The Raiden Network - Heiko Hees

[Music] so red Network arm we'll talk about this off chain token transfer network when we start again with why we're doing this and the reason this was current state of blockchain technology during some problems we can only do a certain limited number of amount of transactions per second arm to reach finality to be sure that the transaction will update the state arm the current takes 15 seconds per block but you should wait multiple blocks so that can add up to one 100 seconds and another issue is that all statins in boxing is readable for everyone and the through Proctor's you are leads to higher transaction cost because there's like a limited resource of arm transaction or a capacity on the blockchain and the reason for this is global consensus global contest is very expensive because if Alice sends five tokens to Bob then the world needs to know and all the nodes need to reach agreement on this fact and the problem is the latency and bandwidth properties of networks there's latency and the bandwidth is limited and you want to have as many nodes as possible participating and the consensus protocol so if we switch to a different view and concerns us if it would only be between Alice and Bob say Alice would send Bob like a check saying I owe you five tokens and if you then add some state channel technology which would allow Bob to secure about the fact that he's able to claim there is five tokens on the blockchain arm then you have a pattern which you can use to solve this problem or to improve the situation and that's what we based the rate in token that we're gone so what we do is basically we have many or we have participants have sectional with each other like so every participant has like five or fifty states on earth with other participants and together they form a network and if two participants want to which don't have direct channel want to transfer tokens we can find a path in that Network to transfer them and all transactions happen outside of the blockchain for the transfers we use the blockchain only to manage deposits and to eventually settle so that's nothing nothing you need to do but you could do on today I want to won't go into the implementation details I've presented them last year at last year's Def Con but let's recap the features so we can scale out asset transfer capacity we get good finality properties like well one certain finality are we get better transaction confusion previously because only those nodes involved in a transfer learn about a transaction and we get very very low fees and well the way how we build the system is it's compatible with the year C 2010 standard that is it should be compatible with most the apps that are built currently arm that's a bit unfair but it's like if iam compares to the rain it looks like an early bike to maglev except for a cost it's it's way cheaper than mother okay so one concept I need to explain you because we come to that later is what we can do in readiness we can entangle to transfers so if Bob and Alice want to exchange tokens say Alice wants to exchange ten items for three details with Bob then you can set up two transfers one sending the items one sending the B terms and they can lock them together so that either both of them go through or not so that's atomic which is an ID property arm something else we can do is so-called smart transfers these are transfers which can only be settled on the blockchain if a certain condition on the blockchain is true that could be the outcome from an Oracle or the last price from Unchained exchange and then you can build more advanced applications based in rail like betting or financial derivatives okay so what's the status of the project we've been working with this since last September arm we had a long sprint starting and May I think and it ended maybe in July but then we were able to do the first transactions on the Radin I'm sorry on the e3 'im test net that is actually the transactions have been off chain but the setup was one on the writing test on the theorem test net three and well we had a transaction initiated in in from a note in Copenhagen going to note in florianópolis and finally the receiver of the trapped hopes were lesbian was based in Mumbai so that's where our colleagues are some of them and what we get quite good breast coverage for that and yeah we're happy that we could deliver so basically rate in words because one of the better applications of rain is probably in the Internet of Things technology we prepared demo for that so here the basic setup is that we have a producer and a consumer of electricity and the producer he has a meter so he can account for how much energy units were transferred and there is a raspberry pie around in a red node and the respite I can control a relay to switch off the supply we have the same phone on the consumer side there's also a meter and a Raspberry Pi with red note on it and now the producer requires that the consumer send some tokens and if you just say arm he will start supplying electricity and you see the light goes on and then there's like here's this LED it blinks and whenever it links this one energy unit consume and whenever it blinks we sent one token using the rate in networking and so here we can see that there's on the consumer side he has only like 19 talks left that's all he has on a card and the receiver side the producer earns those curtains and the consumers also some some credits so arm naruse tokens are transferred okay detailed view here are whenever just blinks there should be a transaction going on here so for every impulse dmitri gifts resent a transaction well then at some point in this demo the consumer ran out of curtains and also the turks that he had on credit with the producer goes to through on the upper right and well then the producer will decide to shut down the electricity supply and well you can imagine if such technology or similar is used and widely deployed in IOT then we will see like millions of transactions in short time