Ever heard of The Orchid Protocol?

It is a decentralised, open-source technology
for an Internet free from surveillance and censorship

The information contained in this report is neither legal nor financial advice and presented for informational purposes only. Before considering any investment, make sure you read the report below carefully and take time to do your own due diligence.

Existing approaches to unrestricted, unsurveilled Internet access such as I2P and Tor suffer from a lack of widespread adoption. This is where Orchid steps in. Orchid Protocol enables decentralized network formation and probabilistic micro-payments. What they propose is a market based, fully decentralized, and anonymous peer-to-peer system formed on a “bandwidth mining” which they believe addresses the lack of relay and exit nodes in the currently existing structure of many VPN traffic transmission chains by directly incentivizing participants. To note, the system is still under development and various internal algorithms will probably change. Though, the essence of this concept, its purpose and main goals will remain the same.


The Orchid Protocol organizes bandwidth sellers into a structured peer-to-peer (P2P) network termed the Orchid Market. According to the scheme, all customers will be able to connect to the Orchid Market and pay bandwidth sellers in order to form a proxy chain to a specific resource on the Internet. Nowadays, the users who access the Internet without protection provide their complete browsing history and website use to their ISP, who can then share or sell that data. What makes Orchid Market different from the common methods for sending and receiving data from the Internet, which as we all know are tracking our personal data, is that it naturally separates information about the source of data from information about its destination; no single relay or proxy holds both pieces of information, or knows the identity of someone who does. The structure of the Orchid Market further supports this separation of information by providing strong resistance against collusion attacks — the ability of a group of bandwidth sellers to overcome this separation of knowledge. It is crucial to note that Orchid Market provides a “fixed rate relaying” to prevent traffic analysis and an incentive for participation not related to the hiding or discovery of information: a payment in tokens.

This is how the mechanism looks like:

Direct connection, VPN connection, Orchid connection

The Orchid technology is progressing and the alpha code is available on Github. Gustav Simonsson, the main code developer, states in the reddit community that the token sale will most likely be launched in Q2. However, initially it was planned to happen at the beginning of 2018. No official date has been announced yet.

Platform use-cases

In the Orchid market, peddlers serve as buyers and sellers of bandwidth that also may be relays or proxies. The users are not required to be peddlers within the Orchid market but all relays and proxies will be required to be peddlers. An entry to and continued participation in the Orchid market is gained by presenting a proof-of-work which they call a “Medallion”.

Medallions are closely tied to the Ethereum block digest, a holder’s public key. Within the Orchid market, Medallions are used in two ways:

  • To prevent trivial entry into the market resulting in attacks
  • To prevent attackers from choosing their location in the market

In order to prevent attackers from running more Peddlers than is proportional to their share of the Orchid market’s total computational power, every Peddler checks the validity of all its connections’ Medallions every “Medallion cycle”. In the event that a valid Medallion is not supplied, it is disconnected from the network. By tying the market address of a Peddler to the Medallion, performing an attack becomes much more difficult.


The Orchid Protocol has a great potential of becoming a new VPN provider that encrypts and securely transports traffic across a larger insecure networks

  • Data protection is vital for individuals as well as companies that are more than willing to pay for a well-optimised internet security. VPN market is relatively huge and is rapidly expanding. According to MRS research, the global VPN market has generated USD 15.27 billion in 2016, is projected to grow with 18.22% CAGR during forecast period 2016–2022 and is expected to reach 106 billion in 2022.
  • Secondly, VPN grants you an access to geo-restricted contents.
  • Thirdly, the encryption of your web traffic makes it barely possible for hackers to steal any of your financial data stored in cloud (passwords, credit cards and e.t.c).
  • Moreover, the Orchid Protocol protects your data from the advertisers, marketers and other organisations that are constantly trying to make your web experience “personalised” by feeding you with more and more ads while you are surfing the net.


