After a successful token sale concluded last month from Raiden Network, an off-chain scaling solution, enabling near-instant, and low-fee payments on Ethereum, the first Raiden Payment Network and Microraiden release with smart contracts has been deployed on the main net. This allows developers to start building Microraiden-based applications immediately. Now available on GitHub, the focus of this release is for testing and receiving feedback from developers who plan to integrate Microraiden into their product.
Restrictions on the Bug Bounty Release
This is a bug bounty main net release. The Raiden team recommends using only small amounts of RDN as channel deposits. To that end, it has limited the maximum deposit to 100 RDN.
The Raiden team stated:
“We plan for subsequent release without this restriction after thorough public testing and feedback. Note, that the protocol may change, as the used signing format as proposed in EIP712 is not finalized yet.”
In response to the news that Raiden payment network and microraiden is getting deployed to Ethereum, Matt Shaw of Synechron, a business consulting & technology services providers firm based has commented on the news and its significance.
“This is an exciting development in the world of distributed ledgers and global payments. The Raiden network uses off-chain transactions in order to provide improved scalability, settlement speed and privacy for global payments, whilst using the public Etherium blockchain as an immutable ledger for settling netted transaction balances.”
“In order to do this Raiden have had to build their own secure, crypto-graphic payments and smart contract network since they are avoiding the financial and performance costs of using Etherium for the main value-transfer, bi-lateral consensus, and non-repudiation features. The Etherium network is only used as a distributed settlement platform for the ‘final hop’ of each transaction group providing immutable ‘global consensus’ and audit trail on net outcomes. Payment channel solutions also require an on-chain escrow deposit (i.e. trust enhancing collateral) before channels can be opened – this ties up liquidity and funding, undermining the benefits of this technology for some use cases (e.g. large scale payment agents). The firm also provides Micro Raiden – an out-of-the-box, simplified implementation of the Raiden network aimed at driving automated, uni-directional, micro-payments to serve the Internet of Things. This is also very timely for ‘pay per use’, machine-to-machine and auto-replenishment IoT use cases.”
“The challenge for Raiden is to demonstrate to users how their hash-locked transfers, balance proofs, and smart contracts are secured outside of the Ethereum network so they can build systemic trust in their platform.”
Which problems does the Raiden Network solve?
The Raiden Network is a technology that leverages off-chain payment channel networks to address these substantial issues on the Ethereum blockchain:
Blockchains do not scale well. Current public, permissionless blockchains are unable to achieve more than a low, fixed number of transactions per second. Ethereum has been shown to reach its cap at about 10 transactions per second. Short-term scaling solutions, like raising maximum computation performed per block by a constant factor, will not be able to support continued mainstream adoption.
The Raiden Network will provide a payment system based on payment channel technology that scales with the number of its users. This means that the bigger the Raiden Network becomes, the higher its maximum throughput will be, with practically no upper limit in sight.
Blockchains are slow. At the moment, Ethereum mines a new block approximately every 15 to 30 seconds. To reach practical finality of a transaction, confirmation times of several minutes have to be endured. This significantly degrades the user experience and hinders mainstream adoption.
Raiden Network transfers are as fast as text messages. The moment you receive a signed Raiden transfer, you can be certain that you now hold the amount included in the transfer. There is no need to wait for any confirmations.
Using blockchains is expensive. Once a blockchain hits its limit, paying high enough fees to be included in a block becomes a competitive endeavor, as is the case with Bitcoin today. Ethereum will be no different, eventually leading to even higher confirmation times and transaction fees on the order of a few dollars per transaction. For the vision of a global, decentralized, and dependable computer this is highly detrimental.
Raiden Network transfer fees will be several orders of magnitude lower than on-chain transaction fees. Instead of paying for global consensus, you only pay for forwarding peer-to-peer consensus. Low fees allow for a long tail of new use cases which have not been practical before due to high transaction costs. Especially IoT and the Machine-to-Machine economy depend on being able to transfer tiny values. Raiden aims to be the predominant payment layer for these applications.
Ethereum transactions are public, whereas Raiden transfers will be private between the payer, the payee, and the nodes forwarding the transfer. When channels are settled, only the sum of transactions will become visible to the entire world.