Ethereum Off-chain Scaling Solutions: Raiden & GoNetwork

in #ethereum3 years ago (edited)

Ethereum scaling

Today we are going to take an in-depth look at two of the most anticipated scaling solutions for the Ethereum Blockchain. A large part of Ethereum’s mainstream adoption will be scaling up to consistently provide fast low cost transaction despite the number of user on the network. 

The off-chain scaling solutions we will examine here are the Raiden Network and the GoNetwork. Both have similar solutions for Ethereum’s scaling issues, but there are a few key differences.

Ethereum Off-chain Scaling with Raiden and GoNetwork

Both these scaling solutions are designed to provide off-chain transactions which are then settled on-chain at a later date. These off-chain transactions are possible due to a technology referred to as state channels.

Transactions using this technology allow for virtually feeless and instant transfers of value. The implementation of the State Channel technology on the Ethereum Blockchain seems imperative for more mainstream adoption. Both the Raiden Network and GoNetwork have this technology as a key feature.

The State Channels used by the Raiden Network and GoNetwork will work fundamentally the same. To make a payment and/or transfer value from one person to another, a channel is opened by creating a Smart Contract on the Ethereum Blockchain. 

This Smart Contract holds the tokens each participating member of the channel wishes to use within the channel. If you haven’t already, you’ll be hearing a lot about State Channel technology in the coming year, so let’s take a look at how they work on the Raiden Network.

Person A and B want to establish an off-chain State Channel to transfer ERC20 tokens. Using the Raiden Network or GoNetwork, they would do this by creating a Smart Contract on the Ethereum Blockchain that holds the amount of ERC20 tokens person A and B want available to transfer within the channel.

In this example person A is adding 2 tokens for use in the channel and person B is adding 4 tokens for use in the channel. 

open off-chain state channel

Once the tokens or locked in the Smart Contract on the Ethereum Blockchain, the off-chain State Channel is opened for use. To keep an accounting of each transaction made in the off-chain channel, the Raiden Network uses “Balance Proofs” to record transaction made within the off-chain channel.

first transfer in state channel

So when Person B transfers 3 tokens to Person A, a Balance Proof is created to record the transfer.

2nd transfer ethereum state channel

Then when Person A sends Person B 1 token using the channel another Balance Proof is created recording that transfer too. This happens when any transfer is made within the channel.

Once the channel is closed, each Balance Proof is confirmed and the transactions are added to the Ethereum Blockchain.

The tokens held in the Smart Contract that was created in order to open the channel are then released. Each participant receives the amount indicated by the sum of the Balance Proofs created by transactions that were made within the channel.

balance proof calculated and settled on Ethereum Blockchain

These off-chain state channels ensure that transfers are virtually feeless and instant. The global Ethereum Blockchain network is only involved at the opening of the channel and at the close of the channel.

What Sets the Raiden Network and GoNetwork Apart.

Raiden Network logo

The Raiden Network is much further along than the GoNetwork which is currently pre ICO. Raiden completed it’s ICO successfully back in November of 2017. Since then, the team behind the Raiden Network has been hard at work creating code and debugging. They have also released demos which run on the Ethereum testnet.

The Raiden Network is looking very promising, and we should expect to hear a lot more about the progress they've made throughout 2018.

GoNetwork logo

The GoNetwork is currently in the pre-ICO phase. You can find out more about that on their website. The GoNetwork has a solid team working on the project and a clear vision. There is a lot of hype surrounding the ICO, but it is always important to do your own research.

What really sets GoNetwork apart from Raiden is the fact that GoNetwork will focus primarily on providing off-chain state channel solutions for mobile users.

The protocols implemented in the mobile environment differ from those used in more static infrastructures. The team behind the GoNetwork are working hard to address these issues and bring off-chain scaling to mobile.

What Do You Think of These Ethereum Scaling Solutions?

Are you a fan of the Raiden Network and the work they’ve done so far? Or are you one of the many investors waiting for the GoNetwork ICO to launch? Share your thoughts in the comments below.  

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Hey David, long time fan here. Q: If only the balance is stored on the blockchain, does this mean there's no transparency at the detail level of each transaction? Meaning if Person A and B trading coins say 10 times between each other before the channel closes, the blockchain will not have these records except for the balance. Correct?

Yes, the record of individual transactions which occurred in the channel are not added to the Blockchain. Only the amount that is received by both parties at the close of the channel is made public when added to the Ethereum Blockchain. Furthermore, Raiden has expressed plans to enable 3rd parties to offer services to re-balance and obfuscate channel balances so that it is even harder to trace on-chain transactions to ones that took place in off-chain state channels.

I see a great future for one of these. I already hold a small portion of RDN and will most likely invest about the same amount into GOT (maybe a lil extra just cause Game of Thrones reference hah). I dont believe they will both be able to live side by side in the long run, but one of these (or new-not-invented-yet) solutions will be huge for the ETH network. Great things happening.