What is Raiden network: a scalable project of Ethereum network

What is Raiden network: a scalable project of Ethereum network

  • Raiden network allows users to execute off chain transaction 
  • It has its own native token, RND, which is used to acquire various services on the network.

Raiden network token is a cryptocurrency of Raiden network. It is an open source project used to scale the Ethereum network through the use of state channel technology. State channel technology is a process which facilitates transactions outside the Ethereum network (blockchain). 

Raiden network is an off-chain scaling solution which allows users to transfer ERC-20 tokens economically and fast. The term off-chain refers to transactions taking place outside blockchain. Raiden network provides the same level of security, privacy, finality, and decentralization feature like blockchain. The aim of Raiden network is to create a base where users can do transactions of token without global consensus mechanism, which is a major issue of Ethereum blockchain. 

Raiden network is a payment channel which facilitates users to transact off-chain of on-chain tokens. For this feature Raiden network charges minimal amount fees from its users and clients. Thus it charges fees in two ways –

  • Protocol level fees – this is the fees collected to keep network workinking ,it is collected in the denomination of transferred tokens.  
  • Peripheral fees – this fee is collected for the different features which the platform provides to clients for easing their operation and it is collected in RND tokens.

Raiden network have there own crypto currency too, RND token, which is used by Raiden project as a subscription fees for various services provided by the network such as –

  • The tokens can be used for paying peripheral fees 
  • Tokens are also used to reward users for providing their services to the network such as monitoring service, finding paths with capacity, etc.
  • Tokens are used for making micropayments, API (application programming interface) access, and for other services.

How Raiden network works

To perform its transaction process securely and safely, Raiden project uses digital signature and hash-locks. Raiden uses payment channels which allows it to execute bidirectional transfer between two participants without intervention of the underlying blockchain.

Balance proof, digital signature and hash locks, are monitored by the  main chain, and also acts as bidding contracts. It is also characterized by mediate transfer and routing apart from bi-directional payment channels

Mediate transfer refers to the process where tokens are transferred through other user, in a bi-directional token transfer. This happens when there is no open peer-to-peer  channel. Whereas routing is responsible for facilitating mediate transfer through various nodes.  

Raiden network solves the major problem of high transaction cost while directly interacting with Ethereum blockchain. It makes transfer of small ERC-20 based tokens economically feasible.

About origin of Raiden Network

The Raiden network was created by Ethereum in the need of scaling the number of transactions on the network which will inevitably be solved by mainstream adoption. Ethereum required a fast, inexpensive and trustless payment layer 2 solution, something which acts similar as Lighting Network for bitcoin.   

Ethereum started to develop layer 2 solution –  state channel based peer-to-peer ERC 20 token transfer. The name of Raiden network is kept after a japanese god of lighting and thunder, and a popular fighter of Mortal Kombat.