Raiden Network Ethereum Testnet Deployment: On The Verge of a New Era?

‘The Raiden Network
is not your average DApp’

Raiden Network Team,
“The Raiden Network Token Model”, October 2017.

On July 19, 2018, the Raiden Network team announced that the product is ready for deployment in the Ropsten Ethereum testnet. Swap.Online would like to make an overview of the history and present state of the Raiden Network technology, which is considered to be the second-layer scalability solution for Ethereum network tokens and off-chain transactions, and discusses the prospects of its commercial application.

Driving transactions off-chain

As the quantity of transactions on the blockchains like Ethereum or Bitcoin started growing exponentially, it became obvious to the industry that one day, in the future, high transaction fees and long confirmation timeouts will eventually become the downfall of cryptocurrency’s evolution. The extensive solutions based on the banal increase of mining technical capacities seemed to be a feeble remedy. Thus, the only possible resolution was to transfer some part of transaction process from the blockchain in a safe and decentralized manner. After working on the problem since early 2015, the developers from Brainbot Labs Establishment presented the Roadmap of the Raiden project. It was initially planned that the series of decentralized solutions will be implemented in three stages, namely µRaiden or Micro Raiden as a service of many-to-one transfers above the Ethereum network, the Raiden Network as an advanced many-to-many payments service for ERC-20 tokens, and Raiden 2.0 (or ‘Raidos’ referring to ‘dos’ for ‘two’ in Spanish) designed to scale Ethereum’s generalized computation capabilities through a network of satellite chains, which can host any smart contract.

Raiden Roadmap: October 2017. Not so easy to figure something out.

The path

The Raiden Network team raised great awareness the first time with the Micro Raiden, which was launched in testnet in September 2017. As the project developers said, mainly it targeted the dApps interested in ‘using the Raiden Network as a robust, many-to-one payment channel system; one service provider offering services to many recurring customers’. A more advanced and scalable solution was presumed since the very start of Micro Raiden’s implementation. It was said that Micro Raiden requires users to lock up tokens upfront for every potential payee, so, it is not suitable for many-to-many payments. The reason was the reduced technological complexity, which made a quick mainnet release of the product possible.

Apart from the technical aspects of this release, we have to admit that it was a really splendid commercial move, as the ICO of the Raiden Network was announced two days later.

At first glance, the ordinary offering of yet another utility-token set off a firestorm of debates, despite the fact that the team said they will do little to market their ICO. The team was accused of planning a ‘grab-the-cash’ ICO. When somebody asked why ETH itself cannot be used as the currency of the Raiden Network, the Reddit thread collected more than 400 comments by the time it was archived. Even Vitalik Buterin, who usually appreciates all second-layer scalability of Ethereum decisions, was defensive, albeit understanding the motivation of the Raiden Network team.

Vitalik understood the Raiden Network team’s efforts to raise some cash.

As it has already been said, the ICO of RDN was not accompanied by a remarkable media campaign. Nevertheless, after being launched on October 18 and organized on the principle of a Dutch auction, it ended on November 1 with a rather moderate amount of 109,532 ETH (about $32.75 million). The final price at which all the participants received the RDN tokens was 0.0021906 ETH per RDN. The tokens themselves immediately became available for secondary trading. Looking ahead, we need to say that on January 9, 2018, the RDN/USD exchange rate reached its top value (see figure below).

On January 9 2018, one RDN was worth some 8,65 USD.

In the last days of November 2017, the project team released the full version of Micro Raiden in the Ethereum main blockchain. The users met one restriction: the amount of tokens used in some project features was limited to 100 RDN. Lefteris Carapetsas, the developer of the project, wrote in his Github that the main aim of the release was to identify bugs in the code within the framework of the Raiden Network’s development process: “This is a bug bounty mainnet release. We recommend using only small amounts of RDN as channel deposits. As such, we have limited the maximum deposit to 100 RDN”.

The Raiden Network’s release on the Ropsten Testnet has been highly appreciated in the crypto world. What profits does the industry expect from this update?

Raiden Network: Features and Capabilities

It is generally believed that all second-layer Ethereum blockchain solutions (e.g. Raiden Network and its competitors, like the Liquidity Network) solve four main problems: scalability, latency, transaction fees, and privacy.

Traditional public blockchains are able to execute very low quantities of operations per second: e.g. for Ethereum this figure is some 9.6. This problem is solved in the Raiden Network by decentralized peer-to-peer mechanisms. The bigger the Raiden Network becomes, the higher its maximum throughput with the ability of growing ad infinitum.

These blockchains also work very slowly. With 15-30 seconds spent on one Ethereum block, the confirmation of some operations can take up to a couple of minutes. Raiden’s developers say that their transfers “are as fast as text messages”. The amount of coins received is transferred straight to the receiver’s wallet with no need to wait for confirmation.

