Check out the episode:

You can find the shownotes through this link.

---

Are you interested in new forms of governance?

---

Our summary today works with the whitepaper titled Liberland Blockchain Whitepaper, published on the Liberland website.

This is a great preparation to our next interview with Vít Jedlička, the president of Liberland in episode 370 talking about their new governance structure based on blockchain.

Since we are investigating the future of cities, I thought it would be interesting to see how we can utilise the upcoming technologies, like blockchain to improve our governance systems. This whitepaper presents how Liberland operates its government entirely on a public blockchain which aims to ensure transparency and accountability, balancing decentralisation with necessary permissioned access for citizens.

[intro music]

---

Welcome to today’s What is The Future for Cities podcast and its Research episode; my name is Fanni, and today we will introduce a research by summarising it. The episode really is just a short summary of the original investigation, and, in case it is interesting enough, I would encourage everyone to check out the whole documentation. This conversation was produced and generated with Notebook LM as two hosts dissecting the whole research.

---

[music]

Speaker 1: Today we are taking a really fascinating plunge into the world of digital statecraft. We’re focusing specifically on the governance system of Li Land.

Speaker 2: Yeah, it’s quite something

Speaker 1: for those, maybe just catching up Libra Land is that Micronation founded back in 2015 on a piece of land between Croatia and Serbia, but really it’s identity, it’s operations. They live online. We’ve got a stack of sources here detailing how they actually built a functional three branch government.

Speaker 2: Legislative executive judiciary, the whole setup.

Speaker 1: Exactly. But using smart contracts and a public blockchain. So our mission today is to strip back the code, look at the white papers and figure out what makes this structure tick.

Speaker 2: And this is really crucial, I think, because this isn’t just theory anymore. Lieber land is running a complex layer one public blockchain. It’s actually a fork of the substrate polka dot framework, which is pretty sophisticated stuff. What’s really fascinating here is that they decided governance itself, the whole constitutional structure. That would be the first major use case. They’re genuinely trying to solve real world government problems. Things like gridlock, transparency issues, but purely through tokens in code.

Speaker 1: Okay. Let’s unpack that then. Starting at the foundation Power. If you’re building a state on a blockchain, you have to define who owns the network, right? And who gets to make the rules. Our sources show they tackled this by creating two distinct on chain assets.

Speaker 2: That separation is absolutely the linchpin here. You’ve got the Liberal Land dollar or LLD and the liberal land Merit, LLM. The LLD is what you call the native token. It’s the medium of exchange. It’s essential for securing the network, and it’s used for registering digital entities. Think companies real estate claims right onto the chain. So holding LLD technically means you own. A piece of that network infrastructure itself. It’s basically the currency of commerce within LI land.

Speaker 1: So LLD is the utility token, like digital shares in the infrastructure company, let’s say. But that doesn’t automatically grant political sovereignty. That’s where the LLM comes in, I gather.

Speaker 2: Exactly. The LI land merit, LLM is the political token. It explicitly represents a share in the state and the nationhood. This is the asset that grants governance power. Crucially, its supply is capped 70 million total, and it’s conceptually tied to the physical world. The idea is 10 LLM equals one square meter of land claim. So if you want a voice in Libra Lands direction, you need LLM.

Speaker 1: But that immediately raises a question for me. If political power sovereignty is tied directly to an asset, the LLM, which you can buy, sell, accumulate. Aren’t we just building a digital plutocracy? Isn’t that tying voting power inherently to wealth, to how much stake you have?

Speaker 2: That’s definitely the central tension, you could say. And the liberal land architects seem to acknowledge it because they add friction specifically to that governance layer. They implemented something called permission access. So while the blockchain itself is public, like voting in on chain elections or running the validator nodes that secure the network, those functions are reserved. They’re only for citizens who have actually gone through KYC procedures and met certain requirements. It’s a mechanism that tries to filter for well commitment and identity validation, not just pure wealth.

Speaker 1: So they’re mapping that traditional idea that full political rights are for verified citizens onto the digital layer. But even if you have LLM and you’re a citizen, you still have to lock it up in something called politic pooling. What’s the rationale there?

Speaker 2: Politic, pooling. That’s their game. Three safeguard. It’s designed to enforce long-term commitment to actually activate the political power of your LLM. You have to vest it, lock it up for a significant time. The sources say only 10% of your vested LM can be unvested per year,

Speaker 1: 10% a year.

