Raiden Network-Fast & Scalable Transactions
What is the Raiden Network?
What’s going on viewers of the tube, my name is Tyler of Chico Crypto and welcome to another episode of Crypto and a cold one. Today’s guest is south of the border too, well north of the border…..but south of the border inspired.
Today’s episode is going to focus on a crypto that I hold dear to my heart. I am a huge fan of Ethereum, and as the 1st smart contract platform in crypto, that crypto is the Raiden Network. The RDN token is a virtual currency that will be mainly used for off-chain machine-to-machine micropayments. The raiden network protocol is built on top fo the Ethereum Virtual Machine and will allow the Ether network to scale up to 1 million transactions per second.
What problem is Raiden trying to solve? Well, Ethereum has been struggling to answer to major question of how to scale, and it’s the main reason holding Ethereum from real world and mass market adoption. Ethereum can only handle currently 15-20 transactions in its current state, and makes it extremely impractical for real world applications.
Here is some perspective Ethereum without the raide protocol is only 20 tx/s. Paypal processed 6.1billion transactions in 2016 at 193 tx/s.
A question that pops up is how exactly raiden is planning on doing this? They are developing state channel technology which is built on top of Ethereum. Now another question, what the hell is a state channel? Basically it is a two-way discussion channel between users or between a user and a service(machine) or between to services(machine to machine). Messages take form of transactions, such as “I want to buy a beer for 3 dollars” particiapnts sign each message of the discussion, making it impossible to refute later on. The transactions take place entirely off the blockchain and are exclusive between the particpants. This means they are cheap and very fast to execute.
Implentation of Raiden Network
Practical implementation is left to the choice of the developer. State channels can be closed at any predetermind point, 5 hours or when the total transactions have made 20 dollars.
Looking at Raiden, it is a network of raiden nodes. Nodes establish payment channels to other nodes. The payment is routed through the network via multiple nodes, but each node only communicates with it’s direct neigbours. Each node has to hold the balance for the amount being moves. That why with the Raiden Network, it would be hard to move 1000 ether because very node will have to hold an equivalent of that balance.
Raiden As Payments
Raiden is designed to be a payment network. This means a user A, having a channel with B, can send a payment to C as long as Chas a channel opened with bob. This works through an Ethereum smart contract called a channel manger. While each payment channel is a sperate eth smart contract, channel manager is a global contract used for deploying channels. This channel manager has knowledge of all the currently open channels between all network participants and this info is used to find the shortest and least expensive path through the network.
Routing nodes will collect a small fee for the transfer, with each node publishing its fee to its peers. The fees are extremely low, with them being seven time smaller than the current Ethereum transaction fees.
These mechanics of the network do seem kind of complicated, but this is not going to effect usability. End users will not have to manually select participants to open a channel with. The participants will only need to open a software client and tell it the number of tokens they want to deposit. Client will take care of opening the channels for the participant to have the good connectivity needed to make instanetous payments and transactions.
So since the Raiden network is a network of nodes you would think you need to run a full node to participate. Well that isn’t the case, the raiden team is developing a light client. It will allow participants to start their computer or phone and make payments without running a full node all of the time.
Use of Raiden Network
What is the use, I mean what type of tokens can be sent through the raiden network. Currentely, the protocol supports only ERC20 compatible token, and each asset type will have its own channel manager running and forming its own network.
The payment network is discussed as the primary use of the state channel, but they will also allow for off-chain smart contracts which will allow anything that is possible on chain to happen off chain. Very exciting times friends!
Why will raiden grow to a massive size and scale in the future, well a user on the Raiden Network forums who goes by cmthai84 put’s it like this “the fees are intended to be fractions of a penny per transaction to full nodes. With mass adoption of real world use cases, we will se an increase in tx’s that will accumulate in the use of the Raiden token. Even though users pay low fees, the amount of Raiden used will add up, creating demand and scarcity for the RDN token. The more developers adopts the Raiden Network for third party services and the more people use them, the more demand.
Well lets look at some recent news regarding third party use. Wala, is going to provide full nodes and integrate the network into their light client wallets. The nodes will have high liquidity and act as a hub to connect other wala payment channels. The Wala corporation is going to provide this liquidity and subsidize the cost of doing business for the hub nodes. This will allow Wala token holders to participate in fast, lowpcost transactions by staking wala tokens and becoming an active Raiden Network node. Boys and girls this is called growth, and it’s beautiful to see.
Well viewers, as most of you know I’m a huge fan of the raiden network and have been increasing my stack since I fist invested about 3 weeks ago. Good thing I was able to get them around $1.50. Currentely the price is 4.33 a 2.03 percent increase from yesterday. You can pick up Raiden on a variety of exchanges but if you like decentralized exchanges like ether delta, I would recommend checking out the token.store. This is where I do all of my raiden trading. within the next 4 months I can see this tokenm going 10x…that would put one raiden token at 43 dollars and give it a market cap of about 2 billion. That is not out of the relm of crypto possibility. Well thanks viewers and I hope you are able to see the potential that is the raident network token…have a good rest of your Sunday and see you tomorrow! Peace 😊