Orchid’s nanopayments work on a principle: that sending someone a scratch lottery ticket with a 1/100 chance of winning $100 instead of sending $1 will save you transaction fees and transmit the same amount of value over time. The amount of value transmitted per “winning” ticket divided by the fees gives the account’s efficiency which is displayed in the app and dApp.

When the efficiency of an account drops below 0%, providers will no longer accept payments from that account because the network fees are greater than the amount of value they could receive from a winning ticket. Accounts with 0% efficiency will not work with the VPN service and will warn the user with a red “!”.

There are three major factors that affect efficiency:

  • The size of the deposit of the account which determines the face value of the tickets

  • The network fees for a given moment in time

  • Currency conversion of the currency held in the account to the currency used to pay network fees

Efficiency example

Imagine an Orchid account with a 150 OXT deposit. The account will issue tickets with a 75 OXT face value. Providers therefore are getting a tiny chance at “winning” 75 OXT for each ticket they accept for service. Providers must pay the network fee to claim the 75 OXT. Since the OXT denominated account is on Ethereum, the network fees are paid in ETH. So the provider calculates the current ETH gas price in OXT and makes sure that the fee is not greater than 75 OXT. When the network fees the provider pays to claim the 75 OXT are greater than 75 OXT of value, the provider does not accept payments from that account and that account has a 0% efficiency.

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