This week the Raiden network announced the release of its “Red Eyes” scaling protocol for Ethereum. The code is an Alpha version designed to test smart contracts and core functions on the mainnet. The initial release will do stress testing and include a bounty program that rewards users for identifying bugs in the system. With it, Ethereum aims to remain the leading Daaps development platform.
What is the Raiden Network
Raiden is an off-chain scaling solution that enables near-instant, scalable, payments using channels. Raiden will use second-layer or state channels scaling to conduct additional transactions off-chain. This is similar to the Lighting Network where individuals open payment channels, use them, and then close them. These channels function separately from the main blockchain, thus reducing transaction congestion. And when the “private” transactions are completed, the channels are closed and the main blockchain is updated. This system can theoretically achieve up to one million transactions per second.
This system will vastly improve the speed and versatility of the Ethereum network. All ERC-20 and 721 token compatible projects will be able to scale using the Red Eyes protocol. And since payment channels work particularly well in B2B transactions, this upgrade will significantly boost the commercial competitiveness of the network. Payment channels’ speed and low cost are ideal for business-to-business transactions. Businesses benefit from payment channels because they reduce transaction fees and make settlement instantaneous. If successful Raiden could once again make Ethereum the ideal business applications platform. And put it on par against EOS, Tron, Bitcoin Cash, Stellar, and Cardano.
One major drawback of using payment channels is the cost of updating the transactions back to the main chain. When that happens fees comparable to those incurred during On-chain transactions apply. This will make Red Eyes only practical for large volume transactions. Also, while Ethereum will scale off chain, its main chain will remain slow.
It is hard to predict how favorable this change will be on the price of Ethereum since testing just began. But so far it is on track to beat EOS and become the first working scalable solution on the market. Therefore, in all likelihood it will enjoy a period of price surge and dominion over its competitors.