With Ethereum gaining its status as the leading blockchain that supports apps built on the platform and offers smart contracts, scalability issues become the biggest of its hurdles. The user base of the platform is growing continuously and the diverse ecosystem gets more demanding to develop scalable and comprehendible solutions. However, the potential solution to overcoming the scalability challenges may reside in the development of Ethereum scaling and state channels.
In this article, we discover the state channel implementations and applications that have the scalability of Ethereum. The next topic will cover Raiden Network and Connect Network, which are state channel-based projects that let people perform transactions cheaply and fast and as a result, they raise the scalability and efficiency of the Ethereum ecosystem. Let’s go into detail to find the innovative features speeding up Ethereum’s scalability through the state channel by Ethereum Layer 2 Scaling Solutions.
What does “State Channel” mean?
In the context of blockchain technology, the channel state is one of the techniques specially developed for this purpose. Fundamentally, it allows users to conduct a series of standing things off-chain hence diminishing pressure on the main blockchain. State channels, which enable prompt and cheap transactions, are efficient to the scalability question which more popular blockchains like Ethereum struggle with.
Raiden Network
Among the most popular designs of Ethereum scaling by state channels is the Raiden Network. Like Lightning Network is for Bitcoin, Raiden allows for quick, low-cost, and off-chain scalable token transfers. Raiden’s ability is enabled by the creation of bi-directional payment channels between participants, which make instantaneous transfers among participants feasible and increase Ethereum’s throughput. Meanwhile, Raiden’s bonding with Ethereum smart contracts allows expanding the spectrum of the utility of such transfers only up to integrated dApps with even greater scalability.
Connext
The major player here in the state channel space is the Connext which serves as an enabler of microtransactions and cure of various use cases by providing more than simple value transfer functionality. Connext boasts state channels that users can connect participating in multi-token transfers and interfaced dApps without any hassle. The perk of openness on Ethereum now provides a way for innovations in DeFi (Decentralized Finance) applications, gaming, and other decentralized services by fuelling the Ethereum Layer 2 Scalability Solutions.
Celer Network
Celer Network – as a full-stack layer-2 scaling solution for Ethereum – is the one resolving widely used state channels, sidechains, and off-chain computation systems needs. By using Celer technology, developers have a chance to develop scalable applications featuring interaction at the same time that are secure and decentralized. Celer’s layered 2 scaling structure and the way it deals with blockchain scalability issues translate this project into a particularly relevant strategic tool in Ethereum’s attempt to become the world’s most recognized and used cryptocurrency infrastructure.
Perun
For example, Perun will use VPCs (virtual payment channels), an off-chain accounting network adapted to aggregators. VPCs are Perun’s core feature that facilitates multi-party trades by keeping security and trustlessness. Besides improving Ethereum’s blockchain system, the new solution provides new avenues for other applications making it possible to access real-time micropayments and DEXs.
Counterfactual
Meanwhile, the counterfactual is a framework that is open-source and enables the development of state channels that are multi-party and generalized for Ethereum. Contrasting with the available counterparties which require users to be online simultaneously, Counterfactual allows the interaction between participants to be asynchronous which will enhance accessibility and usability. This protocol enables further development of the all-encompassing applications of a decentralized nature and is among the solutions of this platform in soaring this network scaling and usability.
FunFair
Funfair aspires to introduce new technology that will reshape the online gaming industry by introducing fair and transparent gaming solutions by utilizing state channels. With Ethereum’s state channel technology, the FunFair platform performs instant and secure transactions without the requirement for high-cost, slow, and on-chain transactions. Moreover, this system does not only improve end-user experience but also aids operators in reducing operational costs, which in turn makes it a vital solution for gaming community members.
Liquidity Network
Liquidity network is a Liquidity network’s scalable payment hubs built on Ethereum that token transfers are done off-chain swiftly and at lower costs. By adopting a separate off-chain payment hub, Liquidity Network makes Ethereum more scalable than ever before, since other transactions are done off-chain while the underlying blockchain is not jeopardized in terms of security and trustlessness. This solution embraces a pragmatic solution to help mining the Ethereum network in a scalable way thereby abating the users’ transactions costs to a considerable degree.
Magmo
While Magmo strives to strengthen scalable payment channels on Ethereum, broad success still depends on the proper implementation of strategies to address the network’s scalability issues. In this regard, Magmo offers payment channels built for off-chain trading. Thanks to this application Magmo increases the overall capacity and reduces transaction fees in the system, making users and projects set on Ethereum more attractive and welcoming. With scalability and usability being a part of the Magmo mission, Ethereum has become a prominent blockchain-based platform for the long term with its sustainability prospects.
Shedding Thoughts
The conclusion would be about the state channels being a great game-changer in Ethereum’s road towards the scalability of the network by providing novel solutions to overcome the throughput restraints and the transaction cost. The rise of scaling solutions such as the state channels, e.g. Raiden, Connex, and Celer, for Ethereum allow for more off-chain interactions and thus have a positive effect on Ethereum’s usability as well as on the market for decentralized applications and use cases. In addition to all of the things already highlighted, the state channel, an integral part of Ethereum, is the ultimate key that unlocks its potential to create an economic system that is scalable and decentralized. A financial system that is for the next generation of finance, gaming, and other uses.
