Dala, the Raiden Network, and the path to decentralization

Globally, over 3.5 billion people are not adequately served by current financial solutions. Over 2 billion people do not have bank accounts and another 1.5 billion only have basic savings accounts, which are not transactional. These underserved consumers are primarily based in Latin America, Asia-Pacific, and Africa. Across these emerging markets, the two key barriers to financial services are access and cost.

In order to enable a completely free and borderless financial system, a new utility crypto-token, called Dala, was issued last year. Through the Wala Financial Platform, Dala’s launch partner, the Dala token will be used to reward platform-enhancing behaviors and will be redeemable for value-added services or exchangeable into fiat currency. Dala is an open platform and partners, like Wala, are encouraged to participate by either providing innovative financial services or assisting the network by acting as high-liquidity partners on the network.

The Dala token will take full advantage of the scalability, cost, and speed of the Raiden Network to provide a useful cryptocurrency to emerging market consumers. Emerging markets present some interesting challenges to any new cryptocurrency, such as the financial education of the target market, the concepts of trustless economies which are relatively unknown, and the technical engagement to own and manage private keys.

Dala is creating a framework to facilitate the engagement with a user’s wallet as well as defining a roadmap towards decentralization. This will begin with a custodial relationship between a user and the Dala organization. The Wala Financial Platform will be releasing an integrated Dala wallet which will be considered a reference implementation for future adopters.

The deployment of the Dala network has been split into two phases, the details of each are outlined below.

Phase 1

Phase 1 is made up of three major components: the Dala API, the Dala Wallet smart contract, and a digital ledger to store token balances.

Dala API

The Dala organization will host and manage an HTTP RESTful API to facilitate engagement with the network. The API consist of instances of µRaiden paywall proxies that are hosted behind a load balancer. All available paths are considered paywalled resources, but will have pricing based on the real cost incurred by the organization. This prices may adjust over time as they are a proxy for the gas cost incurred when executing on-chain transactions on behalf of the caller. All of these prices will be denominated in Dala; early adopters and partners will be incentivised with Dala to participate.

Provisionally at launch, the available paths will be:

Register new Dala user (free)

Registers user with identity store

Define challenge type (OTP, TOTP, etc.)

Confirm new Dala user (free)

Requires challenge response

Creates ledger entry for user with initial balance (zero).

Authenticate (free)

Uses username and password to authenticate user — returns token

May require challenge request/response

Create Wallet (paid)

Creates wallet smart contract instance for receiving on chain transfers

Stores wallet address with identity store entry of authenticated user

Only one wallet per user

Requires token header from authenticate operation

Send Dala to internal address (free)

Requires token header from authenticate operation

Receiver can be address, username, or phone number

Send Dala to external address (paid)

Requires token header from authenticate operation

Receiver must be address

Get Balance (free)

Returns the current ledger balance of the user

Requires token header from authenticate operation

Get Transactions (free)

Returns the transaction history of the user

Requires token header from authenticate operation

Register Service Provider (paid)

Registers the provided address as a service provider

A payment channel is created from the central pooled address to the provider address for future settlement

In time, this will include the ability for the service providers to provide the definitions and metadata of the services they offer. These services can be offered by third-party applications (such as Wala) to their users.

Get Services (free)

Queries the service providers and services that have been registered with Dala

This provides the ability for consumer applications to offer these services to their users and facilitate the transfer of Dala between user addresses and service providers for the purchase of registered services.

Architecture Overview (Phase 1)

Dala Wallet Smart Contract

In order to enable the receiving of Dala from external addresses into the network, a Dala wallet smart contract will be deployed on the Ethereum blockchain. A new wallet will be created for a user on demand and the resultant address will be stored with their identity. Users can use this address to send Dala, and only Dala, from external addresses such as an exchange. No token balances will remain allocated to the wallet address but will instead be swept to a pooled address and be available for transactions from the µRaiden channel. Minimum deposits may be enforced as each deposit requires an on-chain transaction to sweep the tokens to the pooled address. When a deposit has been swept, a users corresponding balance entry in the digital ledger will be updated to reflect the available tokens.

Dala will manage the pooled address independently to ensure a satisfactory balance between sufficient liquidity and security by moving surplus tokens to a Dala multi-signature wallet.

Digital Ledger

A digital ledger will be kept to represent the Dala token holders balances that reside in the pooled account. This ledger will also keep a transactional history per address of events that occur from and to the pooled address, along with information such as a hash of the corresponding µRaiden transaction.

Phase 2

Phase 2 represents the necessary final steps towards a decentralized economy using the full Raiden Network. This does create a dependency on the stability and viability of the Raiden Network, but as a team, we strongly believe that this is the best option for fast, scalable, and affordable transactions for ERC20 tokens and will provide the necessary infrastructure to support the future of the Dala network.

Raiden Network

To assist the growth of the early network and facilitate easy routing, the Dala organization will deploy a number of high-liquidity hubs to the Raiden Network. Each of these hubs will be connected to each other, and a reliable partner discovery mechanism will be required to ensure an even distribution of channels between users and hub nodes. The Dala API will be extended to support functionality that determines the best partner address to connect to. These nodes will not charge fees and will probably remain an optimal path until they are slowly decommissioned to create opportunity for token holders to participate and define their own fee models.

Light Clients

The final hurdle towards the decentralized Dala network are the light-clients. A Dala light-client will be released based on the work being done by the Raiden Network (https://github.com/raiden-network/raiden/issues/114); this will enable direct interaction with the Raiden Network, and provides further opportunity for community members to get involved to build and enable this decentralized economy. Nodes that act on behalf of light-clients will be incentivised in Dala for the work they do.

As the network matures, the Dala organisation will slowly remove itself from being a central point of failure to the success of the ecosystem. This will only be possible as community involvement increases and the need for the API diminishes as light-clients become the preferred mechanism of engagement.