Enhancing the Awareness, Utility, and Anonymity Set of Oxen - Part 8 - Lokinet Monetization

[venezuela01]

Enhancing the Awareness, Utility, and Anonymity Set of Oxen - Part 8 - Lokinet Monetization

The ORC-8 discussion highlights a crucial challenge within the Oxen ecosystem: the coin's underutilization due to a limited number of daily transfers, which consequently diminishes Oxen's practical anonymity set. Prior proposals have addressed this issue from the AARRR framework perspective.

This proposal aims to implement Lokinet monetization to further increase Oxen usage.

Background

Lokinet Exit is a VPN that utilizes onion routing, offering enhanced privacy and security. Lokinet Exit Marketplace is a collection of Lokinet Exit vendors, offering various services. To facilitate easier understanding and retention for users, Lokinet Exit could potentially be rebranded as SessionTunnel, to capitalize on the existing Session brand.

On a side note, the Lokinet darknet *.loki website, could potentially be rebranded as a SessionLink, the action to connect to a SessionLink could be rebranded as SessionConnect or *SessionDive.

Read-only Session Open Group as Lokinet Exit Marketplace

With over 700k monthly active users (MAU) on Session, we propose the creation of a read-only Session Open Group, featured in the Session App, dedicated to Lokinet Exit VPN vendors for sharing products and promotional information. More details can be found in Oxen Monetization: Integration of Lokinet Marketplace Referral Program in Session.

Session Enterprise as Vendor Online Store

A Session Enterprise channel can be implemented by modifying the existing PySogs infrastructure. This ensures each user has an individual conversation with the Lokinet Exit vendor, maintaining privacy.

In a Session Enterprise channel, users are connected with the Session Enterprise account using a blinded ID for privacy protection. A vendor can then provide detailed product, promotional, and payment information. The purchase process is streamlined through an integrated wallet in Session. Essential details including the user’s blinded ID, the product’s SKU ID, and the payment ID, are saved securely in the vendor's database.

As an alternative option, an in-app purchase using fiat currency can be implemented. OPTF can collect fiat payments from the user, as well as the user's Session blinded ID, the product's SKU ID, and the Oxen payment address. OPTF then converts the fiat to Oxen and pays the vendor. Afterward, it returns the Oxen transaction ID to the user. In the future, the user can contact the VPN vendor through the original Session blinded ID and provide this Oxen transaction ID to authorize access. The original Session blinded ID should be recorded in the VPN vendor's order history database already, regardless if the order was pay directly by the user in Oxen or indirectly by OPTF.

When a user purchases a VPN through an in-app payment and uses OPTF as a proxy, the user's Session blinded ID can be encrypted with the VPN vendor's public key before being submitted to the OPTF server. In this manner, OPTF cannot link the blinded ID with the user's fiat payment ID. However, the VPN vendor can still identify the user's blinded ID after decrypting it with their private key. Nevertheless, the VPN vendor remains unaware of the user's fiat payment ID or any other potentially sensitive information.

A discount should be offered to users who directly pay in Oxen, because:

• If users purchase using Oxen rather than in-app payment, we can reduce fees paid to Apple and Google without compromising the third-party VPN vendor's income, creating a win-win situation.
• If users choose to use Oxen, they contribute to Oxen's anonymity set and should be rewarded for their contribution.

Ideally, when paying for VPN vendor on behalf of users, OPTF should always create a temporary wallet for each order, and discard that wallet in 48 hours.

Lokinet Authentication

After payment by Session integrated wallet, the user opens the Lokinet client, usually on a desktop, and enters the Lokinet Exit’s address, clicking 'connect'. The Lokinet client generates a random public key and submits a connection initiation request to the vendor.

The vendor responds with a one-time password and auxiliary metadata, including the Session Enterprise Account's Session ID. The user's Lokinet client encodes this one-time password as a QR code, which the user then scans using the Session mobile app. Upon scanning, the metadata, including the Session Enterprise Account's Session ID and the one-time password, is extracted and parsed. The Session mobile app then automatically connects to the Session Enterprise Account in the background and submits the one-time password.

Simultaneously, the Lokinet client on the desktop will keep polling the Lokinet Exit vendor every 5 seconds until a timeout error occurs. If a Session mobile app successfully submits the correct one-time password to the Lokinet Exit vendor's Enterprise Account within this time frame, the vendor checks its customer purchase history, verifying the customer's Session (blinded) ID, SKU, and one-time password. If everything matches, the previously submitted public key by the user is added to a whitelist, where it stays until the connection expires, which could be hours or days.

This procedure ensures a seamless integration between the Lokinet desktop app and the Session mobile app, while maintaining security, privacy, and user convenience.

Boosting Oxen Usage

Integrating Oxen as a payment method and providing discounts for Oxen users (if multiple payment methods are supported) can increase Oxen usage, thus improving its anonymity set. The Oxen discount could be an agreement negotiated between OPTF and the Lokinet Exit vendor, as a condition of listing vendors in the Session integrated Marketplace, thereby encouraging Oxen usage.

Anticipated Impact

According to VPN Statistics, Trends & Facts, there are 1.5 billion VPN users globally, creating a market of around 45 billion dollars per year. Here's an estimation of the potential of Lokinet Monetization:

Total VPN Users and Market Size: 1.5 billion VPN users globally, with a market size of $45 billion per year.
Target Lokinet Exit Market Share: 0.01% of this market.

Lokinet Exit Total Transaction Volume: 0.01% of $45 billion equals $4.5 million USD per year or $375K USD per month.
Subscription Rate: Assuming a user VPN subscription rate of $10 USD per month.
Transactions Per Month: $375K USD per month / $10 USD per subscription equals 37500 transactions per month.
Transactions Per Day: 37500 transactions per month / 30 days equals 1250 transactions per day, or 1.74 transactions per block on average, significantly reducing the risk of timing analysis for high threat users.
Comparison with Monero: This is about 5/100 to Monero's current daily transaction number of around 20,000.

Lokinet Exit Paid Users from Market Share: 0.01% of 1.5 billion VPN users equals 150k users.
Comparison with Session's MAU: Given the Oxen team's proven success in developing Session, which boasts over 700k MAU, and consider VPN users are very likely to pay, the goal of attracting 150k paid Lokinet users seems well within reach.
Comparison with Tor Users: There are over 3 millions of daily Tor users, attracting a similar unpaid user base or even more with Lokinet is plausible, which also suggests 150k paid Lokinet users is feasible.

Conclusion

This proposal leverages the Lokinet technology and Session platform to bolster the usage and utility of Oxen.

(Edit: Fix an incorrect quote of Monero's daily transaction count)
(Edit 2: Deleted another incorrect conclusion when comparing with Monero's daily transaction count)