Orchid Launches Privacy Network

‘With Great Responsibility Comes Great Power’

  • The Orchid Privacy Network will be launched this week. As an overlay to the Ethereum blockchain it restores natural levels of access & privacy to the Internet.
  • The OXT token, which is used to purchase VPN services or provide bandwidth, was recently listed on the top two decentralised exchanges by volume: Uniswap and Idex.
  • Coinbase has announced they are also listing OXT and trading will begin imminently.
  • Orchid is led by a truly stellar team of co-founders in the form of Steve Waterhouse (Sun, RPX & Pantera), former Ethereum developer Gustav Simonsson, developer Jay Freeman (best known for jailbroken iOS software), and Brian J. Fox, author of the GNU Bash Shell
  • Fabric has elected to run nodes and provide bandwidth on the Orchid Network as have Private Internet Access, VPNSecure, LiquidVPN, BolehVPN, and Bloq
  • Fabric supported the project from prior to its inception in 2017. Orchid subsequently attracted investment from Sequoia, A16Z Crypto, Polychain and DFJ.


Addressing both the misuse of data by institutions and the value yet to be unlocked from the torrents of unused data is crucial to the coming wave of AI-powered services. At Fabric Ventures we believe the future belongs to a new ‘private by default, mutual by design’ approach to software architecture. A cornerstone of this new approach is ubiquitous and reliable tools for personal privacy. One of our portfolio companies, Orchid¹, is launching a network supporting virtual private networks, a technology used by more than 1 Bn people in a market estimated at between $27 Bn² and $100 Bn in value. Yet more important than this, Orchid’s offering can be stitched together from many providers to definitively improve actual privacy levels, censorship resistance and traffic throughput.


It was actually on the chilly fens of Cambridgeshire and crossing the greens of Cambridge University during the winter of 1991 that I first met this tall guy with shades of Sean Connery. He also was into hip hop and had a Mini Metro specially adjusted for his height. Super useful for weathering the wind from the North Sea en route the boathouse at Ely or the skipping the hoar frost on the morning dash to Fenners gym.

My new accomplice was Steven Waterhouse (Seven), already a couple of years ahead of me in his studies at the Cambridge University Engineering Department (CUED). This in turn was useful as I played around with Pascal in designing solar powered vehicles to cross Australia; dug into Kirchhoff’s matrices theory applied to electric circuits, and hijacked his PhD research into speech recognition to help me get my head around the maths of programming neural networks…back then at least. All formative in my future career in building and now investing in deep tech software companies at Fabric.

Sensibly, Seven fled to the sunshine of Silicon Valley whilst I stoically flew the flag for Silicon Fen, Silicon Beach, Silicon Roundabout and what I now like to think of it as the Silicon Banana, arcing from Bristol to Cambridge via London. Following a couple of decades of remote but effective collaboration on a succession of companies, it was in the spring of 2013 that the power of adding a new decentralised data layer to the Internet brought Seven and what was to become Fabric Ventures together more decisively. The two funds we had co-founded now collaborated on some of the very first venture investments in decentralisation.

The Dilemma

At the heart of today’s Internet & the Web lies what we at Fabric Ventures have come to entitle the ‘Data Dichotomy’. The quantity of data that is misused in the name of advertising revenues, and even abused in the name of political coercion, is incomprehensibly vast. Yet it is but a small fraction of the rushing tide of unused data that otherwise might lead us to life-saving gene therapies; drive financial inclusion or ensure sustainable and ethical supply chains. Moving forward, society has a choice:


  • Keep humanity under ‘capitalist surveillance’ — be it in social democratic, progressive, or state-sponsored format; leave the populus ‘doped on…TV’ as Lennon put it, and squander the genuinely limitless potential of that data ‘oil’ or ‘uranium’.

