Open venezuela01 opened 1 year ago
KeeJef
commented
1 year ago Yeah i generally like this idea, we will already be looking at getting some commercial VPN providers onboarded into Lokinet as Exit providers. I think it could be cool to promote those providers products via Session. I think the conversion percentages and pricing points given here are slightly optimistic. But this could still result in a non negligible income for the network.
venezuela01
commented
1 year ago Yeah i generally like this idea, we will already be looking at getting some commercial VPN providers onboarded into Lokinet as Exit providers. I think it could be cool to promote those providers products via Session. I think the conversion percentages and pricing points given here are slightly optimistic. But this could still result in a non negligible income for the network.
According to Affiliate Marketing Commission Rates:
Percentage commissions are most common in affiliate programs, and the average affiliate commission rate is between 5–30%.
From my personal experience in an industry selling physical products online, partners offered us a commission ranging from 0% to over 10%. The weighted average hovered around 8%. The digital product markets usually have a higher commission rate than the physical product markets.
The actual commission rate was negotiated on a case-by-case basis. Factors like brand strength played a key role; if a partner boasted robust brand recognition, we were keen to onboard them onto our platform even without commission. On the other hand, lesser-known partners, whom we assisted in acquiring customers, were levied a higher commission.
This strategy can be mirrored for the Session Lokinet Referral Program, with a lean startup style approach.
Initially, we can partner with emerging brands, prioritizing those businesses owned by loyal Session/Lokinet community supporters like PrivacyProShop or Rob Braxman Store.
By fostering their growth, we position ourselves to request a relatively higher commission rate, all while refining our product through hands-on experience. Once our Exit Market prototype is firmly established, we can pivot to onboarding more mainstream brands, potentially at lower commission rates.
BeholdersEye
commented
1 year ago Bundled advertising seems like something most users want. Unlikely to result in a fork. 🙄
venezuela01
commented
1 year ago Update: a list of 100+ VPN service providers who supports crypto payment. https://cryptwerk.com/companies/vpn/
These VPN service providers might be our potential partner for Lokinet integrated VPN. Note that not all listings have a high rating score, we need to carefully select out potential partners.
Off-topic: For people want to run Oxen service node and pay in crypto, there is a list of 500+ hosting vendors as well: https://cryptwerk.com/companies/hosting/
Oxen Monetization: Integration of Lokinet Marketplace Referral Program in Session
According to official report, Session currently has about 700,000 monthly active users, and is projected to reach to 1 million by the year's end. However, it is often perceived that Session users do not significantly contribute to the value of Oxen tokens since the existing protocol does not mandate Oxen token consumption by Session users.
This proposal introduces an different perspective, advocating that Session could aid Lokinet VPN providers in accruing users. In reciprocation, the VPN service providers would pay commissions to OPTF, who would then purchase and burn Oxen tokens from the market, reducing the supply and increasing the token value.
Motivation
The primary roles in this referral program are the user, the VPN service provider, and OPTF. For the successful execution of this program, it is crucial to maintain integrity among all parties and to establish a scenario beneficial to everyone, thereby incentivizing participation.
With a continuously growing number of monthly active users, the Session app presents a valuable channel of traffic. Considering the costly nature of customer acquisition and high churn rates in the VPN industry, Session's introduction of new users to VPN service providers could be highly beneficial. Session users, as a privacy-conscious group, are likely to be potential VPN customers as well. With numerous VPN service providers in the market, users might have difficulty choosing a reliable one. If Session carefully selects reputable service providers for the users, and leverages Lokinet technology to enhance privacy, it is likely to benefit users as well. If successfully referred, a modest commission could be charged by the OPTF for every customer introduced by Session.
Challenges and Solutions
The referral program faces several hurdles:
Our proposal addresses these issues:
Initially, OPTF will partner with selected VPN service providers. Each service provider creates an Oxen wallet, retaining the spending key and sharing the view key with OPTF. This setup allows OPTF to monitor all incoming transactions, ensuring transparency in order completion. Alternatively, OPTF can aid VPN service providers in operating a BTCPay server, which accepts BTC and other cryptocurrencies. In this scenario, no view key is needed, as the transparency of BTC blockchain permits the tracing of incoming payments by default. See also https://github.com/oxen-io/session-desktop/issues/2809 for the benefits of supporting mainstream cryptocurrencies like BTC in Lokinet/Session monetization.
