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OXEN Monetisation Design: Lokinet Exit Marketplace

We’re revealing one of our latest designs for the exciting Lokinet Exit Marketplace
28 April 2023Alex Linton

The anonymous internet access industry is worth 50 billion dollars. The Lokinet Exit Marketplace is going to disrupt it. Get ready for the VPN game to change — a lot.

People have been wondering about Lokinet monetisation for years. How could it work? What was the plan? Not unlike Lokinet itself, the possibilities—and complexities—are mind boggling. There are many doors we can open, and because of the immense importance and difficulty of this task, we are determined to investigate every worthwhile idea to ensure Lokinet and Oxen will flourish.

After a lot of whiteboards, deep thinking, and espresso, we’re ready to share one of our favourite designs for the marketplace with you. Of course, there are still more paths to follow, and we are still exploring a multitude of possible Lokinet monetisation strategies.

So, how are we going to do this? Currently we have a strong, fleshed out design — and a couple of other options to investigate further. For now, we’re sharing in-depth designs for a path we have thoroughly explored. Here’s what you need to know.

Lokinet Exit Marketplace: Our current candidate

For the Lokinet Exit Marketplace to displace the VPN market, it needs to be: private, decentralised, efficient, customisable, and trustless. This design ticks all of these boxes. 

The quick version

The Lokinet Exit Marketplace trustlessly connects Exit Providers with End Users.

Exit Providers offer exit-points for Lokinet users, giving them the ability to browse the regular internet while enjoying the privacy and anonymity of Lokinet’s onion-routing. 

Exit Providers burn OXEN to register a specialised ONS called an Exit ONS. Exit ONS’ are more costly and expire more quickly than currently available ONS types, making Exit ONS registration a significant OXEN-sink. 

Exit Providers can choose to boost their Exit ONS’ by spending more OXEN — by burning more OXEN, the Exit Provider is able to connect to more service nodes simultaneously. The more users an Exit Provider has, the more traffic they will need to handle at a time — meaning they’ll need access to more service nodes lest they offer reduced speeds to their users. 

Once an Exit Provider has registered an Exit ONS, they can publish proof of their registration to the Lokinet network in something the Lokinet devs are tentatively calling an Exit Description. This Exit Description contains metadata about the Exit Provider, including the exit address, contact information, and proof of the active Exit ONS registration validation the number of service nodes the provider is reachable through.

The Exit Marketplace then uses the network’s Exit Descriptions to compile a list of Exit Providers and provide users a way to discover and subscribe to various Exit Providers. The marketplace never dictates the nature of the relationship between the provider and the user — things like the exit’s pricing and customer service obligations are mediated by the provider and the user.

The marketplace provides a simple way for people to find the Exit Provider they need, including things like filtering for specific exit locations, reading user reviews and feedback about providers, pricing details, exit uptime or date of registration, or what tier of Exit ONS they have. 

Ideally users will pay for their subscription in OXEN in order to maintain privacy and provide further value return to the network. We are looking into the possibility of native Lokinet Exit Subscription within Wallet3 to facilitate the use of OXEN payments. While we’ll work to support ease-of-payment in OXEN, it won’t be required: Exit Providers will be able to accept payment in whatever means they prefer. 

Keen for more details? Keep reading. It gets better.

The long version

Trust me — this goes deep. Grab yourself a cup of tea, make sure you’ve got a comfy spot to sit. This might take a while. 

The Exit Marketplace

The Exit Marketplace is a website which pulls data from the network’s Exit Descriptions and uses it to provide comprehensive information about the available Exit Providers. 

Much like block explorers, anyone could fetch information from the Exit Descriptions and create their own marketplace, and although we’re planning to run the first Exit Marketplace website — we anticipate many people will offer alternative services with their own interfaces and differences. 

To maintain privacy, decentralisation, and trustlessness, the Exit Marketplace does not govern the relationship between the user and the Exit Provider — it simply provides a mechanism for users to discover their ideal Exit Provider. 

Using the Exit Marketplace interface, users can filter for specific exit locations, pricing details, user ratings, exit uptime or date of registration, or the number of service nodes an exit can be accessed through. This makes it easy for users to find the specific experience they’re looking for without compromising on privacy — something no VPN provider in the world can offer. 

The marketplace gives Exit Providers a chance to ‘sell’ themselves by providing pricing details and a blurb about their service to be displayed alongside their exit metadata (such as the exit location/s), user feedback and ratings, and information about their Exit ONS.