“We want to see the Greta Thunberg moment of privacy at the moment but we don’t have one. Nobody’s screaming about this,” Seven said to Decrypt.³


  • Give the users of the Internet the privacy they should naturally enjoy; educate them that with control over data comes great responsibility, and ‘with great responsibility comes great power” that should be used to unlock the value trapped in a skyrocketing stream of data from the world’s activities.
Figure I. Spidey realises that the gift of great power comes with the burden of responsibility. The future of the Internet should bring the inverse of the Peter Parker principle, i.e. for every individual, more responsibility for your data and interactions brings more power to the collective.

The Pioneers of the Web Anticipated This Challenge

Early business applications of the Internet involved closed ‘walled gardens’ in the name of security and commercialisation. For example, British Telecom’s ‘Telecom Gold’ email service (I hooked up to my Dad’s Apple IIGS in the mid 80’s); Lotus Notes and its implementation of email; corporate knowledge-sharing ‘pages’ over dial up POP’s provided by Compuserve; or the much heralded, but extremely empty, Microsoft Network or MSN as it was known.

Yet many people quickly recognised that the Internet and the Web had already outstripped these proprietary networks in terms of usability, speed and security. It was this dynamic that prompted Gates to announce he would ‘embrace and extend the Internet’ and for the pendulum to swing decisively from these closed & tightly controlled to open and permissionless systems.

IP was clearly the winning platform, but it was missing the crucial elements of the protocol stack that were needed to reserve bandwidth and encrypt and decrypt traffic. To bring the security and ‘Quality of Service’ of entirely proprietary corporate networks to the open standards and permissionless environment of the Internet and the Web, the Internet Engineering Task Force (IETF). This was a fascinating gathering of the Internet’s largely bearded and Birkenstock wearing early ideologues and academics and the ‘chino and branded polo shirt’ army of US technology firms. This collective worked on resource reservation protocols like the Common Open Policy Service (COPS⁵), and the Resource ReSerVation Protocol

(RSVP⁶ ⁷) and tunnelling approaches like Multi Protocol Label Switching (MPLS). None of these were nimble enough to support the bandwidth marketplaces of the time like Invisible Hand or BandX, let alone meet today’s demands.

On the security side, researchers and corporates worked to develop and deploy technologies Internet Protocol Security (IPSEC⁸), Remote Dial In User Service (RADIUS⁹ ), and HyperText Transfer Protocol Secure (HTTPS). Yet it was not until a major initiative from the Electronic Frontier Foundation (EFF) that HTTPS became widely deployed. Although efforts were made to integrate accounting with these new protocol layer capabilities, there was no intrinsic ability to exchange value and amongst other challenges the cost of requiring a trusted third party to sign server side digital certificates had been too expensive an overhead.

Web 3.0 Superpowers To The Rescue

Today, in spite of all the investment and high profile privacy crises, a full third of all page loads are still unencrypted¹⁰ (measured by Firefox Telemetry), and it is time for the pendulum to swing once more, yet this time we will catch it mid-swing.

Here is where the emerging Web 3.0 computing paradigm comes to the rescue. These new cryptography-powered decentralised data structures have a more fundamental impact than might first meet the eye. They herald network-native identity; self-sovereign management of data in a ‘Private by design, yet mutual by default’ and ‘Can’t Be Evil’ architecture; security that can scale with the size and value of the network; true peer-to-peer transactions of many types; and digitally native money at the heart of extremely low friction and programmatic incentive structures. With the new building blocks of Web 3.0 we believe we can retain the open, permissionless, and cost-effective nature of the Internet, while adding the performance, security, and privacy it needs.

The Orchid Story

After 4 years of pioneering investments in decentralised protocols and applications, in 2017 Seven struck out again as a founder and practitioner with Orchid. He assembled a truly stellar team of co-founders in the form of a former Ethereum developer Gustav Simonsson, developer Jay Freeman (best known for jailbroken iOS software), and Brian J. Fox, author of the GNU Bash Shell. Orchid’s advisors include Ethereum co-founder Gavin Wood and Stanford cryptography professor Dan Boneh.

