Raiden Network

The Raiden Network is an off-chain scaling system designed for Ethereum. It lets two parties lock tokens in a smart contract, then exchange signed balance updates privately and almost instantly, without paying a fee to the network for each transfer. Payments can also be routed across several linked channels, so a user can pay someone they have no direct channel with. Only the opening and closing of channels are recorded on the main chain.

Raiden is often described as Ethereum's counterpart to Bitcoin's Lightning Network, and it applies the same payment channel idea to ERC-20 tokens. It was developed by the German company brainbot technologies, and the project issued its own RDN token in 2017. Its practical importance declined as Ethereum's scaling efforts shifted towards rollups.

Imagine two coworkers who buy each other coffee every day. Instead of paying in cash each time, they put some money into a shared envelope and keep a running tally on a notepad that they both sign after each coffee. At the end of the month they open the envelope and split the cash according to the final tally. Dozens of coffees are paid for, but money only actually moves twice.

Now imagine that one coworker also keeps a tally with a third colleague. Payments can pass along the chain of tallies from one person to the next, so people who never set up a notepad together can still pay each other. Raiden builds that chain of notepads for Ethereum tokens.

Raiden uses a state channel design with these steps:

1. Opening. Two participants deposit tokens into a channel contract on Ethereum. This is an on-chain transaction and costs a normal gas fee.
2. Transferring. The parties send each other signed messages that update their balances. Each new message replaces the last, and no on-chain transaction is needed.
3. Routing. For a payment to someone without a direct channel, intermediaries forward it using hash-locked transfers, so that either every hop completes or none does. This works much like a hashed timelock contract.
4. Closing. Either party can submit the latest signed balance to the contract. A settlement window allows the other party to challenge an out-of-date balance before funds are released.

Because transfers happen off-chain, they can be fast and cheap, which made Raiden attractive for micropayments and machine-to-machine payments. A simpler variant, µRaiden, was built for one-to-many payment set-ups such as paying for an API by the call.

Raiden was proposed in 2015 and developed mainly by brainbot technologies. The RDN token was sold in a token sale in October 2017 and was intended to pay for services in the network, such as path-finding and monitoring that watches channels for users who are offline. The project made a limited mainnet release in December 2018 under the name "Red Eyes", with deposit caps and support for a test token, and followed it with further releases intended for wider use. Adoption remained small compared with the attention it received during the 2017 token boom, and RDN traded mostly as a speculative asset rather than as a fee token in active use.

Raiden also inspired research into related designs, including networks of generalised state channels able to run small pieces of contract logic off-chain, and projects that aimed to connect channels across different blockchains. Several of those efforts were later wound down or folded into other scaling work.

Payment channel networks share several practical problems, most of which also affect Bitcoin's Lightning Network:

• Locked capital. Funds must be deposited in channels in advance, and routing a payment needs enough balance on every hop.
• Being online. Users must watch for cheating closures or hire a monitoring service to do it for them.
• Narrow use cases. Channels suit repeated payments between known parties better than one-off transfers or general smart-contract activity.
• Fees on entry and exit. Opening and closing channels still costs gas, which can outweigh the savings for occasional users.

From around 2020 the Ethereum community adopted a rollup-centred plan, in which optimistic rollups and ZK-rollups batch transactions and post data to the main chain. Rollups support general smart contracts and do not require users to lock funds in channels, so they absorbed most of the demand Raiden was built for. Payment channels remain a useful idea, and Raiden is often cited in discussions of layer 2 history, but it is no longer a central part of Ethereum's scaling as of November 2026. Some of its ideas, such as signed off-chain balance updates and hash-locked routing, live on in cross-chain bridges and in the fast-transfer services that operate between rollups.

• Raiden Network