Raiden, one of Ethereum’s highly anticipated scaling solutions, is now live on a test network. The Ethereum payment network was announced on GitHub yesterday. The solution is to allow for micropayments, lower fees, and near to instant settlements.
According to the report, the technology is similar to the proposed Bitcoin Lightning Network. The basic idea is to switch from a model where all transactions hit the shared ledger on the blockchain (which is the bottleneck) to a model where users can privately exchange messages which sign the transfer of value. As detailed, Raiden uses a network of p2p payment channels and deposits in Ethereum to preserve the guarantees expected from a blockchain system.
Raiden is implemented as an extension to Ethereum. A Raiden node runs alongside an Ethereum node and communicates with other Raiden nodes to facilitate transfers and with the Ethereum blockchain to manage deposits. It offers a simple API which makes it easy to use Raiden in DApps.
State channels are an important technology that has the potential to greatly improve the scalability and privacy of many categories of blockchain applications; in conjunction with sharding and other privacy-preserving cryptographic technologies, they are an important ingredient in helping decentralized systems to achieve the properties that mainstream individual and institutional users expect and deserve.
As ethnews.com details, Raiden’s off-chain transactions, which take place on “state channels,” are built from Ethereum executable distirbed code contracts (smart contracts). Raiden will facilitate the transactions by utilizing its own nodes, running alongside Ethereum nodes, to communicate with other Raiden nodes.