As much as it might be expected, it remains morally wrong when dictatorial nation states such as Iran shut down internet access to silence protests.¹¹ It is even more ominous when the world’s biggest democracy had more than 159 internet shut-downs just over the past 3 years.¹² When the stats come to light that show that 15% of countries in the world have cut off the Internet for civilians at least once in the past 4 years, it gets truly scary.¹³ Who is next, and when might we get that ‘access restricted’ message pop up?

Whether it is providing fundamental communication rights to the persecuted Iranians, Uyghurs, and Catalans, allowing people access to impartial, non state-sponsored news sources, or simply providing access to geographically restricted content, Orchid is a technology for freedom. It is a technology for good.

Yet human nature is generally such that people find themselves ‘closing the barn door after the horse has bolted’ and this applies to privacy for certain. So it is compelling that the largest part of the western market is interested in VPNs for ‘access’ rather than full privacy. Whether it is to bypass firewalls, school and workplace restrictions, or politically blocked websites, Orchid will cater to a growing audience, while also providing better privacy and anonymity online.

The Orchid Offering

The team is now launching the world’s first privacy network. This peer-to-peer, incentivised marketplace for bandwidth and encrypted communication permits users of Orchid’s own multi-platform VPN client to access the Natural Internet. Critically, under the hood Orchid employs the OXT token to deliver the economic incentives intrinsic to ‘Web 3.0’ to ensure that resources are allocated as needed; the cost of malicious behaviour is higher than its benefit; and that the ‘codec’ is operating through the power of a decentralised marketplace. It employs innovations only possible with network-native ‘digital money’ to operate at ultra low levels of friction, using Orchid’s stochastic nanopayments. The network is open to broad and inclusive participation by those with spare internet bandwidth on the supply side that seek to monetise it — or indeed simply want to participate in delivering access and privacy to the world’s Internet users. Moreover, the network is designed in a way that allows users (or third-parties) to curate ‘white lists’ of highest quality bandwidth providers, including useful metadata such as geographical location, latency, and price.

To contribute to the network’s distribution, and building on our ongoing work on active network participation, Fabric will be running at least one node on the Orchid Network.

Powering Third Party VPNs

For thousands of founders and funders before and during the first wave of the Web eager to hone their start-up craft, Geoffrey Moore’s ‘Crossing The Chasm’ was pivotal text. A key framework within it is the criticality of contemplating the ‘whole product’ i.e. not just features your users might love but a route-to-market that serves your target segment and partnerships that fill out the produce functionality to make adoption a ‘doozy’. Many if not most of the products launched in this first ten years of Web 3.0 have been severely lacking in this regard, they are still the domain of technologists and very early adopters. Orchid is now launching with four key VPN providers. This choice of end user products and distribution they represent, these partnerships will onboard hundreds of thousands of users into the Orchid Network, therefore kickstarting the Orchid’s economy around bandwidth. Users need not be in the slightest bit aware of the underlying technology and token economics that deliver them access to the global Web with peerless privacy.

Coordination of Marketplace Actors

As the ConsenSys security audit¹⁴ points out, ‘The usage of the Ethereum blockchain within the Orchid network protocol is an exceptional example of decentralized coordination with on-chain enforcement.’ In practice, this means that the very complex job of brokering communication bandwidth and VPN workload management can be coordinated effectively and automatically without the need for a trusted third party. The bandwidth provider node is selected using Orchid’s reference implementation of the scan function using a linear stake-weighted approach together with arbitrary metadata criteria. Critically, Orchid retains no special function after deployment of the smart contracts to the nodes and hence no trust is required.

Paying Your Way

Once the multi-hop routing is in place, the movement of packets can be paid for through Orchid’s stochastic nano payments that allow for very small amounts of value to be at stake at any point in time, thus minimising the trust in the system. The transaction overhead is already low enough to permit scaling of the system to millions of end users. As the Orchid White Paper¹⁵ points out, “the Orchid client can also use separate nano payment accounts and public keys for each node in the circuit to protect against route inference from on-chain payment history” if complete anonymity is required.

