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What Is Raiden Network Token (RDN)?

Raiden Network token (RDN) is a cryptocurrency belonging to the Raiden project. The Raiden is an open-source project that uses state channel technology to scale Ethereum. The state channel technology is a process that facilitates users to transact outside the blockchain. According to the website, to carry out the process of scaling, Raiden project developed the network known as Raiden Network.

The Raiden Network is an off-chain scaling solution that functions on the Ethereum blockchain and seeks to enable economical, fast, and scalable token transfer for ERC-20 tokens. The term off-chain signifies transactions that take place outside the blockchain. The network also seeks to provide users with security, privacy, finality, and decentralization like blockchains. Thus, aiming to create an ecosystem where users can transfer tokens without a global consensus mechanism while resolving the issues that existed with the Ethereum blockchain. To operate on the network, users and clients have to pay fees for the payment channels to transfer tokens. The payment channels are the technology that facilitates off-chain transfers of on-chain tokens. These fees thus collected by the network are of two types:

Protocol Level Fees: These are fees collected by the network to keep payment channels working and are collected in the denomination of the transferred token.
Peripheral Fees: These are fees paid for the different services used by the clients on the network and are collected using RDN tokens.

The collection of these fees aims to allow the network to function properly while ensuring proper maintenance of the network. Further, to ensure a proper service framework on the network is maintained, the Raiden project introduced the cryptocurrency, the RDN token. The RDN token is a virtual currency of the Raiden Network and aims to be used for many service-related purposes on the network, which includes:

The token is used for making payment of peripheral fees.
The token is used to reward users on the network for their contributions to the network, like monitoring services, finding paths with capacity, etc.
The token is used for making micropayments, API (Application Programming Interface) access, and other services offered by the network.

These utilities of the RDN token seek to help in maintaining a proper operational structure for the service framework within the Raiden Network.