Announcing the Raiden Network Token (RDN)
We are happy to officially announce the RDN token launch.
The Raiden Network Token
The RDN token will be a virtual currency to be mainly used for off-chain machine-to-machine micropayments. RDNs can be used shortly after their distribution to access the µRaiden system deployed on the Ethereum mainnet. µRaiden provides efficient micropayments for use cases that depend on frequent, fast and free transfers between users and service providers as well as “keepers” in crypto economically secured systems.
A future Raiden Network will also depend on auxiliary keepers, which need to be incentivised to provide their services. It is planned, that the µRaiden system together with a RDN token will be used to facilitate such payments to auxiliary service providers.
Note, that RDN tokens are not necessary at the core of the Raiden Network Protocol and in theory anyone can use the Raiden Network without having RDN tokens. That said, our assumption is, that most participants in the Raiden Network will be light clients which are happy to pay small fees for the comfort of not having to run all required auxiliary services themselves 24/7. This aspect will be covered in-depth in a future blogpost on the RDN token functionalities.
In the past, various token distribution mechanisms have been proposed, all of which come with different trade-offs. We judged efficiency, certainty of participation and certainty of valuation to be the most important properties for a RDN token launch. This led us to choose a uniform price Dutch auction as the format.
In a Dutch auction, the exchange rate starts very high and decreases over time until all tokens are exchanged. All participants will get the same final exchange rate which is determined at the end of the auction. We are designing the auction to run for at least multiple days, by offering a fixed fraction of 50% of all tokens during the auction. This guarantees, that everyone who is happy with the offered exchange rate at a certain point in time, will be be able to acquire RDN tokens by sending ETH to the auction contract. We assume that this leads to an accurate price discovery, avoids congestion on the Ethereum blockchain and allows anyone interested to be able to get tokens without having to rush.
The specific details and an in-depth explanation of the chosen model auction will be covered in a future dedicated blog post on this topic.
*Raiden is a project run by brainbot labs Est.