How Orchid delivers digital privacy
The Orchid network enables a decentralized virtual private network (VPN), allowing users to buy bandwidth from a global pool of service providers.
To do this, Orchid uses an ERC-20 utility token called OXT, a new VPN protocol for token-incentivized bandwidth proxying, and smart-contracts with algorithmic advertising and payment functions. Orchid's users connect to bandwidth sellers using a provider directory, and they pay using probabilistic nanopayments so Ethereum transaction fees on packets are acceptably low.
Core componentsof the Orchid network
The Orchid app
Users of Orchid run a client similar to a typical VPN client for protocols such as OpenVPN, but which speaks the Orchid protocol. The Orchid network client goes past the basic functionality offered by most VPN clients, with features such as the ability to run traffic through an integrated personal firewall. The Orchid client is accessible via iOS, Android, macOS, Linux, and (soon) Windows.
The Orchid cryptocurrency (OXT)
OXT’s primary and fundamental purpose is to keep track of who has used computing services, who has provided computing services, and whether the average user is fairly compensating the average provider.
The OXT token provides value in the Orchid network in a number of ways:
- A Bandwidth Provider - Anyone can operate an Orchid Node, but must first stake OXT, with the more OXT that is staked, the greater the chances of reward in the Network.
- A Bandwidth User- For the first time, users can pay-on-the-fly for a private, secure internet connection. To power up the client, a user installs the Orchid VPN, adds OXT to a wallet, and then can access the internet through a user-chosen path to ensure a secure connection anywhere in the world. Users only pay for the bandwidth they consume.
The bandwidth marketplace is peer-to-peer and run in a completely decentralized manner without reliance on any central party. The primary reasons for a native token are:
- To have a token that is specifically tied to consumption of bandwidth on the Orchid network
- To align operator incentives towards the benefit of the Orchid Network.
Accordingly, in addition to facilitating bandwidth transactions on the Network, the Orchid Token is used to prove a stake within the Orchid network that is intended to demonstrate a commitment for bandwidth providers, as well as to mitigate certain risks.
The Orchid Protocol
The Orchid software is designed to use a custom VPN protocol, similar in scope to OpenVPN or WireGuard. The Orchid protocol is designed for high-performance networking and runs on top of WebRTC, a common web standard, widely used to transmit video and audio from inside browsers. Our protocol is intended to allow users to request access to remote network resources and pay for these resources using OXT via a nanopayments system.
Orchid uses a new probabilistic nanopayment system to scale payment throughput.
This nanopayment system is the foundation of the Orchid peer to peer bandwidth marketplace where clients pay Node operators OXT “tickets” for proxy bandwidth. The system is designed to lower the transaction fees on small payments by amortizing transaction fees across many transactions and even across multiple parties.
For more information, see our recent article: Introducing Nanopayments
Service providers on Orchid run software similar to a typical VPN daemon for protocols such as OpenVPN, but which speaks the Orchid protocol.
Orchid nodes maintain registration information in a stake registry and provider directory on Ethereum. The stake registry is optimized for enabling the Orchid app to automatically discover random servers in a decentralized environment, while the provider directory allows Orchid nodes to register metadata such as geolocation or additional services offered.
A provider stakes some number of OXT tokens to create a stake deposit.
- Anyone can stake OXT on nodes using the smart contract.
- Clients select new nodes in proportion to their relative OXT deposit size.
- Larger stake deposits thus lead to proportionally more users, bandwidth, and revenue.
- If the node is already at max bandwidth capacity additional stake is effectively wasted.
Once tokens have been locked into a stake deposit they can be used immediately for bandwidth provisioning. If the provider wants to withdraw tokens from the staking contract, they have to start an ‘unlocking’ process period, which involves a three month cooldown where their funds cannot be used as a stake deposit or transferred elsewhere by the provider.
Whatever the amount of value that is exchanged in the Orchid ecosystem, a given seller’s relative stake amount, as a percentage of the total stake, provides them that same percentage of user traffic and dealflow. Assuming typical and honest selling behavior (no users drop them for bad service) this dealflow will translate into a similar portion of the total revenue. The staking decisions of sellers is left to their own choices.