The Birth of Sovereign Individuals: From "Human On-Chain" to DeSoc Under Competitive Governance

Author: LXDAO

This article is the final chapter of the “Blockchain Civilization Trilogy” and aims to outline the prototype of a decentralized society (DeSoc). We believe that civilization is undergoing a matrix shift: from the atomic age to the bit age. In this context, Ethereum shows the potential to become the meta-framework of civilization—a “self-correcting system” that allows social institutions to continuously iterate in a low-cost, programmable environment.

The upper limit of this framework begins with its most basic unit - the individual. This article argues that as RWA (Real World Assets) are scaled on-chain, the overall mapping of ideological culture and RWO (Real World Organizations) will be based on the premise of “the on-chain of individuals.” Rights such as personal identity, credit, abilities, and social relationships must be reliably mapped, freely transferred, and combined in order to achieve the on-chain reconstruction of social structures.

Accordingly, this article elaborates on the DeSoc centered around the “sovereign individual” from three systemic levels: identity, economy, and governance. Individuals, by virtue of their tokenized on-chain rights and assets, can migrate at low cost between multiple DAOs (digital city-states), thereby driving governance optimization and ultimately forming a competitive governance landscape, opening a new chapter in the era of Bitcoin.

Keywords: decentralized society; sovereign individual; on-chain identity; data assetization; universal basic income; Bitcoin era.

Introduction: Eternal Migration - The Path to Freedom from Geographic Frontiers to Digital Realms

The freedom of migration is the oldest and most fundamental right of humanity. Before the formation of nation-states and fixed borders, tribes and families could migrate according to their survival and security needs, choosing better environments. This mechanism of migration as feedback is a primitive constraint on power—it does not eliminate power, but allows power to always be replaceable.

Agrarian civilization and state construction tightened this freedom: population and land were bound together, and power anchored individuals to their place of birth through “irrevocable authorization.” The social contract transformed from a dynamic reciprocal relationship into a static constraint. The cost of individual migration became high, and it was difficult for power to reclaim.

However, the pursuit of individual freedom has never disappeared and has given rise to two major trends:

1. Vertical escape: Individual immigrants seek a freer and more prosperous society governed by the rule of law, achieving an active choice in governance and services.

2. Horizontal Unification: The integration of nation-states to obtain higher-level public goods, broadening the rights of movement and market boundaries.

These two trends point to a core demand: people are always seeking a space where they can achieve “voting with their feet” at a lower cost and with higher efficiency.

Today, blockchain technology, especially DeSoc on Ethereum, is opening a third path: constructing a new digital territory. Here, the right to “vote with your feet” is inherently and cost-effectively re-empowered to each individual.

This article aims to argue that DeSoc, based on the “human on-chain” as a starting point, is the latest chapter of humanity's eternal migration for freedom in the digital age. It will achieve the ultimate deconstruction of “irrevocable authorization” and accelerate the evolution of civilization towards the Bitcoin era.

Identity Layer - From “Data Naked” to “Sovereignty in the People”

1. Theoretical Foundation: From SBT to the Vision of “Social Composability”

Vitalik Buterin laid the theoretical foundation for the next generation of identity systems in his writings such as “Decentralized Society: Finding the Soul of Web3” and “What Do I Think About Biometric Identification?” The concept he proposed, “Soul-Bound Identity,” with its core mechanism SBT (Soul-Bound Token), is not another financial asset, but a non-transferable credential that carries an individual's social history, credit, and contributions. The ultimate goal of this system is to construct social composability – allowing each independent “person” to have an identifiable, trustworthy, and incentivized social foundation on the blockchain.

2. Technical Architecture: Sovereign Identity Stack and Standardization Process

The vision of “human on-chain” is moving from theory to engineering reality through a series of Ethereum community standards (EIP/ERC). Its technical core is a three-layer “sovereign identity stack” driven by community consensus:

2.1 DID: The Root of Sovereignty and Standardized Identity Anchors

Decentralized identifiers that comply with the W3C DID standard provide individuals with the ability to generate and fully control their “root identity.” On Ethereum, this concept is materialized through EIP-4361 (Sign-In with Ethereum, SIWE). This standard allows users to log in to third-party applications directly using their Ethereum accounts, achieving decentralization of the authentication method, which is a key step in the return of identity sovereignty to individuals. At the same time, EIP-712 (structured data signing) provides security and user experience assurance for DID when signing complex, human-readable off-chain statements (such as identity credentials).

2.2 Zero-Knowledge Proofs: Privacy Shield and Verifiable Credential Engine

Zero-Knowledge Proofs (ZK) are a privacy-enhancing layer in the identity stack, which ensure the authenticity of identity claims (such as “I am over 18 years old”) without the need to expose all data (like date of birth) through a “verifiable yet invisible” cryptographic mechanism. Although ZK itself is a cryptographic primitive, its application in the identity domain is being driven by exploratory proposals such as ERC-5833 (a privacy-compliant composite for soulbound tokens), aimed at addressing the challenges of compliance and privacy for SBTs.

