NOTE: This Analysis document was updated on the 13th of November 2019 to reflect the new ticker symbol OXT. No other changes were made.
Orchid Protocol Token ICO Fast Facts
- ICO Crowdsale Start Date: Private Investors Only
- Maximum Discount: 30% (Private investment rounds only)
- Platform: ETH
- Amount Raised (Valuation): $120m USD for 200m OXT tokens (1b tokens issued values the project at $600m USD)
Orchid Protocol Token Utility
The Orchid Protocol is one of the best uses of cryptocoins reviewed so far. It uses a semi-anonymous, easy to access token to provide anonymised access to the internet for people who need it. Not only that, the token doubles as the accounting system (down to the packet level), allowing the person browsing to compensate the person providing the internet access for their resources.
The Orchid Protocol looks to improve on the few competitors it has out there at the moment. The most known protocol for anonymous browsing is Tor. Originally developed by the United States Navy, Tor has been open sourced and taken over by the community as a tool to provide anonymity to personal internet browsing. The theory of Tor has proven to be sound although the actual deployment has suffered from an overload of users. With tens of thousands of users relying on the service, yet only about 1,000 exit nodes, Tor has become synonymous with slow or no browsing speed. Over recent times, information leakage has also raised suspicion of the protocol and the entities hosting the exit nodes.
The other concern with Tor is that it is now easy to identify Tor traffic on the network. Enterprises and entire countries can now block Tor traffic with ease. 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 countries affected by the Arab Spring a couple of years ago. There are add-ons and modules available which add some advanced features to Tor, but these are not standard, and rarely known by the average user. By preventing users from protecting their online activity, these countries can continue to restrict users access to an open internet. Even Australia is facing significant interference by the Government with regard to our open internet.
As more and more organisations and countries begin to censor or limit the internet, people will search for alternate methods to access the information they want. Currently this is limited to experts in the technical field but as we have witnessed with VPNs, this will grow as technologies mature and become main stream. By building an anonymised and protected method to access the internet, the Orchid Protocol could become mainstream in future years. Basing this on Ethereum ensures that users are able to freely access the required payment method for such access.
Orchid Protocol Token Team
While orchid has a strong management team, there isn't a whole lot known about their technical or development team.
With four co-founders, Orchid Labs has a very rich history with managing large scale projects. Up front is Steve Waterhouse, who has a PHD in Computer Science from Cambridge (even winning the Isaac Newton prize for his research). While he performs in a number of technical advisory roles, his latest occupations would be classified as venture capitalist or startup mentor/incubator as he funds and works with a large number of startups.
Next up is a favourite of mine, Brian Fox. I know Brian for his work in creating the BASH shell which is used extensively on Linux systems. More recently, he too has been filling a venture technologist type role. Another thing I am happy to see, is that he is the first employee of the Free Software Foundation (FSF), a foundation that I believe does very good work to keep key technologies free and open.
Gustav Simonsson, who was part of the Ethereum core team at launch, will bring his obvious skill set to the project as well. His background is in blockchain core protocols, clients, and security auditing, which will be critical to the project.
Finally is Stephen Bell. Stephen was the Vice President then Managing Director of Trilogy Ventures. A Technology venture firm that provides first stage startup capital to teams in China.
As you can see, while they all work in and around the tech industry, there isn't anybody with recent, hands on development experience in there. No further details are provided about their network engineer, protocol engineer, Orchid Market developer etc. This is a little concerning, but probably a little closer to how a real VC funding round goes in Silicon Valley.
Orchid Protocol Token Roadmap
There isn't a whole lot of information published about their plans at this stage. This is to be expected for a beta product aiming to be launched in 2018, followed by significant testing before a final protocol launch after that. It is still very early days for this ICO with a launch date not even confirmed yet. It is expected that more details will begin to filter through closer to the launch.
Orchid Protocol Token Value
Raising $120m for 20% of the project values it at a massive $600m. But consider that the VPN sector alone is expected to reach $106b by the year 2022 with a small concentration of nine organisations currently dominating this sector. The $600m valuation represents a little over half a percent of the expect market in 4 years. Should The Orchid Protocol manage to take even a small part of this market, that valuation appears extremely fair. It is a reasonable reflection of the project's current size and hasn't been inflated due to the team or potential market domination.
As there are no details about how the remainder of the funds, it is difficult to ascertain how much is being spent on the project versus the amount given to the project team and advisers. Given the team's experience with open source projects and the Free Software Foundation, I am willing to give them some benefit of the doubt in this regard.
Orchid Protocol Token Transparency
The ICO has not commenced yet. While their whitepaper goes into the technical details of the protocol, challenges and the competition; there is very little information about this project on social media. However, investments listed on their website do give an indication of the type of project this will be. To support Orchid Labs and its mission, the company has raised $4.7M seed SAFT (Simple Agreement for Future Tokens) from investors including Sequoia, Andreessen Horowitz, DFJ, PolyChain Capital, Metastable, Blockchain Capital, Crunchfund, Struck Capital, Compound VC, and several other funds and angel investors. They are now seeking $200m from a private investment round. It is not expected to make it to a crowdsale phase.
Orchid Protocol Token Distribution
No details of the distribution have been supplied, although it is rumoured that there is such significant interest by Funds and VCs in Silicon Valley that they may not proceed to a public ICO phase. If the capital can be raised privately, this would ease the community support and other overheads by the company.
Orchid Protocol Token Summary
The Orchid Project (OXT) is an exciting project which uses the Ethereum network to provide a truly anonymous and private internet for users who suffer from oppressive restrictions, have a higher requirement for privacy or just want to use an open internet platform. It builds on several proven protocols to create easy access and secure communications for its users. It will reward users who provide nodes in the network for sharing their resources and bandwidth.
While the OXT token may never become available to the general public during the ICO, users may be able to gain access to the private phase of the sale through large syndicates or pools of users working with other VC funds. They should seek to identify more details of the funding including: details about the team, the number of tokens being issued and their ability to be traded on an open market or exchange.
There may be big benefits to those who have the access and are willing to take the risk.
Crypto Coin Disclosure
The author does not hold OXT in his portfolio (although would love to know of a source to purchase tokens from).
No payment or private consultation was sought for this article.
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