Raiden Network

What Is the Raiden Network?

The Raiden Network is a scaling layer built on top of the Ethereum blockchain that enables fast and low-cost transactions.

Like Bitcoin’s Lightning Network, it operates as an off-chain solution, which doesn’t require global consensus like the main Ethereum chain.

Enabling Off-Chain Token Transfers

The Raiden Network powers token transfers through balance proofs using digital signatures and hash-locks.

The main Ethereum chain monitors these balance proofs and serves as binding contracts.

By utilizing payment channels, Raiden allows bidirectional transfers between participants without relying on the underlying blockchain.

In addition to bi-directional payment channels, the Raiden Network supports mediated transfers and routing.

Mediated transfers occur when a token transfer passes through other participants without a direct channel. Routing facilitates mediated transfers through multiple nodes.

Efficient Microtransactions

One of the key advantages of the Raiden Network is its ability to make economically feasible transfers of small amounts of ERC20-based tokens.

By reducing the transaction fees associated with interacting directly on the Ethereum blockchain, Raiden enables cost-effective microtransactions and retail payments.

Furthermore, the Raiden Network offers increased privacy compared to on-chain transactions, making it suitable for instant token swaps and enhancing the confidentiality of coin transfers.