2.3 SBT: The Soul of Society and On-Chain Credential Container

As a data container for identity and a social resume module, the form of SBT is being defined and optimized through multiple ERC proposals. Its core idea originates from ERC-721 (Non-Fungible Token Standard), but the key feature of “non-transferability” is conferred by specialized extension standards: ERC-4973 and ERC-5192 (Minimum Soulbound Token) are two competing proposals aimed at defining the core logic of SBT, both injecting the attribute of “non-transferable” into the token and binding its metadata to identity. Additionally, ERC-1155 (Multi-Token Standard) is often considered for issuing and managing a large number of composable SBT credentials due to its efficient batch processing capability, thus constructing the programmable social DNA of individuals in the digital world.

This technology stack, composed of DID (EIP-4361/712) + ZK (privacy enhancement) + SBT (ERC-4973/5192/1155), based on community standards, is the foundational, interoperable architecture that enables DeSoc to transition from the white paper to smart contracts.

3. Ecological Practice: Early Map of Personality on the Chain

Currently, the identity experiments in the Ethereum ecosystem exhibit the characteristics of “fragmented exploration.”

A series of cutting-edge projects are dedicated to mapping abstract identity theories into concrete digital persona networks:

• Lens Protocol/ Farcaster: Bringing social graphs on-chain, making social relationships and influence portable and verifiable assets.
• Worldcoin: Despite the controversy, its attempt to verify “human uniqueness” through biometric validation reveals a path to resist sybil attacks and achieve inclusive identity distribution.
• Proof of Humanity / Idena: Dedicated to distinguishing real individuals from fake identities on-chain through various “proof of humanity” mechanisms, safeguarding the authenticity foundation of DeSoc.
• Gitcoin Passport / ENS: By integrating on-chain contributions, domain identities, and reputation credentials, a quantifiable foundational record for individuals' social capital is constructed.

These practices are like puzzles; although breakthroughs have been made in single dimensions such as social, identity, and biometrics, they objectively form “multi-source reputation fragments,” but have yet to achieve the “composable digital persona” required by DeSoc.

In this context, the exploration of projects like Credinet becomes particularly important. They are no longer satisfied with isolated descriptions of a certain attribute of “individuals” but instead integrate tools like MACI (a verifiable computation tool for anti-manipulation interactions) to attempt to build a digital identity framework that allows users to carry and prove their multidimensional credit fragments. The project starts from multiple independent ZK proof modules to sustainably update, verify, and combine an individual’s rights in a “Lego-style” representation, aiming to achieve the goal of “unified representation + rights fragmentation + privacy against coercion + decentralized governance.”

4. Real Motives: From Industry Pain Points to Civilized Infrastructure

Building decentralized identity is not only a technological evolution but also a rigid demand for the development of blockchain reality.

Industry-driven: Advanced financial applications such as insurance, credit, and decentralized governance rely on trusted identities to achieve precise risk pricing and incentive distribution.

Civilization Driven: In the grand narrative of Ethereum civilization, DeSoc is not merely a simple extension of DeFi, but a paradigm revolution of social structures. Establishing a credible identity infrastructure is the foundation for building a new civilization.

Competitive Drive: The next growth curve of the industry should not be trapped in the inward competition of DeFi, but should shift towards building foundational infrastructures like identity layers that have positive externalities and network effects, fully leveraging Ethereum's credible, neutral, and irreplaceable advantages.

Conclusion: When an individual's credit, abilities, and relational networks become portable and freely migratable digital assets, humanity has regained a crucial freedom in the digital world - migration.

The construction of the identity layer is therefore much more than just a technological upgrade. It is the ultimate affirmation of personal rights, marking a historic starting point for Ethereum civilization's transition from “capital contracts” to “social contracts.” From now on, individuals are no longer prisoners of algorithms, but rather sovereign nodes in the true sense of the on-chain world.

The construction of this identity layer makes “people” the unique entities with complete history and reputation in the digital world for the first time, providing a credible atomic unit for all subsequent social and economic activities.

Economic Layer: Ecological Reconstruction from “Financial Lego” to “Social Lego”

When trusted and rich digital identities become a reality, a credit-based market system will emerge. Individuals will be able to break free from the constraints of geographic boundaries, evolving from “digital nomads” to “digital citizens,” living and creating in a new economy built on algorithmic trust.

3.1 Credit is Capital: The Rise of Personal Finance

When trusted identities become a universal reality, a financial market based on personality credit can be established.

