The Raiden Network and its associated cryptocurrency, the Raiden Network Token (RDN) is an off-chain solution to Ethereum’s lack of scalability and transaction processing times.
Raiden was established with some very basic, but powerful concepts in mind.
Global payments is an incredibly lucrative industry, with an annual revenue of approximately $2 trillion.
Current constraints of blockchain technology is not scalable enough to allow for sufficient penetration of this industry. Hence the need for a complementary solution.
One of blockchain’s biggest factors prohibiting it from faster mainstream adoption is the processing power required, and the length of time that it takes to confirm transactions.
The introduction of payment channels, specifically the type first described by the Lightning Whitepaper (which introduced the Lightning Network), seeks to fix the scalability and congestion issues that currently plague blockchain technology.
While the Lightning Network operates on the Bitcoin blockchain, Raiden introduces a comparable solution for the Ethereum network.
What Does Raiden Do?
Raiden addresses the issues that cause network congestion and slow processing times on the Ethereum network.
The reasoning behind this is quite simple. It’s estimated that the Ethereum network will need to be capable of processing 100,000,000.00 transactions per second. This number is calculated as being roughly twice as much as what the Visa system is currently capable of.
In the context where the global adoption of cryptocurrency payments is the new norm, it means that cryptocurrencies have to compete with current debit/credit card standards. Combine the number of Visa transactions with that of Mastercard, and you have a rough benchmark to aim for. Crude, but it’s a good place to start.
The Ethereum network drastically falls short of this number with a measly 15 transactions per second being the maximum it can currently handle.
The following is just some of the features that Raiden enables.
Cheap transactions that are currently not achievable through Ethereum. Raiden will enable multiple transactions to occur off-chain before miners on the Ethereum network process and confirm the transaction. We will address how this works shortly.
Private transactions that do not show on the public ledger.
Accelerated transfer confirmations that take less than one second.
How Raiden Works
Raiden can be thought of as an extension to Ethereum, adding to its capabilities
The Raiden Team
Raiden was founded by brainbot labs Est., a self-described “blockchain development studio” created in 2000 by Heiko Hees. Hees was deeply involved with Ethereum in its early days when it wasn’t certain if the project could be commercially viable. He worked as a core developer for the platform from 2014 to 2016.
Today, brainbot labs Est. has established itself as one of the top firms that develops blockchain technology.
In addition to Raiden, Brainbot is also known for their other projects such as Trustlines and Hydrachain. Brainbot are members of the Enterprise Ethereum Alliance that boasts names like Microsoft, Intel, Cisco and British Petroleum.