The community sentiment on Raiden went south since we announced our token launch.

It looks like a larger fraction of the community, than we had anticipated, has had the misconception that Raiden is ran by the Foundation. Instead we are a for-profit company that bets on the success of Ethereum. Although we tried to make this clear on our website from the beginning, the misconceptions are still to some extent our fault. We have not been good at providing frequent updates and clarifications to the community in the past.

We are sorry for this and the disappointment and anger this might have caused when we announced a token launch.

Let’s try to look at Raiden from a fresh and neutral perspective: Assume a company would announce today, that they are planning to bootstrap a global scalable, low latency and cheap micropayment infrastructure. And that they are building this as an extension to Ethereum that allows it to scale by a factor of 1000 for token transfers and reducing cost by a similar factor while providing sub second latency. Thereby, they’re aiming to solve major issues for many existing Dapps while enabling even more new use cases. They have delivered a working PoC based on 100K lines of code and would then announce a token launch. Please stop reading if this would already turn you off.

Still with me? Then let’s first take a look at the good aspects and then at the more controversial issues.

The Good:

• Their system is really needed and potentially adds tremendous value to Ethereum.

• They are developing the software and make it available for free, open source and it can be used and forked free of charge by everyone.

• They understood that a world wide payment network cannot be bootstrapped and maintained based on donations and without being able to set incentives for a multitude of players in the underlying ecosystem.

• They also understood, that a rent seeking or otherwise monopolizing token might hinder adoption of the system and therefore don’t enforce a token at the core of the protocol.

• They are instead willing to compete and bet on being able to bootstrap an off-chain ecosystem of services aligned around “their” token while not crippling interoperability.

• They did not hype the project, they actually spent zero on marketing or on shills.

• They didn’t do a pre-sale.

• Their token sale allows everyone to participate on the same terms, providing certainty of participation (i.e. it will run for a few days at least) and valuation at the same time.

• They didn’t grant the developers any free tokens, but instead let them only participate in the overall success of the company and have set a 4 year(!) cliff.

Now on to the more controversial issues:

“No Token Needed!”

Assuming this refers to the question if a medium of exchange is needed at all in such a system, then the answer is: Yes, it is. Light clients need to access services provided by full nodes in a Raiden Network and pay for this (unless one is convinced that the backbone of a reliable global payment infrastructure can be provided by altruists who bear the cost).

“Why not ETH?”

This is an interesting question. We acknowledge that from an ETH holder perspective, getting the Raiden vision delivered for free as part of the Ethereum deal would be desirable. At the same time Ethereum gets value from all innovations built on top that further the adoption of the platform. And these innovations would not exist, if Ethereum didn’t come as a system which enables to capture the value of a project in a dedicated token.

“Dutch Auction failed before!”

The Gnosis auction left many unhappy as the funding target was matched after only a few blocks. The Raiden auction will be different, since a fixed amount of tokens will be offered during the auction. This guarantees the auction will run at least for a few days and should allow everyone interested to participate and get the same final price, irrespective of the time of their bid. Consider to take a look before you judge.

“You are not able to bootstrap a global payment channel network!”

This issue was actually not raised. But I think this is the question that one should think about. What does it take to execute on the idea of building a global payment network on top of Ethereum? What would the impact of this be? Is a dedicated token or an auction really the deal breaker here?

You don’t have to agree with the above or like what we are doing. We’ll continue our work to scale Ethereum towards wider adoption - benefiting all of us.