Analysis of Orchid: Decentralized VPN Market

Source: Cryptopedia

Author: Dr. Steven Waterhouse, Orchid Labs CEO

Compiled by: Hu Tao, Chain Catcher

The internet is an essential part of daily life, impacting nearly all business and trade. Like any communication system, internet connections have vulnerabilities that make you susceptible to attacks from malicious and unethical third parties. The security of internet connections is crucial for protecting users' identities and financial data. Orchid aims to address this challenge through its VPN ecosystem and accompanying blockchain-based payment mechanism.

Connecting to the Internet

Most users connect to the web through insecure internet connections, which are standard offerings from most Internet Service Providers (ISPs). These connections may allow private malicious parties and government entities to access sensitive data and personal profile information without explicit purpose and without your consent. In many regions, governments strictly scrutinize what personal profile information and content can be accessed online, as well as what people can post on various platforms. Some governments even track down violators, making the security of their internet connections a matter of life and death.

Secure internet connections can be achieved through Virtual Private Networks (VPNs), which are encrypted connections designed to obfuscate user identities and activities. However, even the best VPN providers have their drawbacks.

Free VPN providers maintain their financial viability by collecting and selling your data, which fundamentally contradicts much of the purpose of using a VPN. On the other hand, paid VPNs are subscription-based, so they often lack the incentive to provide high-quality service—although they typically have better security advantages because their revenue model does not rely on selling user data. The most significant drawback of VPN providers is that they represent a "single point of failure." If the service secretly logs user activity or suffers a data breach, users are left unprotected. When relying on a single VPN, your privacy is entirely in the hands of that service.

Orchid: A Decentralized VPN Marketplace

Orchid overcomes the shortcomings of existing VPN services by leveraging various cryptocurrencies and blockchain features to create a robust and cohesive solution that offers the highest standards of privacy and security.

Orchid VPN aggregates the services of numerous high-quality VPN providers in a unique decentralized marketplace powered by the OXT token. Bandwidth providers register as sellers on the network by pre-pledging their capital in the form of OXT. This staked capital acts similarly to a margin, incentivizing VPN bandwidth providers to deliver high-quality service to you. Providers that fail to do so put their own funds at risk.

Users seeking secure connections can request VPN services through Orchid, at which point the system links them to one of the VPN providers on the network—referred to as "nodes." Orchid's VPN also features an advanced option that allows users to configure multiple "hops," securely linking multiple VPN connections from different providers before connecting to the internet. This further obscures the user's online activities, as even the VPN providers themselves do not have complete information about individual network activities.

Unlike standard VPN services, Orchid's provider mix only charges for the data traffic that flows through them. Orchid VPN operates on a pay-as-you-go basis, allowing you to switch to competing providers' connections at any time, thus avoiding issues with poor connection speeds.

Orchid's OXT Payment Mechanism

The foundation of Orchid's decentralized VPN marketplace is the network's native digital asset, OXT, which can only be used on the Orchid platform. OXT is an ERC-20 token built on the renowned and robust Ethereum blockchain, benefiting from all the advantages and stability provided by the blockchain and its community. Ethereum-based tokens are popular for their security and fast transaction speeds.

After purchase, users can transfer OXT tokens to a Web3-compatible crypto wallet to set up an Orchid VPN account. This transfer incurs transaction fees, which users must pay in ETH, the fuel that powers the Ethereum network. The wallet is then connected to Orchid, allowing setup without personal information. After this, enabling the VPN connection requires a click in the Orchid application.

Orchid employs a unique off-chain transaction system that relies on what is known as probabilistic micropayments. This system reduces the Ethereum transaction fees associated with sending or receiving OXT (the cost required to execute transactions on the Ethereum network). Orchid tracks transactions between users and VPN providers, then processes the total fees weekly.

Orchid also offers pre-filled accounts, allowing people to start in-app purchases using regular credit cards. Preloaded accounts function exactly like regular accounts but operate similarly to gift cards loaded with OXT. When you use VPN services on Orchid, this is depleted; once your account runs out of OXT, you can purchase another preloaded account.