Orchid

  • Cryptoasset Report
  • September 26, 2018

The Orchid Protocol is a P2P bandwidth network marketplace for anonymous, secure internet access.

Overview

The Orchid Protocol is a P2P bandwidth network marketplace for anonymous, secure internet access. Users who access the internet unprotected through an ISP risk having their data stored and shared. Orchid is designed as an alternative to existing security-focused internet access solutions, such as VPNs and the Tor onion routing network. In contrast to Tor, where node owners face considerable legal risks and limited avenues to monetizing services, Orchid incentivizes nodes to provide secure bandwidth to users through a tokenized marketplace. Orchid is also distinct from existing blockchain-based VPN projects, such as Mysterium, as user data is routed through several randomized nodes as opposed to a single VPN provider. 

Project Details

Orchid protects traffic from surveillance en route, but the destination website can still determine that it is being accessed from Orchid. The Orchid marketplace consists of 3 primary user groups:

  • Relays are intermediary relay nodes providing traffic anonymization. Traffic is randomly routed through provably secure relays in proportion to their capacity. Relays can earn tokens by selling bandwidth on the Orchid Market and can set prices dynamically according to demand.

  • Exit nodes are ‘border’ nodes that make the final connection with the destination website. These nodes can restrict connections to a whitelisted set of websites. Proxies also can earn tokens by selling bandwidth on the Orchid Market.

  • Users spend tokens in proportion to the bandwidth used and communicate with Relay nodes in advance to establish an estimated bandwidth price.

Orchid’s design relies on a form of staking whereby entities that wish to provide bandwidth services must stake the native Orchid token, OXT. By staking, providers attest to their identity and win contracts in proportion to the weight of their stake (their proportional share of all OXT tokens).

Since Orchid functions on top of Ethereum and therefore inherits the current scaling limitations of the smart contract network, it has opted to use a second-layer payment network to facilitate the high-frequency of payments required for the proper incentivization of Orchid nodes. As opposed to more commonly-used designs such as sidechains or regular payment channels, Orchid has developed its own model, called probabilistic nanopayments that it claims is more cost-efficient, engenders less counterparty risk and is better-suited to Orchid’s demands.

Orchid went live on mainnet in December 2019 and has released an application by which users can access Orchid VPN connectivity.

Asset Details

The Ethereum-based, ERC20 Orchid token, OXT, functions as the exclusive payment token for the Orchid Network’s bandwidth marketplace and has a fixed supply of 1 billion tokens. As part of the nanopayment design, users send OXT as collateral to a smart contract that then facilitates layer two payments by both directly funding payments and serving as a deposit, guaranteeing any overdrawn payments. OXT also has a secondary function through staking which allows service providers to advertise their capacity to users. In addition to this, Orchid also facilitates a form of delegated staking by allowing holders of OXT to deposit their tokens with service providers, theoretically enabling a revenue-sharing model, although crucially this is not a feature of the protocol itself. The founding team has significant industry experience, including crypto venture investing at Pantera Capital, an early security lead at Ethereum, and development at Dfinity. Orchid completed a $4.9m SAFT in mid-2017 and raised a further $43 million in Q2 2018 from the sale of 85 million tokens. Several Silicon Valley VCs have announced participation in the Orchid SAFT, including Sequoia, and Andreessen Horowitz.