Connext is an infrastructure layer that scales the Ethereum blockchain. It enables cheap, instant transfers on and across blockchains for wallets, applications, and protocols.
What problems does Connext solve?
Connext team believes that there is a global need for digital peer-to-peer micropayments. However, existing payment infrastructure is built around institutions rather than individuals, where institutions have to shoulder the cost burden of preventing fraud. Because of this, the cost of making payments is too high and requires too much coordination, making micropayments below a certain price threshold unfeasible.
The team thinks that blockchains offer a solution to some of these problems. By minimizing trust in peer-to-peer interactions, blockchains dramatically lower the cost of system-wide regulation (and truly trustless systems may remove the need for regulation altogether). Despite these benefits, blockchains struggle to meet the performance requirements of a micropayment-based economy without either sacrificing security or decentralization.
In other words, p2p micropayments become possible when you can preserve the underlying benefits of a blockchain while also leveraging the cost and speed advantages of being off-chain (on "layer two"). Connext is a layer two network which offers solutions to the following issues:
Traditional payment processors like Visa are capable of processing over 50,000 transactions per second (TPS); the Ethereum blockchain averages around 10 TPS.
With Connext, there is no theoretical limit to transaction volume or speed; rather, our technology scales with its user volume, and the total number of nodes in the network will dictate maximum throughput.
Long transaction confirmation times (15-30 seconds) hinder UX.
Transactions via Connextoffer instant finality while preserving the security of the base blockchain. Much like settling a tab at a bar, confirmation times are only incurred when a user closes their "channel" with a Connext node.
High transaction (gas) costs limit the ability to do micropayments.
Because individual transactions using Connext occur off-chain, users do not incur transaction fees until they close their "channel" and settle their final balance with the blockchain. Because the cost of opening and closing channels (in the form of on-chain transaction fees) is amortized over the volume of payments in that channel, payment channels enable micropayments and small-value transactions for which the on-chain transaction fees would otherwise be too expensive to justify.
What is the status of Connext?
Connext’s Indra network is live on the Ethereum mainnet, rinkeby testnet, and support for other chains is coming soon. The current network features a hub-and-spoke topology over which transactions are routed. Anyone can run a Connext node as a service provider to connect users to each other. Users can open channels to this node and can then make commitments to any other user connected to the same node. In Connext, users’ funds and transactions are entirely noncustodial - the node never holds your value at all. The next major iteration of Connext will feature routing state updates between nodes, allowing clients to connect to many nodes concurrently, and the ability for anyone to connect their own node to the Connext Network.
How does Connext compare to other state channel solutions?
Connext has been live in production with several projects since early 2019. We’re heavily focused on conditional micropayments and support transfers across chains. We also pride ourselves in being easier to use than anything that exists in the market today.
Content Payments and Transactions
- Video streaming platforms such as Twitch or Youtube
- Payments to creators on sites like Patreon
- In-game microtransactions for videogames
- Transfers of tokenized advertising impressions
- Micropayments and tokenized ratings for posted content on sites such as Reddit
Peer-to-peer and Machine-to-machine Payments
- Blockchain versions of P2P payment apps like Venmo or Square
- Online retailers such as Amazon
- Tokenized versions of sharing economy marketplaces such as Uber or Airbnb
- Incentivized mesh networks
- Billing platforms
- Payroll processors
- Subscription model companies