Speaker 2: It acts as a serious personal investment. The white paper even calls it a form of voluntary tax contribution. By tying up your main political and financial stake for potentially years, you’re disincentivized from making impulsive or harmful short-term political moves. And if you do decide to uncool the tokens, they immediately lose their political voting weight. It ensures only deeply committed capital is participating in governance decisions.

Speaker 1: That’s a powerful deterrent against quick exits or trying to destabilize things politically. It forces participants to literally have skin in the game for the long haul. Okay, so now let’s look at how that vested power that LLM and politic pooling is actually exercised. Let’s move to the legislative branch. It’s split right between direct democracy, the referendum, and a representative body, the Congress. Let’s dive into the referendum first. Apparently every single law has to pass through this direct vote, but it’s engineered with, you called it an anti-pop safeguard.

Speaker 2: Yes. And here’s where it gets really interesting. It shows how they tried to learn from or fix real world democratic failures. You know how in many direct democracies, low voter turnout can let small, maybe extreme, but highly motivated groups push things through because the sort of silent majority stays home, right? Apathy rules. Liberal land actually coded against this. They made the voting requisite. That’s the number or percentage of tokens needed for a law to pass escalate based on participation. It scales inversely with voter turnout. So if turnout is usually high, say 80%, the normal majority rules might apply. But if turnout drops significantly, maybe down to 10%, the percentage of yes votes needed from those voters might spike dramatically, maybe to 90%. It sets a much, much higher bar to prevent small factions from hijacking the process just because others are disengaged. Beyond that quite complex voting math. They also have simpler mechanisms just to deter basic denial of service attacks on the system. Proposers have to pay a meaningful amount of LLD just to initiate a referendum proposal. So if someone tries to spam the system with hundreds of useless proposals, the economic cost ramps up very quickly. It makes the attack financially unviable. It’s quality control via cost.

Speaker 1: Okay, so that’s the direct democracy side. Heavily safeguarded. Then you have the elected representative body, the Congress, they’re elected quarterly. You said by citizens using their LLM tokens. What are their main jobs beyond just representing

Speaker 2: the Congress acts as a critical filter and also a facilitator. They can initiate what the sources call rational referenda, and these are important because they’re exempt from that heavy anti, anti-pop safeguard we just talked about. That allows for faster policy adoption when it’s genuinely needed and supported. They also have the power to appoint. And importantly, remove the prime Minister.

Speaker 1: Okay. Executive oversight.

Speaker 2: And critically, they act as a kind of human oracle or a safety valve. They have the power to cancel referenda, they de malicious, or maybe proposals that just don’t have a substantiated basis for urgency. And if Congress does cancel a proposal, the proposal’s LLD fee is gone, non-refundable. So they’re like a human layer of quality control, trying to stop obviously bad faith actions before they waste everyone’s time and resources.

Speaker 1: And the system allows citizens to delegate their voting rights directly to a Congress member. I like that. That feels like a really novel form of post-election representation. You elect them. Sure. But you can also grant or even rescind your voting weight delegation pretty much anytime. Keeps them constantly accountable to their token holding constituents. It’s a dynamic link. Yeah. Let’s shift gears then to the executive branch. This is the part that actually executes the laws, manages the state’s day-to-day operations led by the cabinet you mentioned headed by a Prime minister and four other ministers.

Speaker 2: That’s the core. The executive branch oversees the functional e governance offices. This includes the essentials, like a company registry, a land registry, things that are currently being piloted on the chain, and transparency is meant to be built in. All state budgets, including how the executive spends money are supposed to be maintained right there on the p chain, allows for real time oversight by anyone who cares to look.

Speaker 1: Seems straightforward enough. But now for the really interesting check on both the legislative and the executive power, the Senate, our sources describe this as Liberal lands House of Lords. And this is where maybe the structural contradictions in this whole system really start to pop

Speaker 2: the Senate. Its members are appointed for life initially by the president. Then later they co-op new members from within their own ranks. And their power is fascinated because, as you say, it’s purely control. They have zero legislative power to create laws, zero executive power to manage things. They cannot write laws. They cannot manage budgets. They can only veto.

Speaker 1: Veto. What exactly

Speaker 2: they wield immense power here. They can nullify any referendum concerning laws before it acquires legal force, and maybe even more powerfully, they can revoke lower tier regulations even after they’ve been enacted and are already operational.

Speaker 1: Hold on. Lifetime appointments in a system supposedly founded on decentralized governance. Isn’t that the polar opposite? A sort of perpetual unaccountable aristocracy baked into the code?

