What is Raiden Network?
Let's find out Raiden Network meaning, definition in crypto, what is Raiden Network, and all other detailed facts.
Raiden Network is an additional off-chain layer that provides scalability, speed, and lower fees on the Ethereum blockchain. Raiden Network processes tokens based on ERC-20 standards outside of the blockchain.
These token transactions go through specific payment channels, also known as balance proofs, which are secured by hash-locks and digital signatures. Balance proofs serve the purpose of a binding contract. They’re also monitored by the main chain.
The key difference between the Raiden Network and the main chain is that a global consensus is not necessary within the Raiden Network.
Payment channels utilize bi-directional transfer between two participants without the underlying blockchain’s involvement.
Additionally, when there’s not a single peer-to-peer (P2P) channel available, Raiden Network enables mediated transfers. These types of transfers employ additional parties in a two-party exchange. Routing is also a crucial part of this kind of network since it manages mediated transfers through multiple nodes.
Raiden Network is considered to be a second-layer solution specifically for the Ethereum blockchain. Ethereum developed Raiden Network in order to receive assistance with scaling.
Moreover, transaction fees were removed from the Raiden Network. Therefore, unlike Ethereum, Raiden Network allows completing small transactions of the ERC20-based tokens in a cost-efficient way.
In essence, the Raiden Network is Ethereum’s alternative to Bitcoin's Lightning Network.
Plus, comparing completing transactions on-chain and doing it through the Raiden Network, we can see that the privacy aspect is enhanced.