Comparison: Raiden Network

µRaiden is not part of the Raiden Network. However, it was built using the same state channel idea and implements it in a less general fashion. It focuses on the concrete application of charging per-use of APIs, digital content and utilities via micropayments in Ethereum based ERC20 tokens.

The main differences between the Raiden Network and µRaiden are:

  • µRaiden is a many-to-one unidirectional payment channel protocol.

A payment channel in the Raiden Network is based on the same principles as µRaiden, but is laid out bidirectionally, so that the roles of sender and receiver are mutable. Additionally it uses a special cryptographic protocol to connect the owners of those singular payment channels to form an interconnected network of channels.

This allows participants of the Raiden Network to efficiently send transfers without being forced to pay for opening new channels with people who are already in the network - it is a many-to-many payment solution.

  • µRaiden’s off-chain transactions do not cost anything as they are only exchanged between sender and receiver, because they don’t use intermediary channels.

Apart from the initial cost of opening up a channel, a µRaiden transaction doesn’t cost anything, because to deliver the payment itself is as easy as putting some additional data in a http-request.

To be able to use an existing channel in an interconnected network of channels, the Raiden Network requires an additional, sophisticated application transport layer. The forwarding of payments from sender to receiver through the network is based on incentivizing intermediary users to lend their resources in a secure and automated way.

Sender / Receiver

Since µRaiden enables easy micropayments from one party to another, the application is structured in 2 logically separated parts:

  • the Sender or Client side of a payment
  • the Receiver or Proxy-Server side of a payment

The Sender is the one who initially deposits Ether in the µRaiden payment channel. From this point on he signs so called balance proofs with his private key. A balance-proof functions as a valid micropayment, once the Receiver gets hold of it and keeps it on his disk.

The µRaiden application has different implementations for different scenarios for the Sender side:

  • a JavaScript client that runs in the Senders browser whenever the Sender visits the Receiver’s webpage
  • a Python client that runs on the Sender’s machine and makes http requests to the Receiver’s Proxy-Server instance

A typical use case for the JavaScript client would be a content provider, who wants to receive micropayments for accessing paywalled content. The content provider is the Receiver in this scenario and he would integrate µRaiden’s Proxy-Server for example in his flask or Django backend. At the same time, the content provider would serve an implementation of µRaiden’s JavaScript Client from his webpage. All that the consumer of the paywalled content now needs is an Ethereum account that is backed with some RDN and that is web3 accessible (for example with MetaMask). The JavaScript client will run in the consumer’s browser and once it needs to sign a microtransaction the MetaMask plugin will pop up and ask for confirmation.

The Python client would get mainly used in Machine-to-Machine (M2M) applications or more customized applications without the use of a browser. In this scenario, the Sender has to actively install the client application and connect it to his standard blockchain-interface (like geth or parity).The client will then send out http-requests to a known Receiver that is running a Proxy-Server application. Price information on the requested resource will be sent from the Receiver to the Sender in a custom http-Header. Vice versa, once the Sender has processed his business-logic (like evaluating the price), he will repeat the http-request with a matching balance proof embedded in the custom http-Header. This balance proof signature represents the actual micropayment and should be followed up by the Receiver with the delivery of the requested resource.


Schematic overview of an exemplaric µRaiden application [1] [3]

Off-chain transactions

A visual description of the process can be found here.

The heart of the system lies in its sender -> receiver off-chain transactions. They offer a secure way to keep track of the last verified channel balance. The channel balance is calculated each time the sender pays for a resource. He is prompted to sign a so-called balance proof, i.e., a message that provably confirms the total amount of transferred tokens. This balance proof is then sent to the receiver’s server. If the balance proof checks out after comparing it with the last received balance and verifying the sender’s signature, the receiver replaces the old balance value with the new one.

Smart Contract

To be exact, there is a third party involved in µRaiden:

  • the Enforcing or Smart Contract part

This is the part where the trustless nature of the Ethereum blockchain comes into play. The contract acts as the intermediary, that locks up the initial deposit from the Sender and enforces a possible payout of the funds based on the signed balance proofs, that the Sender sent out to the Receiver without the use of a blockchain.

Once the Receiver has a balance proof, it’s easy for the Receiver to prove to the contract that the Sender owes him some tokens. With the balance proof, the contract now can reconstruct the public key of the Sender and knows with certainty that the Sender must have agreed to the updated balance.

This means that there are only 2 transactions that have to happen on the blockchain:

  • the initial opening of the channel with the prepaid amount the sender eventually wants to spend during the channel’s lifetime
  • the final closing of the channel, where the sender’s initial deposit is paid out to the receiver and sender, based on the agreed on off-chain balances

If the channel runs low on funds before it is closed, the sender can increase the transferable amount of the channel with a topup transaction on-chain.

After a channel is closed, it can’t be used anymore. If the business-relationship between the same sender and receiver should revive again, a new channel has to be opened.

µRaiden uses its own token for payments which is both ERC20 and ERC223 compliant.

Closing and settling channels

A visual description of the process can be found here.

When a sender wants to close a channel, a final balance proof is prepared and sent to the receiver for a closing signature. In the happy case, the receiver signs and sends the balance proof and his signature to the smart contract managing the channels. The channel is promptly closed and the receiver debt is settled. If there are surplus tokens left, they are returned to the sender.

In the case of an uncooperative receiver (that refuses to provide his closing signature), a sender can send his balance proof to the contract and trigger a challenge period. The channel is marked as closed, but the receiver can still close and settle the debt if he wants. If the challenge period has passed and the channel has not been closed, the sender can call the contract’s settle method to quickly settle the debt and remove the channel from the contract’s memory.

What happens if the sender attempts to cheat and sends a balance proof with a smaller balance? The receiver server will notice the error and automatically send a request to the channel manager contract during the challenge period to close the channel with the receiver’s latest stored balance proof.

There are incentives for having a collaborative channel closing. On-chain transaction gas cost is significantly smaller when the receiver sends a single transaction with the last balance proof and his signature, to settle the debt. Also, gas cost is acceptable when the sender sends the balance proof along with the receiver’s closing signature. Worst case scenario is the receiver closing the channel during the challenge period. Therefore, trustworthy sender-receiver relations are stimulated.


[1]All robot icons made by Freepic from
[2]Raspberry PI Pictograms by
[3]All other icons from IcoMoon Icon Pack Free, licensed under a Creative Commons Attribution 4.0 International License