Speaker 2: It certainly looks that way on the surface, it clearly speaks to the founders placing a very high value on stability. Perhaps over rapid, potentially volatile change. The Senate seems designed to be the source of long-term institutional memory, a break against populism causing catastrophic errors. The president who acts as the head of state is actually selected by these senators and is their prime member, although even the president’s actions require validation from a vice president, which is maybe an attempt to build some mutual accountability within that lifetime group.

Speaker 1: So what we end up with is this fundamental hybrid system. It’s got direct democracy, but controlled by token weight, filtered by elected representatives, and then ultimately checked, maybe controlled by an aristocratic lifetime veto chamber. It’s complex, clearly designed for stability. Maybe like you said, at the expense of pure radical decentralization.

Speaker 2: It’s a definite trade off they’ve made.

Speaker 1: Okay, finally, let’s turn to the future system. The one that perhaps embodies the most audacious goal of this whole experiment, the on chain judiciary system. Aims to tackle those two fundamental blockchain problems, the finality of irreversibility, and the absence of authority to enforce human contracts.

Speaker 2: This is truly ambitious stuff. The judiciary is planned as a hybrid entity using professional human judges combined with blockchain solutions, their core mission to interpret intent and regulate transactions by actually having the capacity to reverse or counteract them. If things like fraud, bad faith, or theft are proven,

Speaker 1: wow. Okay. Reverse a finalized blockchain transaction. Based on a human judge deciding what someone intended

Speaker 2: exactly. The court essentially acts as a smart contract oracle, but for legal interpretation, it’s seen as essential for enforcing traditional, verbose legal contracts, the kind that are just too complex and nuanced to be run purely by code, but which can be recorded on the chain. It’s meant to provide that necessary human element for real world legal situations.

Speaker 1: That ability to reverse or rectify is foundational to any working legal system, isn’t it? How are disputes actually processed? The sources outlined? Two paths, starting with a simple process.

Speaker 2: Yeah. The simple process is designed to be quick and economical, hopefully resolved in days, not months. It’s used when all the parties involved actually agree on the choice of judge or panel, and it includes a mandatory mediation step first. To try and avoid full litigation, if possible.

Speaker 1: Makes sense. And if they can’t agree on a judge, then they default to the complex process.

Speaker 2: Correct. The complex process is the fallback. It’s designed for the really intricate, contentious issues. It mandates a panel of three judges, typically the attorney representing the applicant, the attorney for the respondent, and then a third jointly selected arbitrator. This framework is built to handle the tough cases, and eventually it’s intended to adopt the structure needed for Libra Land’s criminal process too.

Speaker 1: The power this judiciary wield seems pretty extreme, especially when it comes to enforcement. What happens if someone loses a lawsuit but doesn’t have enough, say, LLD, collateral to pay the damages, right? The judge can use this heavy handed enactment of awards mechanism.

Speaker 2: Yeah. This is the ultimate digital sanction. Within their system, the judge has the authority to designate an individual’s politic, pooled. LLM. Remember, that’s their crucial vested political asset is collateral. This designation then triggers the involuntary UN pooling of that asset and its subsequent seizure to settle the debt awarded by the court

Speaker 1: so they can seize your political power, your stake in the nation to pay your debts

Speaker 2: precise, and it gets even more severe if the damage caused, particularly in cases involving aggressive conduct or maybe violence exceeds the offender’s entire LLM stash, their LLM balance can actually go negative at that point. They’re digitally sanctioned. They become persona non gra. Effectively. They get listed on Libre Land’s internal wandered roster. Lose all voting rights, lose access to state services until that negative balance, that debt is fully repaid.

Speaker 1: It’s a truly radical attempt to merge classical political science ideas with decentralized tech.

Speaker 2: It really ties everything together, the entire operational model from making people commit politically with politic, pooling right through to enforcing justice. Relies fundamentally on the ability to seize those digital assets, mainly the LLM. And this raises, I think, a really important final question for you to listener to. It’s the fundamental challenge facing every digital micro nation really. If Libra Land can successfully seize digital assets on its chain, how effectively can it actually enforce its civil or criminal judgements when the defendant. When their physical body or their are other non-digital assets, say a bank account in Germany or a house in Serbia lie entirely outside Libra Land’s digital and physical jurisdiction. It really highlights that crucial, often difficult boundary between digital code and physical reality between on chain enforcement and off chain assets. Are people

Speaker 1: a deeply complex puzzle indeed for the digital state builders and for us watching.

---

[music]

What is the future for cities podcast?

---

Episode and transcript generated with ⁠⁠Descript⁠⁠ assistance (⁠⁠affiliate link⁠⁠).