When Ethereum 2.0? Soon. So they keep saying. And it’s needed more than ever, because the success of the Ethereum blockchain will lead to its downfall if it can’t scale.
And it won’t be able to scale without Ethereum 2.0, will it?
Well Ethereum has its very own Lightning Network. A layer two scaling protocol known as Raiden Network, and many believe this could solve Ethereum’s main problem.
What Is The Raiden Network?
The Raiden Network uses an algorithm consensus known as Balance Proofs to increase speed and security. The main advantage is that Raiden doesn’t need global consensus, like the main Ethereum network, making transaction confirmation fast and easy.
The protocol is an off-chain scaling solution, that enables near-instant, low-fee and scalable payments for the Ethereum blockchain and any ERC20 token.
The Raiden Network avoids the blockchain consensus bottleneck problems by leveraging a network of payment channels which allows for off-chain transactions without involving the Ethereum mainchain.
As well as interoperating among the Ethereum eco-system, it allows for subsecond transactions, and because it’s not a public ledger, the transactions are private.
The cost of transactions are an order of magnitude cheaper than transactions on the mainchain, which also introduces the possibility of microtransactions on the Ethereum network.
How The Raiden Network Works
The participants of each channel are given certificates at the start of the process. The transactions within the channel are recorded and secured by the Raiden Network, and the balance of each member is also recorded.
The protocol is designed to lock ETH into a smart contract, and will release the funds once the operation is complete.
The smart contract is a bidirectional payment channel, which all parties can use to transact with each other. The channel will remain open until all of the parties involved put an end to it
Once the channel has been ended the smart contract will then need to interact with the Ethereum mainchain.
The smart contract will then quantify the balance for all participants and release funds to each one, before closing the channel.
Then once all parties involved have presented their balance proofs, the funds from the smart contract can be withdrawn.
If a participant refuses to enter his balance for whatever reason, the Raiden Network will still close the channel and send funds to everyone. This mechanism has been implemented to prevent a rogue participant from holding the funds hostage.
The Raiden Network – Ethereum’s Lightning Network
The Raiden Network is similar to Bitcoin’s Lightning Network. It uses bidirectional token payment channels to connect participants with each other.
It allows for near-instant transactions, which are much cheaper than transactions on the Ethereum mainchain. It also offers privacy-preserving payments, a first for Ethereum
The Raiden Network isn’t Ethereum 2.0, but it is up and running and is helping Ethereum to scale, a necessity with the way DeFi is scaling.
With Raiden and OMG Network’s plasma chain, Ethereum might scale much more, much sooner than expected.
Author: Tommy Limpitlaw