Orchid Protocol has only a few direct competitors but they have a slightly different market strategy. One of them, Mysterium, allows anyone to join its network as a provider to sell unused traffic or as a buyer of VPN services. The second, Substratum, is focused on decentralized hosting of websites, where users can upload websites to the substratum network instead of a traditional central web hosting, and access such sites in the same way as if they don’t use the VPN protection. The indirect competitors also exist. One of the most powerful is Tor. In fact, Tor is by far not widespread as the economic stimuli are missing there. As a consequence not enough nodes are live in the network. Tor is focused on users remaining anonymous towards the website they access, whereas Orchid is for any type of browsing, whether anonymous or using logins / accepting cookies etc. Another concern with Tor is that it has become easy to identify its traffic on the network. Enterprises and entire countries can now block Tor traffic without any problems. This has made Tor impossible to use in countries who could benefit from it the most, such as those behind the great firewall of China or those countries affected by the Arab Spring a couple of years ago. As stated by one of the main Orchid’s technology developers, Gustav Simonsson: “Orchid aims to be fully decentralised and avoid central directory nodes as used in Tor as well as achieve a higher node count over time.”

Among other competitors you will find such companies as ExpressVPN, which offers its services in 94 countries, one of the world’s fastest VPN providers, IPVanish with unlimited traffic boasting 40.000+ shares IPs and one of the securest VPN company, NordVPN, with a built-in 2048-bit encryption. All these companies are limited by the amount of countries and geographical locations where they can operate. Concerning the Orchid Protocol, as stated on the official web page : “Our initial release operates with a threat model of an authoritarian government’s internet censorship — such as that seen in China, Turkey, or Russia — which is a more tractable problem. We may implement full Chaumian mixes in the future (which are immune to metadata/traffic analysis), but they are unlikely to be complete for our first public release”. All centralised companies mentioned above lack transparency. The Orchid relays and proxies can be viewed as just-in-time purchased VPNs chained together. Unlike traditional VPNs, Orchid proxies and relays do not know the identities of their customers, nor do they know the IP addresses their customers are using. Though, it is important to take into account the “unspoken rule” that anonymous service providers are always the first targets which can be potentially cracked down by central authorities.


This is how the technology is going to work:

  1. List Services: Asks a Peddler for a list of services it sells.
  2. Get Routing Table and Medallion: Get the Peddler’s Medallion, a signed routing table, and a cost of relaying traffic to members of the routing table.
  3. Relay Traffic: Pays the Peddler to forward traffic to one of the peers in its routing table.
  4. Purchase Service: Employs the Peddler as a service provider.
A three-Peddler Chain routing traffic for a Customer

The Orchid Network will support at least these services:

  • APIs for websites to directly integrate to the Orchid’s network and incorporate tokens into their services.
  • On-network file storage and static website hosting.
  • File sharing.
  • Email/messaging service.
  • An arbitration/moderation service.

Economics and Token

Incentivisation is a way to bootstrap new protocols and networks by giving people partial ownership of the network. The more proxy and relay nodes, the more useful the network provides for users. And the more users, the more valuable it becomes to run a proxy or relay node.

  • The Orchid Token (OCT) will be used for payments within the Orchid Network. The Orchid Token is a new, Ethereum-based, ERC20-compatible, fixed-supply token. The supply is fixed at 1 × 10^8tokens where each token has 1 × 10^18 non-divisible subunits (same divisibility as Ether)
  • The Orchid Protocol hasn’t yet established how much it will charge per 1KB of data packet but the team claims it will be less than 0.00000014$ (1.4 × 10^–5) , charged by the Amazon Web Services Singapore CloudFront.


The Orchid token is expected to be launched in early 2018 but the exact date of ICO hasn’t been announced yet. Though, the company has already raised $4.7 million in a seed SAFT (Simple Agreement for Future Tokens) round of venture funding from MetaStable Company, Blockchain Capital, DFJ Growth, Richard Muirhead, Struck Capital, Polychain Capital, Compound, Andreessen Horowitz, Sequoia Capital, CF and several other undisclosed investors.

The Howey Test conducted for this research indicates that it is highly unlikely that Orchid Protocol will be considered a security, which is a good sign for long-term investors and it also means that the project’s team is not influenced by the “short-termistic” biases.