• Members of the DAO can issue “reputation bonds” (a debt instrument backed by future labor or contribution earnings) with SBT;
• Open source developers can obtain “trust loans” based on their contribution records;
• High-reputation communities can even issue stablecoins backed by collective credit.

The barriers of finance have been completely dismantled. Trust is dynamically defined by algorithms and real-time behavior. Finance returns to its essence - the quantitative expression of social trust. From now on, financial activities are no longer an exclusive game of capital, but a natural extension of personal credit.

3.2 Reputation is Productivity: The Birth of the Thought Market

When trusted identities carry rich individual histories, a brand new “thought market” can be unlocked. All creative units, interactions, and evaluations are condensed into the reputation asset portfolio of producers. Knowledge can be securitized, influence can be invested in, and collaboration can be quantified. In this new market, trusted individuals become the most productive ones. At this point, a “thought market” shaped around trust as a clearing unit is formed.

3.3 Identity as System: On-chain of Real Economy

The trusted identity system provides an institutional bridge for the integration of the real economy and the on-chain economy.

Organizations such as enterprises and communities can map their legal structures to on-chain sovereign identities, allowing for complex relationships such as equity, governance rights, and asset rights to be automatically executed through smart contracts.

• DAOization of the company: Equity and voting rights represented by NFT/SBT.
• Community Financialization: Governance rules and profit distribution are encapsulated by code.

This achieves a paradigm shift from “legal trust” to “algorithmic trust,” laying a credible foundation for on-chain applications in the real world.

3.4 Paradigm Shift in the Economy: Endogenous Trust and Order Reconstruction

When trusted individuals become the basic unit of the economy, the operational paradigm of the entire economy shifts accordingly. Its core manifestation is: transaction costs approach zero, and the cost of wrongdoing approaches infinity.

The Collapse of Transaction Costs: Trust Becomes an Endogenous Mechanism

On-chain identity and credit systems eliminate the three core frictions of information asymmetry, trust deficiency, and performance difficulty. Trust shifts from an expensive external cost to a cheap intrinsic algorithmic attribute, thereby transforming the economic system from

High-friction society transitions to low-friction society.

The Cost of Malfeasance Soars: Credit Becomes a Permanent Constraint

The non-transferability of SBT permanently binds individuals to their behavior records. A single act of fraud can lead to damage to on-chain credit, resulting in the loss of all collaborative opportunities until repaired. Under rational calculation, maintaining credit becomes the only optimal strategy.

The Arrival of Trust Civilization: From Rule of Law to Self-governance

As transaction costs approach zero while the costs of wrongdoing approach infinity, the foundation of social order shifts from external enforcement to internal constraints. The rule of law evolves into “self-discipline through trust,” and regulation gives way to “reputational constraints.” We move from a “contractual society” to a “credit civilization.”

3.5 The Rise of Digital Nomads

When “people” are established as credible and rich digital entities, the “digital nomads” free from territorial constraints have truly evolved into digital citizens. Their basic economic source (UBI) consists of two parts.

Data asset revenue

An active and trustworthy on-chain identity itself is a data asset that can generate sustainable profits. Individuals can authorize the usage rights of their data to demand-side entities such as AI training and market analysis through a data marketplace, while protecting their privacy (for example, through zero-knowledge proofs), thereby obtaining stable, passive data rights income.

Node Network Income

By providing basic resources for the network (such as PoS staking and storage/computing power of DePIN devices), individuals receive corresponding network maintenance rewards. This income, along with data asset income, forms the foundation of universal income that secures basic economic safety in DeSoc.

Governance: From “Full Delegation” to “Bitcoin-style Authorization”

The essence of power is the possession and control over the rights of others. Since the birth of political society, this power has stemmed from the relinquishment of individual rights.

In the era of monarchy, the transfer of power was one-time and irrevocable, and even the rights of future generations were permanently relinquished; in the era of constitutional government, the transfer of rights occurred based on electoral cycles.

The commonality between these two modes is that the transfer of rights is long-term in duration and comprehensive in scope.

When rights are wholly and permanently relinquished, individuals lose the fundamental leverage to check power. The freedom to migrate thus becomes the ultimate defense mechanism for individuals against power.

When individual rights become decomposable, composable, and transferable on-chain data, no longer locked by geographical boundaries, this defense mechanism is permanently activated in a technical sense. The millennia-old pattern of political power thus welcomes a fundamental restructuring: power is forced to shift from monopoly to competition, and from coercion to service. RWO and RWE (real world anything) will be redefined and iterated rapidly under this new power paradigm.

4.1 DAO: A System Experiment of the “Digital City-State”

Every DAO, whether its goal is to manage protocols, operate communities, or make investments, can be seen as a micro “digital city-state”. They possess:

• Codified Constitution: Articles and governance rules encapsulated in the form of smart contracts;
• Independent Treasury: Community treasury managed by code;
• Citizen Community: A rights entity composed of token holders and contributors.

