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Plasma and Raiden Network

Janice Ng, October 2018

Raiden Network

  • Off-chain scaling solution that is compatible with ERC-20 token transfers in bidirectional payment channels (permit funds to flow in both directions along the channel)

  • Bidirectional payment channels allow for nearly unlimited token transfers between 2 participants as long as their net sum does not exceed initial deposit amount

  • Interacting with Raiden: developers interact with API to build scalable applications

  • Designed to provide near-instant payments, increase transaction privacy, micropayments, low fees and atomic token swaps

    • Payment channels exist off-chain + sometimes on-chain
    • Reduces on-chain transaction capacity

  • Does not need for global consensus of the state of the network required for on-chain transactions

    • Uses hash-locked transfers called “balance proofs”

      • “Balance Proofs” = collateralized by on-chain deposits that are made

        before setting up bidirectional payment channels

Example of Raiden Network: Raidos

  • Research and planning phase
  • Sidechain technology to generalise state channels
    • Generalized state channels can be used to implement arbitrary state machines which allow Ethereum’s computational capabilities to scale through satellite chains, which can host any smart contract
      • State Channels: Transactions take place entirely off the blockchain and exclusively between the participants, meaning they are cheap and very fast to execute compared to on-chain payments.

Plasma

  • Series of contracts that run on top of a root chain
  • Consist of a network of “child chains” (side-chains) connected to a root chain
    • Each child chain functions as its own blockchain with own consensus
  • Process of utilizing Plasma conceptually work by:
    • Smart contracts created on the root chain and act as the child chain’s anchor to root chain
    • Child chain is created that functions as its own blockchain with its own consensus (something like PoS)
    • All states within child chain are enforced with fraud proofs t hat ensure all state transitions are valid + enforce the protocol for funds withdrawal
    • Smart contracts specific to that Dapp or child chain can be deployed to child chain
    • Necessary assets can be transferred from the root chain to child chain
  • dAPP running on child chain does not have to interact with root chain
    • Can withdraw assets to the root-chain whenever they want
    • Exits from child chain allow users to safely retain their funds through Merkle proof through verifying ownership of specified amount of funds

Benefits of Plasma

  • Ability to substantially alleviate the computation that is currently congesting the main chain
  • Lower processing and storage requirements

Disadvantages of Plasma

  • Concept of “ mass exits” from the child chains
  • Coordinated simultaneous exit from the child chain may potentially result in a lack of processing capacity to withdraw all the funds. As a result, users could lose funds.

Plasma Cash

  • Construction that gives tokens on the network unique serial numbers to unique coins

  • Benefits

    • No need for confirmations, more straightforward support for all kinds of tokens + mitigation against child chain mass exists (OmiseGo is an example)

    • Plasma Cash utilizes unique identifiers when depositing ETH into a Plasma

      contract that allows users to only store information about their coin

Example: OmniseGo

  • A white-label eWallet, smart contract platform and ERC-20 token built on Plasma

  • Working on a proof of concept for Plasma Cash and Loom is planning on using Plasma Cash to facilitate Plasma Exits for their dappchains

  • Uses PoS algorithm

  • Decentralized bank, exchange, and asset-backed blockchain getaway

  • Goal

    • Help unbanked get banking services (those who have no access to financial services)
    • Build fully decentralized P2P system to enable “asset agnostic” value exchange in real time on an Ethereum-based blockchain
    • Wants decentralized wallet development + ability to send funds across networks

  • Launched own mainnet; allows users to send, receive and exchange any currency or crypto

    • Use SDK which allows any organization which issues some unit of value (currency/cryptocurrency) to create their own branded wallets which interact with OMG network, which facilitates the swapping of currencies by bonding ETH to the Smart Contract
      • EG: If Alice wants Bob to send him US dollars, but Alice only has RMB, Alice can send RMB which will be traded for ETH, and sent to Bob in US Dollars

  • Allow people and businesses to send and receive payment in any currency

    • Based on ERC-20 = recognised smart contract code functions across Ethereum ecosystem

    • Allow to transfer token data (supply, balance)