Orchid Labs Inc. is a company registered in Delaware promoting and supporting R&D of the Orchid Protocol. All information available for the public can be found on the Orchid Labs Inc. main website. According to the information taken from the Bloomberg the company was founded in 2017 by 5 co-founders and is registered in the USA (82 Howard Street, Suite 423, San Francisco, CA 94105).


Stephen Bell: (Linkedin profile, Twitter profile)
Co-Founder of Orchid Labs & Business developer

Serves as the Managing Director and Managing Partner at Trilogy VC. Mr. Bell served as Vice President of Trilogy VC from 2002 to 2006. He expanded and managed the Trilogy University Program to include India and China. Mr. Bell founded ShangBy in 2002. Prior to that, he founded Supply Solution Inc. in 1998. Mr. Bell served was the Chief Executive and Founder of CORE Products GmbH since its launch in 1995…

Brian J. Fox: (Twitter profile)
Co-Founder of Orchid Labs & Core developer of Orchid Protocol

Serves as Vice President of Technology Development at Izalex, Inc. Mr. Fox served as the Chief Technology Officer of Warp 9, Inc. From 1988 to 1990, he served at the University of California at Santa Barbara as a research software engineer. From 1998 to 2000, Mr. Fox co-founded and served as Chief Technology Officer of Supply Solution, Inc. In 1995, prior to co-founding Supply Solution, Inc., he founded Universal Access, Inc., where he developed the programming language Meta-HTML. He is the author of BASH, the UNIX shell, which is widely utilized in modern versions of UNIX…

Jay Freeman: (Twitter profile)
Co-founder of Orchid Labs & Core developer of Orchid Protocol

Developer of the Cydia software used on millions of jailbroken iPhones. CTO at Let’sCram.com for over 2 years. Technology Partner at the Okori Group for 4 years. Software consultant at Vetronix Corporation for 2 years. Software consultant at Roaming Messenger for a year. CTO at Gnostic Labs for 3 years…

Gustav Simonsson: (Medium profile, Twitter profile)
Co-Founder of Orchid Labs & Technology developer of Orchid Protocol

One of the core developers at Ethereum with focus on blockchain security and the Golang client during the beginning of Ethereum. He has his own GitHub account where you can find his works…

Dr. Steven R.Waterhouse: (Medium profile, Twitter profile)
CEO & Co-Founder of Orchid Labs

Dr. Steven R. Waterhouse, also known as Steve, is a Partner of Global Sales Alliance. Dr. Waterhouse founded Waterhouse Group and serves as its Chief Executive Officer. He serves as Director of the Honeycomb Project at Sun Microsystems. Dr. Waterhouse served as Chief Technology Officer of RPX Corp. He was a Founding Partner in the boutique IP firm Pebble Partners. Dr. Waterhouse was an Entrepreneur in Residence at Foundation Capital, where he focused on investments in consumer Internet and search including the investment in Powerset. More information about him you can find here


  • The Orchid Protocol has a potential of becoming the world’s first decentralised VPN open-source technology with a built-in mechanism of “incentivisation” of its customers participating in the “pool”.
  • The Orchid Protocol has a very strong management team. Orchid’s technical expert, Gustav, has a verifiable experience in the blockchain industry. The rest are well-known financial industry experts advocating for the future of decentralised open-source technologies.
  • Private funding is already driving this project. SAFT agreement signed, 4.7M $ raised.
  • The project is currently in its early stage of development and we do not know if the technology is actually going work as it has been planned.
  • The company is highly concerned for its technology security. Peers on the network will have to create a “medaillon” to demonstrate their realness. Creating such a “medaillon” will be done via Proof of Work concept.
  • The world lives with restricted or censored access to the Internet. The Orchid Labs team intends to provide people with the ability to freely communicate, access information and even get a certain reward.
  • The project received its early-stage support from some well-known investment companies and managed to raise 4.7m $ prior to its planned ICO.
  • The Orchid Protocol could become an open-source project supported by a community of engineers.

Useful Links

For more details on the project check the Orchid Protocol’s website, Whitepaper, Press Kit or follow them in Twitter and Facebook.

You can also read Steven’s Waterhouse article in Medium. You will also find Gustav Simonsson profile here. Discussion forums in Ycombinator and Reddit.



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