The blockchain industry is constantly evolving with new developments and innovations in software and technology. The competition is high and every cryptocurrency project in existence is still under heavy development and have many problems to solve.
One such project is Ethereum, which is one of the most popular and widely used blockchain projects in the industry.
Ethereum provides a platform for developers to create and deploy decentralized applications (dapps) and smart contracts. It also allows for the creation of new cryptocurrencies (ERC-20 and ERC-721 tokens) and features their own cryptocurrency known as Ether (ETH).
Ethereum aims to be the leading blockchain platform with the ability to process 1 million transactions per second. The blockchain project looking to help Ethereum achieve this goal is Raiden Network (RDN).
Red Eyes protocol of Raiden Network
Raiden Network has developed a protocol called the “Red Eyes protocol” which aims to scale the transfer of tokens on the Ethereum network. The protocol is now live on the Ethereum mainnet in an alpha testing phase.
They encourage users to test the protocol cautiously while taking part in Raiden Network’s bug bounty program. Since the protocol is very new, the team at Raiden Network has taken strong mitigation measures to limit damages caused by bugs or misuse of the protocol.
As stated in the official blog post on the release of Red Eyes:
Deposit limits (0.15 ETH per channel/ 250 ETH total maximum network value), as well as a deprecation switch have been put into place. Additionally, the Red Eyes version of the Raiden Network is limited to one token network, WETH (wrapped Ether).
Features in this Red Eyes Release
The features in which users can test and experiment with in this version of Red Eyes include:
- Opening, topping up, closing and settling of payment channels
- Single and multi-hop transfers
- Automatically joining a token network and opening channels with peers
- REST API with endpoints for all functionalities
- Redesigned WebUI
- Raiden Explorer, visualizing the live status of the Network
- Rewritten and more gas efficient smart contracts (e.g. only one contract per token network)
- Improved protocol for dealing with edge cases
- Recoverability in case of an irregular shutdown of the Raiden node
- Integration of the Matrix transport protocol for messaging
The current release of Red Eyes has several limitations due it’s testing phase. For instance, there is no support for third party services to monitor channels on behalf of nodes or to path finding services.
There is no support for atomic swaps or upgrading smart contracts in the network. The only way to upgrade the network is to close all channels and redeploy a new smart contract and reopen the channels.
Security Notes and Known Issues
The official blog post on the release of Raiden Network’s Red Eyes protocol features an extensive list of security notes and system requirements to mitigate the risks involved and prevent loss of funds.
However, the post notes that loss of funds is still possible even when following these notes, so they urge users to proceed with extreme caution.
Also, there are issues in Raiden Network which users should be aware of. Such issues include; compromised user system, a full disk, blockchain congestion, and chain reorganizations.
What does Raiden Network’s Red Eyes Protocol mean for Ethereum?
When Ethereum (ETH) was trading close to its all-time high earlier this year, the network became highly congested from increased transaction and Ethereum dapps such as CryptoKitties.
Once they successfully deploy Raiden Network in full, the Ethereum network will handle 1 million transactions per second. Ethereum will make this possible by processing transactions off-chain, resulting in faster and cheaper transactions on the Ethereum network.
The Raiden Network Red Eyes protocol is very similar to the Lightning Network protocol for Bitcoin. They both present an off-chain scaling solution to facilitate faster and cheaper transactions.
Therefore, if Raiden Network’s Red Eyes protocol is successful, the implications for an increase in Ethereum’s price and status as the leading dapp development and smart contract platform are highly probable.
The price of Ethereum (ETH) is hovering around $125, which is an increase of 8% from ETH’s price of $115 just before the Raiden Network’s Red Eyes protocol release. We will keep a close eye on the price of Ethereum as the Raiden Network’s Red Eyes protocol is battle tested.
Will the Raiden Network be successful in scaling Ethereum? How long will the testing phase take? Let us know what you think in the comment section below.