What is Raiden Network?

The Raiden Network is a layer-2 scaling solution for Ethereum that adopts the same principles as Bitcoin’s Lightning Network. The Offchain scaling solution is designed to enable fast, low-fee, and immediate payments using Ethereum’s ERC-20 tokens. 

The creators of the Raiden Network, Brainbot Labs Est., wanted to release a solution that would enable a fast and instantaneous mode of payment using ERC-20 tokens where validation involved the use of digital signatures and hash-locks. The Raiden Network relieves the primary chain by taking payments off-chain, reducing on-chain Gas fees. Though the implementation appears simple, its operation is complex.

How does Raiden Network work?

The Raiden Network uses bi-directional payment channels enabling users to send transactions without global consensus. To work, Raiden Network parties must collaterized their off-chain transactions with on-chain deposits needed for opening a payment channel. Once the bi-directional payment channel is live, users can transfer funds between each other only until the total value of the transfer exceeds the initial on-chain deposit. 

Raiden Network Use Cases

The Raiden Network provides API Access for developers, enables micropayment, and can be used by decentralized exchanges. The protocol’s developers find their niche in an increasingly competitive world with superior layer-2 options.

Still, Raiden Network as a scaling solution finds adoption challenging due to the emergence of more advanced layer-2 solutions such as Rollups.