We propose to integrate a "Marketplace Community" into the Session app, similar to existing official Session Communities like those Oxen/Session/Lokinet Update Chanels. The marketplace channel will enable subscribed users to receive the latest offers anonymously. Each offer will detail the service provider, VPN service specifications, pricing, and promotions such as 5% or 10% discounts. The order will include an Oxen payment address or BTCPay address agreed upon by the VPN service provider and OPTF. For transparency, it is recommended that OPTF explicitly informs users that if they purchase a VPN service through the referral program, OPTF will charge a commission. The revenue will be used to continuously improve products in the Oxen ecosystem, including Session and Lokinet.
Users can take advantage of these offers by paying to the embedded address to claim the stated discounts. This arrangement mirrors common strategies used by internet influencers for product promotion and commission charging. They utilize promotion codes to incentivize users to purchase with a specific tracking string. In return, the promoter can keep track of successful transactions and charge commissions propotionally. In our case, the usage of onion routing and cryptocurrencies provides better user privacy protection while still keep track of order completions.
If a user finalizes a transaction and pays for VPN service through the offer's embedded crypto address, OPTF can track the transaction amount via the Oxen wallet view key or the BTC blockchain. Subsequently, OPTF can demand a commission percentage from the VPN service provider, potentially on a monthly basis. If a service provider fails to pay, OPTF can revise the Marketplace Community and remove that service provider's offers.
There is an edge case where a user might be dissatisfied with the VPN service and ask for a refund, and the VPN service provider agrees to it. In this case, OPTF shouldn't charge a commission. However, enforcing this on a protocol level is challenging, or at least difficult, without compromising user privacy. A general workaround is to trust service providers to report any refund orders, and to benchmark different service providers on refund rates. If a service provider has a significantly higher refund rate compared to the industry average, we should terminate the partnership with this service provider. The reason could be that they are either offering low-quality service with a high complaint rate or cheating on commission. We don’t know the exact case, but we can’t continue partnering with them regardless of each case.
Anticipated Impact
Assuming a 1% conversion rate from 1 million users and a $10 monthly VPN subscription, the total transaction volume per year would equate to $1.2 million. If OPTF imposes a 10% commission on VPN service providers, this would result in an annual income of $120,000. This revenue could offset more than half of the total Oxen service network infrastructure fees and provide substantial price support. As the user base grows, more Oxen will be burned, leading to a price increase that would incentivize investors to continue supporting the Oxen project, thereby paving the way for further monetization strategies.The above estimation has been superseded by a more refined estimation that utilizes a better conversion scenario in Promoting Lokinet Exit Marketplace through Preview Generation and In-app Navigation of Clearnet URLs.
This strategy doesn't necessitate intricate technological solutions and can be smoothly executed using a lean startup style of trial-and-error. We could invite a few VPN partners for initial experimentation, possibly implementing it on a small scale for a user subset to test the market and survey user expectation and satisfaction. If successful, it will immediately generate revenues, and if the business model is validated, we could scale it up.
The success of the referral program may grant the development team additional time to explore more sophisticated monetization solutions with on-chain enforcement in the protocol, eliminating reliance on a centralized party like OPTF. One possible in-protocol adaptation of the referral program could be the creation of a new transaction type, enforced by a new recipient wallet address type. This new transaction type would carry a higher transaction fee that represents the commission, but would be directly burned, thus removing the need for OPTF to act as an intermediary. In other words, the commission wouldn't go to OPTF; instead, it would be directly burned upon order completion, the detailed proposal is described in https://github.com/oxen-io/lokinet/issues/2191.
Conclusion
By implementing a Lokinet Marketplace Referral Program in the Session app, we create mutual benefits for all three parties:
User: Through the proposed referral program, users gain access to carefully selected VPN brands and promotional offers. This enhances their online privacy and security. Additionally, increased revenue from the referral program could be invested in developing further improvements in the Session app, which would benefit a wider range of Session users in the long term.
VPN service provider: VPN service providers benefit from increased customer acquisition with potentially lower acquisition costs compared to traditional marketing methods. The growing user base of the Session app presents a substantial market to tap into, reducing churn rates and boosting revenue.
Oxen Stakeholders: The OPTF receives a revenue stream through commissions paid by VPN service providers for customer referrals. This income can be used to purchase and burn Oxen, significantly offsetting the infrastructure fees of the Oxen service network and benefiting all Oxen token holders in the community. As a result, it will create price support that incentivizes investors to continue supporting the project.
Further readings
The 6 marketplace business models – and how to choose the right one
https://www.sharetribe.com/academy/how-to-choose-the-right-business-model-for-your-marketplace/