Internet-native societies or collectives, and make them sustainable?

At LottoPGF, putting lotteries onchain and making them available as permissionless ‘money legos’ for Public Goods Funding is our jam.

In the few months since LottoPGF went live, we’ve been blown away by the interest and creativity that has emerged around the concept; from Degens and Regens alike. Integrations and collaborations so far have included On-Chain Lotería, Blockful, 1confirmation and Scrolly, to name a few – each bringing their own unique spin on LottoPGF’s brand of Capital-Formation-As-A-Service.

Deeply aligned with our mission to make the Internet self-sustainable and keep it cypherpunk, our latest partnership promises to do the same, but on a whole new level.

Described as a ‘groundbreaking collaboration’ in a recent announcement (shout out to Cathy from ZuChat!), we’re of course, talking about LottoPGF’s Zuzalu integration.

ZuVillages🤝LottoPGF

For two months, Vitalik Buterin gathered together 200 ‘pop-up’ citizens in ‘Zuzalu’, Montenegro, to explore the practicalities of bringing a decentralised, cloud-based society down to earth and into a real-world setting. Without a doubt, the 2023 event marked an important milestone in the real-time-unfolding history of the network state.

In true Ethereum style, community members from around the world have since been permissionlessly taking co-ownership of the Zuzalu vision, building out a vibrant network of interconnected pop-up communities under the banner of ‘Zuzalu.City’.

For LottoPGF, the journey with Zuzalu.City started with a stop in ZuConnect, a two-week convergence space that took place in the run-up to Istanbul’s DevConnect. Inspired by a natural affinity, and a desire to learn more, some of the team’s earliest contributors followed up by jumping on Zuzalu.City Town Halls.

“Zuzalu represents the cutting edge when it comes to crypto, AI, ZK, longevity, and network state experimentation,” Core contributor, Nico Gallardo, shares. “What I love is how the ethos is so forward-looking and optimistic about the future. There’s no room for apathy. It’s all very solutions-focused.”

With echoes of Punk’s ‘Do-It-Yourself’ culture, but with a Cypher-twist of technologically-enabled social cooperation, Zuzalu.City encourages builders to bring their best ideas to the table and actively contribute to improving the space – a philosophy and praxis that is very much embraced at LottoPGF.

Having been in each other’s orbits for a few months, the thing that really got the conversation started between Zuzalu.City and LottoPGF was an open question from QJ in the Guilded server one day:

As luck would have it, LottoPGF was already on Zuzalu.City’s radar:

A couple of calls later, and LottoPGF became a contributor to Zuzalu’s Software roadmap. The process has involved close work with Zuzalu.City on a bespoke integration that is tailored to the community’s specific needs and preferences.

We’ll be kicking things off with an external link to a test page, but ultimately, we aim to make the LottoPGF integration available as a ‘ZApp’ for any ZuVillage looking for ways to build sustainably.

Lotteries for the people: A real win-win

Within and beyond the Zuzalu ecosystem, our vision is simple: To make freely available permissionless, cryptographic primitives, that unlock alternatives to fund public goods and communities.

As we’ve discussed elsewhere, running lotteries to fund public goods is nothing new. At LottoPGF, our Roman Empire is that public goods funding through lotteries can be traced back to the rule of Caesar Augustus (yes, Otto thinks a lot about the Roman Empire), perhaps even as far as the construction of the Great Wall of China. Yet today, lotteries remain concentrated in the hands of government institutions, despite their potential for positive impact.

And the potential is huge. In 2023, players in the US alone spent over USD$100bn on State-run lotteries. As jackpots have gone through the roof to further drive ticket sales (often in poorer communities), the chances of winning have plummeted. Meanwhile, the amount reserved for public goods has almost flatlined over the years.

But there is another way…

Rather than creating opaque lotteries that don’t serve the community, what if they were used to build new communities from the ground up, using verifiable, open-source protocols?

Waking up and choosing incentives: web3 and the PGF inflection point

Of course, network states are in their early days. And we’re yet to scale the use of lotteries as a voluntary tax mechanism in ways that make rebuilding our communities, cities or states widely accessible. But, for LottoPGF, one thing is clear: it’s Public Goods Funding all the way down, baby.

From Ancient Rome's drive to repair public buildings to a freshly-Independent US rolling out the civic infrastructure of a soon-to-be superpower, public goods are like the glue that holds states together. It always has been.

In this paradigm, onchain governance gives ordinary citizens more say, more directly, over how much to invest in which programmes, projects or services, than ever before. It kind of makes lotteries a win-win.

So, what types of public goods do you want to dream into being for your network state? Montessori schools for all? Healthcare centres that specialise in biohacking? Or perhaps programmes that address more pressing needs within the local communities you’re embedded in?

We might not yet know where the limits of our collective imagination will take us, but alongside the work of trailblazers like Blockful.io, Glo Dollar, Octant, Gitcoin, Optimism, and others, incredibly exciting new horizons are opening up in resource allocation and social cooperation.

Here are just a couple of current experimentations with lotteries (onchain and off-chain) that we heart at LottoPGF:

• Germany’s Mein Grund Einkommen, which is changing lives by raffling Unconditional Basic Income (UBI) to winners.

• US Non-Profit, Student Loan Debt Relief, who we’ll be collaborating with on an integration that will be fully regulation-compliant, proving web3’s use case to a broader audience.

• Onchain Lotería, a LottoPGF deployment which is being used to fund grassroots initiatives in local communities in Mexico. Onchain Lotería is soon going live, so don’t forget to follow them an turn on notifications for their Farcaster channel.

• Across the Global South, draws have long been used to help bolster social programmes. Examples include Bolivia’s National Lottery of Charity and Health (La La Lotería Nacional de Beneficencia y Salubridad) which channels additional income to the State’s Health Ministry, South Africa’s Ithuba-run National Lottery, which raises funds for Arts and Culture, and Brazil’s Loterias Caixa, which have been described as “an important source of revenue to promote Brazil’s social development”.

Radical in its implications, as a tool, LottoPGF passes the credibly neutral test. In other words, it can be picked up and used by anyone to raise funds for any cause.

If you are trying to figure out what it would take to fund your own network state, or any public goods project you’re working on, we’d love to hear from you. LottoPGF has an exciting update in the works, so join our waitlist and you’ll get early access to our latest tooling.

Thank you so much for reading! Mint this piece, share it with a fren you think would enjoy it, and share your thoughts on /OttoDAO.

Next up, we’ll dig into what goes under the hood at LottoPGF and why we’re so amped about our upcoming update. Subscribe so we can let you know when it drops!

gn