Plenty at Stake in the Directory Tree

This economy is powered by Orchid’s OXT token, which will be a ‘work token’ used by the bandwidth providers. As bandwidth suppliers in the Orchid network stake their OXT tokens, their potential revenue increases in proportion to their fraction of the total stake made available by suppliers. In other words, bandwidth suppliers are granted the right to provide a portion of the overall requested bandwidth, pro-rata to the amount of OXT they have staked. Beyond being responsible for a fair allocation of profitable work, the staking mechanism plays a security function, economically incentivising its actors to behave in the best interests of the network and providing sybil resistance.

The stake is truly the key driver of node selection in the system and this cannot be influenced by outside actors. There is also a dampening effect on staking driven by an in-built three month lock-up. This is a world class implementation of multi-characteristic token economics that are an outstanding match for this real-world problem.

The Path Forward

Orchid’s ambitions do not stop there. Their product vision is to serve the needs of individuals more than institutions. Supporting millions and indeed tens of millions of users means embracing the layer 2 enhancements of Ethereum 2.0 as it becomes available. It also means addressing head on its responsibility to foster a healthy token economy in the Orchid network, including through deep integrations and partnerships with the crypto market infrastructure.

In general, broadening its network distribution is never a destination in itself, it is simply a milestone on a company’s journey. In this case we are dealing with a token distribution where the integrity of the token economics and the participation of the suppliers is central to a network’s success. So providing the means for ‘democratised’ participation in its network for users and providers alike is a key step in Orchid’s worthy journey in support of the power and self determination of the individual. Yet Orchid also achieves more than that. It is a technology that gives great responsibility to these individuals and hence the power to act collectively to provide a ‘check and balance’ against the inevitable corruptibility of human institutions. We will probably still need a ‘Greta Thunberg’ moment in privacy at some point in this journey. Yet, if squeezing into Seven’s Mini Metro back in 1991 contributed even in a small way to Orchid’s launch, this might yet prove even more valuable than escaping the chill and enjoying the motivation of some fresh West Coast hip hop.

Sources and Resources

To learn more about Fabric Ventures, you can visit our website , follow us on Twitter and read our investment thesis.

  1. The Blooming of the Sovereign Individual https://medium.com/fabric-ventures/the-blooming-of-the-sovereign-individual-720a0b3205aa
  2. VPN Market in 2020 https://www.statista.com/statistics/542817/worldwide-virtual-private-network-market/
  3. https://decrypt.co/10293/a-look-at-orchids-decentralized-vpn-what-it-means-for-web3
  4. With Great Power Comes Great Responsibility https://en.wikipedia.org/wiki/With_great_power_comes_great_responsibility
  5. The COPS RFC of 2000 https://tools.ietf.org/html/rfc2748
  6. First collaborations on RSVP in 1997 https://tools.ietf.org/html/rfc2205
  7. Wroclawski’s initial paper on RSVP in 1997 https://tools.ietf.org/html/rfc2210
  8. IETF RFC for IPSEC 1995 https://tools.ietf.org/html/rfc4301
  9. https://tools.ietf.org/html/rfc2138
  10. “Let’s Encrypt Stats”. LetsEncrypt.org. Retrieved 2018–10–20.
  11. https://www.wired.com/story/iran-internet-shutoff
  12. https://www.accessnow.org/cms/assets/uploads/2018/06/KeepItOn-Digital-Pamphlet.pdf
  13. https://www.nytimes.com/2019/09/02/world/africa/internet-shutdown-economy.html
  14. ConsenSys Diligence Orchid Network Protocol Audit https://diligence.consensys.net/audits/2019/11/orchid-network-protocol/
  15. Orchid: A Decentralized Network Routing Market https://www.orchid.com/assets/whitepaper/whitepaper.pdf

Disclosure: Fabric Ventures LLP holds OXT.

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