Leveraging Blockchain Technology to Optimise Online Privacy

Casper Brown blog December 24, 2020

Blackmailer Threathens Cryptoholders Following Ledger's Database Leak
Users from the social network Reddit have reported several emails and messages by an unknown person — blackmailing them into giving $500 to leave them alone. The threat was posted on Reddit, following the Ledger's database leak. But it gained more attention when Whale Panda, an angel investor, posted the message on his Twitter account.

Leveraging Blockchain Technology to Optimise Online Privacy

In 2020, 1.7 MB of data was generated each second for every person on the planet. This figure includes the 306.4 billion emails, 5 million Tweets, and 95 million photos and videos shared on Instagram every day. While connecting with others has never been easier, our online footprint has become detrimental to personal privacy. Centralised servers held by powerful entities store vast amounts of personal information, which amplifies the negative impact of inevitable security breaches. However, even when there isn’t a hack, companies use data to gain lucrative insights, often without user consent.

As a result, more people are using privacy-preserving technologies like Virtual Private Networks (VPNs) while online. These networks block the collection of data by establishing a secure, encrypted internet connection. As a low-cost way to bolster personal privacy, VPNs have become increasingly popular. Forecasts indicate that the VPN market will expand at a compound annual growth rate (CAGR) of 17.2% between 2021 and 2027 — increasing from $29.2 billion to $88 billion if expectations are accurate. Beyond the forecasts, there is evidence that global interest in VPNs is accelerating. Google search metrics indicate the term “VPN” has seen increasing interest over the last decade.

Although VPNs provide broad protection, decentralised technology optimises privacy-preserving infrastructure. As such, the SpiderVPN is built across a network of distributed SpiderConnect routers to support a new kind of decentralised autonomous organisation (DAO) known as SpiderDAO.

Decentralising the VPN

A decentralised VPN (dVPN) prevents the logging of user activity and is more resistant to censorship than legacy solutions. The more users that join the network using a SpiderConnect router, the more distributed and resilient it becomes. This network infrastructure forms the foundation of the SpiderDAO — but what exactly is a DAO?

Although many consider Bitcoin to be the first DAO, today the vast majority of self-executing smart contracts are built on the Ethereum blockchain. From inception, DAOs follow the rules encoded in smart contracts which dictate how it will operate. Hard-code can determine reward issuance, how earnings are allocated to participants, or even layout how rules change in the future. Although the implementation of a self-regulated entity optimises autonomy, there are several inherent challenges to overcome.

The Pitfalls of DAO Frameworks

Although decentralised networks eliminate intermediaries and automate processes, on-chain DAOs are susceptible to threats that undermine their governance.

  • Plutocracies: Large investors (whales) can gain an unfair voting advantage by accumulating governance tokens, which buy voting rights. Depending on the DAO coding and the native token it utilises, this scenario results in an unequal distribution of power.
  • Exploitable Governance: DAOs utilise governance tokens to determine the voting rights of each participating member. However, these tokens are easy to purchase on secondary exchanges. This dynamic allows large investors to accumulate voting power, which undermines governance.
  • Rising Dark DAOs: These potentially undetectable entities utilise smart contracts to buy user votes with the intent to overwhelm governance systems, issue false signals, or manipulate the market. In short, dark DAOs dominate voter participation, which is especially concerning if DAO votes suffer from low, legitimate member turnout.

While these shortcomings create a significant barrier to widespread adoption, Spider has built a unique solution that effectively mitigates the threat of exploitable governance.

The SpiderDAO: Optimising Online Privacy

The SpiderDAO will first integrate with the decentralised SpiderVPN platform. This merger will provide owners of the SpiderConnect Router with access to a decentralised VPN service that provides online anonymity and a suite of premium features. However, to overcome the pitfalls of current DAO frameworks, SpiderDAO will employ a multi-layered governance model that utilises both hardware and software tools.

As such, the SpiderDAO will function as a fair and resilient hardware-based DAO that employs the Polkadot protocol to facilitate governance. This dynamic supports integrating of the Proof of Stake consensus mechanism, on-chain governance (SPDR Tokens), and hardware-anchoring (SpiderConnect Router).

  • “Liquidity as Utility” Token Model: Through this program, token holders can engage in liquidity mining while also benefiting from access to the SpiderVPN and subsequent participation in the SpiderDAO. By optimising token utility, there’s more incentive to build an ecosystem of value-generation that supports future community growth and involvement.
  • Hardware-Enabled DAO Voting: The decentralised, hardware-enabled voting process employed by the SpiderDAO is a first of its kind. Network security comes from safeguards that instantly detect the hoarding of hardware devices. By shifting voting power away from a token-only system, it’s more challenging to disproportionately influence elections without incurring significant costs — one router will always be one vote.
  • Dual-Governance DAO Voting: The SpiderDAO deviates from traditional DAOs by shifting voting rights away from token holders and towards hardware owners — one validated router equates to one vote. To participate in SpiderDAO votes, members must prove they have a SpiderConnect router on the network and staked SPDR tokens.

Collectively, the unique functions of the SpiderDAO and the broader Spider Network represent a paradigm shift in the way DAOs are built and deployed.

The Future of DAO Deployment

Together, the SpiderConnect hardware router, decentralised SpiderVPN network, and SpiderDAO interact to deliver an entirely new online experience that merges centralised and decentralised technologies. The SpiderVPN is also faster and more secure than centralised counterparts like ExpressVPN and Nord, further cementing the platform’s value proposition.

Most notably, the Spider “Liquidity as Utility” program builds on the utility of native tokens. This endeavour is critical, given many are critical of governance tokens that provide little utility to holders beyond voting rights that may have little impact on the project’s trajectory. As such, the ability to engage in liquidity mining using the native SPDR token incentivises others to become part of the network and encourages community engagement. In short, participants get paid to use the Spider Network and can decide how that money is spent — everyone benefits.

By diverging from consensus mechanisms of the past, the SpiderDAO circumvents the hurdles of legacy DAO frameworks and fosters new opportunities across a myriad of use cases. This time, your online privacy is the driving force of innovation — but the possibilities are endless.

 

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