Ethereum continues to work towards scalability and proactively address congestion issues and as a proof of that a simplified version of ethereum’s Lightning Network, Raiden, was launched in live production.
The whole idea behind µRaiden is to have an off-blockchain unidirectional payment channel that enables uses to send tokens to pre-determined receivers with the transaction secured by ethereum’s network. µRaiden also enables users to have just one on-chain transaction for the opening of the channel and then have subsequent transaction without affecting the public blockchain except for in instances of disputes.
According to µRaiden’s open source repository, Clients i.e. senders will have to open a micropayment channel with the provider i.e. receiver and then fund the channel with a number of tokens. The tokens will be escrowed by a third party contract that manages opening and closing of channels. The key thing here to note is that these micropayment channels are affectively direct payments that will get settled in one on-chain transaction thereby not being affected by the usual constraints of public blockchains, such as current capacity limits.
The channeled parties, therefore, can undertake thousands or millions of transactions at zero fees, the project says, allowing for micro-transactions, such as pay per view. These payment channels have been possible for quite some time, but can be inefficient as you need a new on-chain transaction, or a channel, for each new transacting party.
The full Raiden network hopes to address that by creating intermediary links, similar to the six degrees of connection theory.