One of the primary priorities for blockchain technologists is finding innovative ways to bring scalability to existing cryptocurrency infrastructure. The problem, at a high level, is that today’s most popular digital-coins, including Bitcoin, Litecoin and Ethereum, are ill-prepared to support widespread consumer adoption.
For example, Ethereum’s network is current capped at roughly 20 transactions per second. Visa’s network (VisaNet), on the other hand, handles an average of 150 million transactions every day and is capable of handling more than 24,000 transactions per second. To achieve global-use and support a budding crypto-economy, developers are working to bring scalable, accessible-architecture to blockchain.
The Raiden Network is a prime example of this, as their team has developed an innovative off-chain solution that enables platforms to provide low-fee, highly flexible and near-instant payments internationally. Their platform works with any ERC20 compatible token, including, and perhaps most notably, the Ethereum blockchain.
To accomplish this, they use a series of “bidirectional token payment channels to connect participants directly with each other.” Furthermore, their platform “provides a protocol to relay token transfers through routes of channels to make use of the natural channel network topology, rather than attempt to connect each and every participant directly. Multihop transfers are secured using cryptographic hash locks to ensure that a mediated transfer either succeeds, or is rejected entirely by all participants.”
This clever architecture brings a heightened level of efficiency and stability to the crypto-world. Via their messaging layer, they also make sure to protect traffic and sensitive data transmitted over the network. The “messaging service will hide participants’ IP addresses from the public, preventing arbitrary nodes from being subject to DoS attacks. Additionally, pre-computed routes may use an onion routing protocol where intermediary nodes participating in a transfer have no way of knowing the target address of a Raiden transfer.”
In addition, Raiden has also created ‘Micro Raiden,’ written out as µRaiden, which is a payment channel framework for fast & free off-chain ERC20 token transfers. This spin-off targets “business models involving frequent payments between the client and their service providers.” Popular examples include IoT/M2M (machine-to-machine) systems and micro-payment (pay-per-use) processors. The latter being particularly interesting, as micro-payment services are becoming an increasingly attractive option for startups who are aiming to circumvent the intrusion of subscription walls and spammy advertisements.
Current blockchain systems are unable to support these types of companies, given their slow confirmation times and high transaction fees, deeming “pay-per-use” a relatively infeasible option. Using µRaiden, “service providers can comfortably charge per-use of for example APIs, digital content and utilities via micropayments in Ethereum based tokens.” The increasing demand for these types of high-frequency-payment business models make µRaiden seem particularly promising.
Importantly, the Raiden team has secured a number of key partnerships with important players across a variety of verticals. Most recently, they announced a deal with Grid+ (GRID), which has raised tens of millions of dollars to build an always-on appliance that provides real-time electricity payments-processing.
Their product will use Raiden’s blockchain technology to authorize payments and validate usage. Using an intelligent batch-processing mechanism, Grid+ can streamline usage reporting and substantially reduce expenses. The Raiden team has also integrated with additional partners in and around the energy sector, including the Energy Network Foundation.
Raiden has also developed quite a few key partnerships with incumbents in Asia. For instance, as detailed by the Merkle, “China-based SmartMesh will make off-Internet instant transactions possible by utilizing both Raiden technology and their own mesh network. As for the advantages of partnering with Raiden, SmartMesh points to its “scalability, fast transaction, confidentiality, interoperability, and low cost”. SmartMesh has begun implementation using uRaiden and, separately, plans to roll out a SmartMesh Raiden Light Node for Raiden Network in Q2 2018. “
As Raiden (and other blockchain-based companies broadly) confirms more partnerships across a wide diversity of industries, it will be exciting to see how implementations of tokenized assets and blockchain supply chains affect end-users.
