Raiden Network is a system that allows you to conduct instant transactions on the Ethereum network with minimal fees and is similar to the Lightning Network solution for the Bitcoin network. Raiden founder Heiko Hees is also the developer of Ethereum.

The main idea of the technology is to scale the blockchain account by using payment channels that allow you to safely conduct transactions outside the network. With the help of Raiden, according to the developers, the throughput of Ethereum and derived from it tokens is able to grow from 25 to 1 million operations per second.

How it works

Between two users who want to transfer the cryptocurrency, a payment channel is opened. With the help of this channel, funds can be transferred an unlimited number of times, provided that the amount of transfers is not more than the amount of the deposit deposited under the terms of the contract previously established within the network. This can continue until one of the parties decides to close the channel. Within the open channel, funds are transferred instantly, commissions are much smaller, and entry into the blockchain is made only at the initial opening of the channel and after the closure of the channel.

At the same time, for operations it is not always necessary to open a direct channel between the sender and the receiver, funds can be transferred and if there is at least one route in the network of channels connecting both sides.

Advantages of Raiden Network:

  •  instant execution of transactions;
  •  solving the problem of scalability;
  •  there are no limits for operations;
  •  Transactions are optimized for the transfer of medium and large amounts of cryptocurrency and exclude overpayment in the implementation of micropayments.

Disadvantages of Raiden Network:

Payment channel networks are a rather complex technology, both from the conceptual point of view and from the point of view of implementation, so two years during which the idea exists is not enough to work out all possible nuances.

The Raiden Network developers themselves are not ready to even to provide accurate data on the system’s availability even within the roadmap.

Raiden Network Token

Raiden Network Token (RDN) is the ERC20 token, which is the internal currency of the system. With the help of RDN, there is a collection of commissions and other payments, which ensures a stable demand for tokens. The main function of RDN is to stimulate network operators to launch or control the operation of payment channels.

The number of RDN tokens is limited – only 100 million were issued, half of them were sold during the ICO, which started on October 18, 2017. The sale of tokens took place in the format of the Dutch auction. In total, Raiden attracted 109,532 ETH during the placement, despite criticism from the community and Vitalik Buterin himself, who spoke against the primary placement of the Raiden network tokens. At the same time, the development of the project takes place without the involvement of the funds Ethereum Foundation.

Conclusion

In order to be viable, transfers based on blockchain should be fast, cheap and scalable. If we recall at least the history of CryptoKitties, which caused network congestion and transaction delay, it becomes clear that Ethereum these characteristics are not particularly good. In the current situation, Raiden Network can solve the problem of the low throughput of not only Ethereum blockchain but also other projects developed on its basis.

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