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The new solution is expected to significantly boost the speed of the ethereum network, raising its capacity to more than a million of transfers a second.
A testnet for the Raiden Network, a proposed solution to the Ethereum scalability issues, was launched on Wednesday, September 6th, 2017.
Scalability is one of the main issues faced by the blockchain networks. The current blockchain model makes it unable to use the system as a global network for instant payments.
As the number of ethereum users continues to grow, the network needs more capacity to handle and validate all transactions. With the rising amount of users, the volume of transactions is surging at a very high rate. This, in turn, slows down the network’s performance. Furthermore, the rise in the number of token sales launched on Ethereum brings huge amount of traffic to the network.
The Raiden Network, which is similar to the bitcoin lightning network, is set to improve the Ethereum blockchain by addressing the exisitng issues.
The main idea behind the project is that there is no need for global consensus to confirm transaction between participants. To increase ethereum scalability, the Raiden Network leverages off-chain state networks. Instead of sending all transactions to the blockchain, the technology allows users to privately exchange messages via peer-to-peer network. This means that only the final transactions are processed by the blockchain.
Vitalik Buterin, the founder of Ethereum, commented: “State channels are an important technology that has the potential to greatly improve the scalability and privacy of many categories of blockchain applications; in conjunction with sharding and other privacy-preserving cryptographic technologies, they are an important ingredient in helping decentralized systems to achieve the properties that mainstream individual and institutional users expect and deserve.”
In addition to higher speed of transactions, the new technology will enable the network to handle much more data in a shorter amount of time. Once fully operational, Paiden promises to extend the transaction capacity to more than one million transfers per second. Besides, all payments will be sent almost instantaneously, while the fees will be reduced to a minimum. The project will also come with support for micropayments and will feature a simple API to make it easier to use the network in decentralized applications.
The Raiden Network can be applied across a wide range of areas, including content distribution, IoT sector, frictionless token systems, and decentralized exchanges. Additionally, it can be used to access and monetize APIs what is at the core of the machine-to-machine market.
Meantime, the price of Ethereum has escalated over the last few hours amid the recovering total crypto market, which now costs more than $160 billion. At press time, Ethereum is standing at $329 per coin, according to CoinMarketCap.
On Tuesday, the main cryptocurrencies, including ethereum, demonstrated a sharp decline in view of the recent ICO ban in China. Now, the Chinese authorities are reportedly planning to tighten control over the digital currency market in the near future. Some predict that after the ban Singapore will become one of the main countries for blockchain startups to run ICOs due to a favorable regulatory environment.
In August, Buterin teamed up with Joseph Poon, a co-creator of the Lightning Network, to solve scalability issues by creating Plasma solution to be compliant with the payment platform OmiseGo.
Later this month, Ethereum developers plan to release an updated Ethereum version, known as Metropolis.