The elimination of transaction fees seems to be the clearest feature of the Raiden Network. It is an odd thing to say that the transaction cost of a transfer via the blockchain is several times higher than of the one sent by a channel directly peer-to-peer. Raiden’s developers say it will be much more useful with the IoT extension surrounded by machine-to-machine payments.

Privacy issues are among the most sensitive for Ethereum users. The Raiden network foresees that only the amount of tokens sent will be shown to the entire world via the blockchain explorer without disclosing the maker and taker addresses.

Thus, the Raiden Network is designed for both for b2b and b2c commercial implementation with the latter being the focus.

What can we find there for Swap.Online?

Firstly, we can use Raiden solutions for collecting fees. As we suppose, we will avoid the classic model of 0,3 percent from the taker transaction fee. By the way, some of our users will be paying something for their swaps, and this issue is related strictly to the machine-executed micro payments field, which is clearly targeted by Raiden. Particular attention should be paid to the orders placed by the bot, as it is the best example of machine-to-machine payments.

Then, we can use the Raiden network’s solutions for researching the mechanism of Atomic Swaps, which is crucial for Swap.Online. Instant low-fee swaps are our basic ideology, so, we need to know something about this process.

We highly appreciate the Raiden Network testnet release. We will try it and write about our experience. We will also review the most interesting updates of crypto transfer technologies and keep you informed.

Stay with us!

Regards,
Swap.Online

Swap.Online. What is ready for June

What we planned to do

March 2018. Launching Alpha-version of OTC market based on Atomic Swap protocol: Registration function, list of orders, BTC-ETH swapping, text description of the protocol, the easiest version of rate system of market-makers.

April 2018.

First release, beta version: swap between Bitcoins (BTC), Ether (ETH) and ERC-20 tokens; Launching the website of the project Swap.Online with a beautiful design and user-friendly description of the project.

May 2018. Adding node.js library; testing; primary audit, launching Bounty campaign

June 2018. Launching MainNet. Support of Nimiq coin, launching telegram bot, Airdrop.

August 2018. Release of the project

The Autumn of  2018. Continuation of researches offchain and full-scale output.

 


 

Perpetual plans: researches about offchain; for example, the opportunity of interaction with Lightning Network

What we did for June 2018

Swap.core

The core with authorization services, orders, events is released. There is a communication between clients occurs through IPFS.

The authorization service allows you to create wallets and initialize existing ones.

Order service allows you to work with a collection of orders: create, store, delete and request any data. This service uses IPFS for communication between clients to notify new users about existing orders (a glass), about changing the status of orders and their removal.

The core functionality of the core is the presence of a Flow abstraction that allows you to create any direction of swaps between any coin/token: a person with technical knowledge can describe lots of variations in the exchange of two pairs, adding steps to execute exchanges between people. That gives more flexibility and does not bind the core users to the core developers – they can develop it as much as they want.

Support for the implementation of their services and changing existing ones is released as well: so a developer can describe his authorization service and replace an existing one without having fork of whole core.

The website testnet.swap.online was launched with following tools:

  • creating wallets of ETH, BTC, NIMIQ, EOS, they are being created when you go to the website first time
  • search for currency pairs you need exchange offers,
  • transfer of all the above currencies to other wallets,
  • output of the list of conducted transactions with the possibility to sort them

In the site header it is possible to create offers for swap, and to see notifications of new swap offers, it is possible to swap between the following currency pairs: ETH <> BTC <> ERC-20 TOKEN.

  • The history of orders has been added,
  • The history of swaps has been added,
  • The button for refund has been added (for unfinished swaps in order to get refund),
  • Counter of connected peers has been added.

Research

Comments of Vladislav Sopov, our business analyst:

A comprehensive study of the DEX market and related projects (April-May 2018) was carried out, technical, marketing, commercial aspects, Internet presence and social networks were covered. ⇒ vision of the commercial offer in this market was formed (who and what offers, how much for it is requested)

A comprehensive study of airdrops and bounty campaigns was done (May 2018), the main algorithms and trends, strengths and weaknesses of competitors are revealed.

The study of the profitability and capitalization of crypto-currency projects is conducted, the results are summarized (June 2018).

Comments of Alexey Bikhun, developer and researcher of new technologies:

Now I’m developing a bot to communicate with the exchange. At this point, the REST API interface is ready, which means that anyone can start writing logic for the bot in their favorite programming language, and details of implementing swaps will be hidden inside my interface. A bit later we will introduce a bot that will implement the simplest arbitration logic through the same API. This is convenient for those who have an account on another exchange and some amount of liquidity. With the help of my bot, he will be able to place pairs of buy / sell orders simultaneously on two exchanges, and earn a small difference in the rate.