We’re joined by Dan Robinson, a research partner at Paradigm, and the author the “Rainbow Network” paper. The paper describes an off-chain decentralized synthetics exchange which leverages payment channels. The Rainbow Network is based on the idea that “rainbows are basically just multicolored lightning,” borrowing from the concepts used in the Lightning Network. The protocol relies on trusted oracles and allows participants to trade any type of liquid asset off-chain. All that is necessary to complete a transaction is an on-chain payment channel collateralized by a single asset. Though it is still at the idea stage and has yet to be implemented, the Rainbow Network could have applications in prediction market and as a new type of decentralized exchange.

Topics covered in this episode:

  • Dan’s background as a securities layer turned coder
  • His trajectory from working at Chain, to spending some time at Stellar, to joining Paradigm Fund
  • His involvement in the development of the Plasma Cash and Plasma Debit protocols
  • Thoughts and criticisms of using HTLC’s in Lightning
  • What is the idea behind Rainbow Network and how to understand it in the context of Lightning
  • What are synthetics assets and the ability to trade multiple assets in a single payment channel
  • The ability to have leverage in a Rainbow channel trade
  • Next steps in research and implementation
  • Dan’s contribution to the Ivey “smart contract” language for Bitcoin

Episode links:

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This episode is hosted by Sébastien Couture and Sunny Aggarwal. Show notes and listening options: epicenter.tv/289