frames and that's something that you can our tackle with technology like Raiden but not so good with block chains that you use global consensus are we working with the swarm guys and we try to leverage third on that work transport and also we will try to convince them to use Raiden for micro payments in swarm and in the light client protocol we thought about how we could integrate Radin into the theorem clients most likely candidate is that we would kind of wrap the written API into the chosen RPC API of the theorem clients and there's already some early industry adopters who try to build applications on top of Radin expecting that it will actually work ok we have a roadmap like the most important part is probably the routing problem which is still to solve in a way that it's scalable currently we we have be required that will build view of all the of all the channels in the system but it would not scale to a large IOT setup but otherwise we hope that we will be able to have a test net operating network on the theorem on like a better of the right network on the 3 or may not this winter okay one more thing I want to talk about is decentralized exchanges arm let's look how decentralized exchanges work on the blockchain currently basically that's a smart contract which implements order book and takes token into escrow so if someone wants to sell terms we call it a maker he will send those terms to the smart contract and it's mud contra and and says which price it sets for those terms and it's smart contract we'll take the turkeys into escrow and list the terms in the order book and if someone likes the offer call it a taker he will pick that offer and send your requested items through smart contract the transaction and then smart contract will give the transaction to both parties as are they expected it that's that works that's good but the problems here are again throughput we can only do so much transactions per second arm penalty like you don't want to wait 100 seconds to be sure that your trade went through and transaction costs with other high so how could we build in rains and the easiest approach would be just to broadcast your offer to group of are interested traders or parties you want to exchange tokens and then one could decide to be one who picks that offer and I take and make a good engage in this atomic swap which I showed earlier you could just swap the terms of chain is it really but the problem is basically if our one party know the setups if you if two parties want to set up an agreement the one who signs it first or commits to it first office the other party free option because the other party can decide whether it also wants to joint agreement or just waits maybe the price moves into his favor and then against the later decide to take that option or not you have this problem if there is a long time out it's just a longer period where this situation can exist and so if you had that for decentralized of Chan exchange we would that would not work so it would be exploited and that would not be workable market probably so a solution could be that you work with a cert party basically free option problems only solvable with the third party so that third party would cook well it would offer to take commitment deposits from both parties and notify both parties if both parties are committed to do that of chain term swap and if they fail to later prove that they actually executed the swap he would keep or burn those deposits otherwise he's on stand back and if we have the incentive setup like this arm it could work and how actually the flow of factions would be something like the the offer of the children's the maker deposits with the third party then broadcast the offer which has a reference to that deposit with the third party arm then someone who is willing to exchange' teams also needs to deposit and if it does the maker gets the notification then they both are duty to swap and if it goes through both confirm to the third party that it worked and then third party can release are those deposits again and the properties forget you is that it's off chain no none of this transaction goes to the blockchain so we get high throughput low latency low fees basically the rain properties and while that looks complicated I think we can abstract it in a way that the API and the user experience is similar to traditional exchanges one more thing to notice just limited trust required to this red party because it could run away with the deposits but this with the yet with the committment deposits but they're very small compared to the jokes they want to exchange it does not take the tokens it takes different deposits and if it makes a business model out of this then always the the business would be at stake so that probably will not will not happen okay one more thing what um do we plan to to move Raiden to become a generalized infrastructure to run arm of chain applications and the infrastructure might be easier than actually giving developers good tools to develop arm off chain applications the differ we also plan to provide a framework which makes it easy or at least easier to build this kind of applications and we just last week met with some nice other people from the ecosystem and we think about joining forces ah to work on that so to summarize what you should take away from the Turkish arm rain Network works and will be available soon Oh we aim to go beyond certain transfers I believe that the theorem killer apps would somehow be based on Raiden or similar technology because if their killer apps they need to scale somehow and should have a good user experience that is low latency is also important here and I also think that if you want to see arm proud industry adaption of distribute electrical technology then we need something like the right network or similar because again the properties of scalability and are especially here transaction privacy are important if you want to learn more about our project and here's some URLs and voice I'm done thank you [Music]