Something users won’t be able to do on the marketplace website is actually subscribe to an Exit Provider — this would create an unacceptable trust requirement on the marketplace website operator. Instead, the marketplace will direct users to the Exit Provider’s website (ideally hosted at a .loki address 😉)  to complete the subscription. 

The Exit Description

Every Exit Provider publishes an Exit Description to the Oxen Service Node Network. Without publishing an Exit Description, the provider won’t appear on the marketplace and will be undiscoverable for users as well as having a limited number of connections to the network. 

Exit Descriptions must be published with proof of an Exit ONS, an address for the exit, and some way to contact the provider. This verifies the provider has paid for their Exit ONS and provides the minimum information required for a marketplace listing. 

The Exit ONS

The Exit ONS is the primary burn mechanism in this monetisation design. There are already several types of ONS, such as Session handles and .loki addresses, but Exit ONS’ are more expensive to register and expire more quickly. 

Not all Exit ONS’ are made equal — boosting an Exit ONS makes the Exit Provider accessible through more service nodes. As Exit Providers gain more users, more traffic throughput will be required to accommodate them. The base Exit ONS means the exit is only accessible through a small number of service nodes, so the provider would only be suitable for either a small number of users or for users who don’t require high speed connections (or both). For more premium offerings, more OXEN will need to be used for the Exit ONS. While this does incur a higher cost for the provider, they’re able to set their service prices such that they remain profitable. 

Also, note that an Exit ONS can be mapped to more than one exit node. In the case of a highly popular Exit Provider with large traffic volumes, multiple high-spec exit nodes could be mapped to a singular Exit ONS for simplicity and ease of use.

A popular Exit Provider may require multiple high-spec exit nodes to accommodate the traffic of their users, all of the nodes can utilise the same Exit ONS for simplicity and ease of use. Service node connection limits are still applied at the ONS-level.

The Exit ONS creates a natural connection between OXEN and the Exit Marketplace. The more Exit Providers are able to recoup costs via subscription fees, the more they will be encouraged to boost their Exit ONS or register further providers — burning more OXEN as they scale.

The examples

An Exit Provider, let’s call ‘em awesome.exit wants to offer five exit points each in a different country. All the exits should be able to carry a decent amount of traffic. In order to offer a worthwhile service, awesome.exit wants access to four service nodes per exit. With that in mind, awesome.exit boosts their Exit ONS to provide access to 20 different service nodes — provisioning four service nodes for each of the five exit points.  

Our second Exit Provider, fast.exit, operates one super-powered exit in the USA. They are set up to have huge capacity, and want to serve large numbers of people at once. To keep up with the traffic, fast.exit boosts their to Exit ONS to allow for connection to 200 service nodes. 

Our third and final provider, free.exit, is a free-to-use exit which offers easy access but low throughput. It maintains just a base level Exit ONS, and is accessible via 2 service nodes. 

Flow of Value in the Exit Marketplace

The Lokinet Exit Marketplace ensures everyone gets what they need. Exit Providers, who utilise the Oxen Service Node Network to provide their services, return value to the network via the purchase of their Exit ONS. They’re rewarded for their offering via the subscription or payments they recoup from users in return for private, anonymous access to the internet. 

As more Exit Providers enter the market, a natural equilibrium can be met between the cost to end users and cost to the network.

value flow

The other candidates

Of course, there are other options for how this can work. At the moment, the design described above is the most fleshed- and thought-out — but that doesn’t mean we aren’t considering other candidates. 

Other options or additions include things like a brand-to-brand approach where we partner with existing VPN companies to integrate Lokinet exits into their existing infrastructure, effectively onboarding their users onto Lokinet while the VPNs can improve their privacy standards.

We are also looking into an Uber-esque approach in which end users payments are collected by the foundation and then meritoriously distributed to the most popular exits.  

This is a game changer 

Lokinet is truly unique, transformative technology. Not only for people who are interested in privacy, but for every single user of the internet. The market dynamics of the exit marketplace allows the network to leverage the utility and value of Lokinet itself. 

Lokinet has been years in the making. This exit marketplace design has too — and it is well on its way. Despite its clear flaws, the VPN industry has continued growing at a rapid pace. It’s a multi-billion dollar industry with a few critical flaws — and Lokinet and the exit marketplace are here to solve those problems.

We invite you to comment on our plans, make suggestions, and discuss the future with us. We are excited to share this with you today and continue on the journey towards privacy for all online.

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