Brainbot Technologies, a blockchain development, and consulting company, just released the first implementation of the Raiden Network, which, similar to the Lightning Network, is a layer two protocol on top of Ethereum’s blockchain, significantly increasing Ethereum’s transaction capacity from the current estimated 20 transactions per second to tens of thousands.

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The first proof of concept version conceptually solves all aspects “and it can work on the current Ethereum blockchain as it is,” according to Heiko Hees, an Ethereum core developer and CEO of Brainbot, with a “hardened” beta version planned for winter 2016.

The Raiden Network uses a deterministic graph of channels for routing, so “a node does not need to know all channels, but only the network topology,” Hees explained, who, speaking to CCN stated:

It’s a decentralized technology. If there are hubs, they’ll provide shorter routes i.e. lower latency and maybe lower transfer fees. But the network works without them and users will be able to choose if they want to connect to a hub or not.

Addressing concerns that the second layer would be centralized due to economies of scale, Hees said:


If someone runs a hub he can not pool funds, but needs to have segregated deposits for every open channel, so there will be a capital cost issue. While say, 100M IoT devices are users and enablers (i.e. being a mediating node) at the same time, so their marginal cost is close to zero.

In regards to privacy, Hees says that there are benefits in that transactions are not visible on the blockchain, but also drawbacks as every node involved in the transfer will be able to see the transaction, but, additional privacy may be implemented in the future.

Interestingly, the Raiden Network interacts with on-chain smart contracts and allows for smart contract execution on the second layer. By using “smart transfers” one can, for example, have a conditional bet with another party through payment channels based on an on-chain contract returning a true or false statement:

In the mid-term we are looking to generalize state channels beyond token transfers such that they are a framework to build scalable Dapps of any sort.

One can have a decentralized exchange, therefore, run on the Raiden Network, or, machine to machine payments at a global scale as the network scales linearly with the number of participants. If you add another intelligent machine to the network, for example, you are also adding capacity at the same time to such extent that one might say its scalability is as good as unlimited.

To prove the point, a demo of 100,000 transactions per second is planned for the end of August, turning into reality the long spoken dream of microtransactions which could replace or complement advertising and save the publishing industry.

In combination with Ethereum’s plans for on-chain scalability through sharding, the Raiden Network allows ethereum’s public blockchain to handle any imaginable blockchain application, thus solving the scalability problem and shifting the ecosystem’s focus to securing digital currency and to the implementation of many new applications made possible by blockchain’s invention.

Featured image from Shutterstock.


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