4.2 Fine-tuning Freedom: “Chain Migration” and Multidimensional Identity Configuration

In the physical world, immigration means a one-time, bundled switch of political allegiance, economic environment, and cultural life, which is costly and difficult.

In DeSoc, “chain migration” achieves free untethering and refinement. Individuals can enjoy a high reputation in the technical DAO for their programming contributions, while becoming core members of the cultural DAO due to their artistic taste. They can choose to exercise governance rights in a DAO that upholds shared ideals, while also allocating assets in a DAO that provides better financial services.

This ability to precisely allocate individual multidimensional rights among different digital city-states marks the first time humanity has achieved low-cost, comprehensive freedom of choice.

4.3 Governance Competition: The “Attractiveness Competition” of Institutions and Culture

The extremely low cost of “chain migration” allows competition between DAOs to surpass traditional paradigms, evolving into a comprehensive “institutional attractiveness competition.”

To attract and retain high-value “digital citizens”, the DAO must continuously optimize its institutional supply:

• Political appeal: more transparent governance, fairer voting, more reversible authorization;
• Economic attractiveness: more reasonable tax system, richer income opportunities, stronger public services;
• Cultural appeal: a more inclusive community atmosphere, more distinct values, and a more active creative ecosystem.

This competition will give rise to unprecedented institutional innovations, just as the prosperity of free city-states in history. Ultimately, the quality of governance and the vitality of culture will directly determine the rise and fall of a digital city-state.

System Integration: The Emergence of DeSoc - A Dynamic, Organic Social Ecosystem

When “people” are fully verified on the blockchain, and their identity, credit, and governance participation continuously evolve in a data-driven and composable way, society begins to exhibit a dynamically emerging structure.

It no longer relies on central planning or macro design, but is generated by the free choices of billions of individuals and the automatic cooperation of smart contracts.

The essence of DeSoc (Decentralized Society) is this bottom-up order generation mechanism.

• Individual level: Each person, as a sovereign individual, possesses a digital identity that carries all their rights, obtains basic security through data assets and node income, achieves personal development through proof of contribution, and enjoys unprecedented autonomy and sense of security.
• Governance aspect: DAOs engage in institutional competition for talent and attention, driving continuous optimization of governance models, forming an “open market of governance.”
• System level: The entire society exhibits dynamic and organic vitality. Power is effectively tamed (through reversible authorization), innovation is greatly incentivized (through proof of contribution), and individual dignity and economic autonomy are fundamentally guaranteed.

In this system, power becomes temporary authorization, institutions become updatable code, and the social contract possesses the possibility of real-time evolution for the first time.

This is a reboot of human civilization: a society no longer bound by territory, identity, or institutions, reborn spontaneously in the world of bits.

Conclusion: Moving towards a self-owned, self-governing, and self-sharing era of Bitcoin

The evolution of the “Blockchain Civilization Trilogy” converges here, forming a solid logical loop:

We reveal the tool for taming power - reversible authorization, transforming power from a monopoly into a service that individuals can harness.

We have laid the cornerstone of civilization – the trusted neutrality, global consensus, and programmability of Ethereum, which builds a permissionless and trustless underlying foundation for DeSoc;

We have outlined the blueprint for a new society - starting with “human on-chain” as the prologue, through the confirmation of identity, economic autonomy, and competitive governance, ultimately reaching a human-centered digital civilization.

This marks a profound shift in the fabric of civilization: from the atomic age grounded in matter and energy to the bit age built on data and information.

The laws of the atomic age are geography-bound, resource-scarce, and power-centralized. Social structures and systems are shackled by the “atomic logic” of the physical world—everything has a location and weight, making migration difficult.

The paradigm of the Bitcoin era is global liquidity, infinite replicability, and decentralized power. All elements of individuals and society—identity, assets, trust, and relationships—are deconstructed into programmable, composable, verifiable, revocable, and freely transferable bit units.

It transforms “identity” from full agency to personal ownership;

It transforms “governance” from monopolistic management to autonomous service;

It allows “returns” to shift from capital monopoly to being enjoyed by the creators.

Lincoln's ideal of “government of the people, by the people, for the people” in the Gettysburg Address is endowed with a new era connotation here, transforming from the grand narrative at the collective level into the life practice of each sovereign individual: “of myself, by myself, for myself.”

This is the era of Bitcoin.

Thinking

1. If “human on-chain” becomes mainstream (identity, resume, credit all on the chain), will your most essential “freedom” be amplified or weakened? Which freedoms will be amplified (right to choose, right to migrate, right to participate)? Which freedoms will be quietly tightened (right to be forgotten, right to start over, space for anonymous mistakes)?

2. In the narrative of “sovereign individuals”, what do you fear more: that others do not treat you as a person, or that the system takes you too seriously as a “computable person”?