RenVM
RenVM (launched 2020) is a trust-less, permission-less and decentralized virtual machine that powers a decentralized interoperability solution for various projects DApps, DEXes etc. in the DeFi ecosystem. It was developed by Ren, an open protocol that enables free movements between decentralized blockchains[1].
Company
RenVM is a product of the Ren project. It was formerly known as Republic Protocol. The Company was founded in December 2017 and It is situated in Singapore and has around 50 employees. Founder Taiyang Zhang is also a CEO of Ren. He is also co-founder of the cryptocurrency investment firm Virgil Capital[2][3][4].
Fundraising
Ren secured over US $34M USD funding over two rounds. Their latest funding was raised on Feb 22, 2018, from an Initial Coin Offering (ICO) round. Their investor list includes Polychain Capital, FBG Capital, Hyperchain Capital, Synapse Capital, Huobi Capital, Limitless Crypto Investments and BlockVC[5].
Overview
As stated in the Introduction, RenVM serves as the engine that powers a decentralized interoperability solution for various blockchains. It is a network (and an accompanying SDK) that helps developers bring cross-chain functionality to their DeFi applications. By using RenVM, DeFi projects can bring liquidity from other blockchains to the Ethereum ecosystem and ultimately improve DeFi utility. It provides a native cross-chain user experience, allowing seamless and decentralized interoperability between Ethereum and other blockchains[6].
Technology
RenVM incorporates four technologies which play key role:
Shamir's Secret Sharing
It is an algorithm in cryptography created by Adi Shamir. The algorithm divides a secret into multiple shares and participants in the secret sharing scheme need a majority of the data to be able to reconstruct the secret.
Secure Multiparty Computation (sMPC)
RenVM have developed their own state-of-the-art sMPC algorithm which allows untrusted Darknodes to jointly run scripts without revealing the inputs or outputs of the script to anyone, not even to the machines which power RenVM.
Byzantine Fault Tolerance
BFT keeps RenVM network safe and running even if Darknodes become unavailable or behave maliciously. The scripts keep running, and secrets stay secret.
Hyperdrive
RenVM uses a modified version of the Tendermint consensus algorithm designed specifically for sharding and sMPC.
Darknodes
RenVM is powered by a network of decentralized virtual machines known as Darknodes. RenVM virtual machine replicated over thousands of machines that work together to power it. These Darknodes contribute their network bandwidth, their computational power, and their storage capacity to the network. Each Darknode earn rewards (in BTC, ETH, ZEC, DAI, and ERC-20) for contributing to the network.
These Darknodes communicate and work in synchronization with other Darknodes across the globe to keep RenVM running. RenVM runs on consensus algorithms and so that any can operate Darknode without needing to trust them.
The REN token is used as a bond to run a Darknode, which powers the sMPC network (RenVM). The requirement for running a Darknode is 100,000 REN staked as collateral + running the Darknode software via VPS. The total number of Darknodes is restricted to 10,000 (equal to Total Ren Supply i.e.1,000,000,000 REN divided by Ren required per Darknode).
| Darknode | Key Numbers |
|---|---|
| Minimum REN required as collateral | 100,000 |
| Total Number of Darknodes available | 10,000 |
RenBridge
Using Renbridge anyone can mint or release RenBTC, RenBCH or RenZEC. Users need to use Web3 wallets like Metamask or MyEtherWallet to sign in[7].
How RenVM works
How RenVM Actually Works
The easiest way to understand RenVM is to first think of a trust-less custodian that holds your cryptocurrency as they move between two different blockchains. When you give BTC to RenVM, it holds that BTC, and it mints that BTC as an ERC20 Token (renBTC) with 1:1 ratio on Ethereum blockchain and ensures your renBTC is always backed by the same amount of BTC. Then you can use renBTC to exchange, swap, leverage and use for many things in DeFi ecosystem. In simple works using BTC, you add liquidity to Ethereum ecosystem.
Any digital asset minted on Ethereum by RenVM is a 1:1 backed ERC20. It means you can always easily redeem 1 renBTC for 1 BTC. renBTC is not a synthetic and it is not dependent on a liquidation mechanism, and it’s not the price of Bitcoin on Ethereum. It is a one to one representation of Bitcoin on Ethereum that can be redeemed for BTC at any time, in any amount[8].
Supported Blockchains
Currently RenVM supports Bitcoin, Bitcoin Cash and Zcash and is capable of supporting any assets that use Elliptic Curve Digital Signature Algorithm (ECDSA) private keys which most of cryptocurrencies use nowadays. The Multichain module is in development and next release of RenVM will see support for Acala, Binance Smart Chain, DigiByte, Dogecoin, Filecoin, Solana, and Terra (depending on the testing results)[9].
On November 16, Ren announced the release of the Multichain into RenVM, and new upgrades to the RenJS library. With this release, a new range of new assets and chains enter the world of interoperability. Now the developers can easily bring Interoperability to their Ethereum or Binance Smart Chain Dapps[10][11].
On May 28, 2021, Ren team announced integration of Fantom Network. With Fantom x RenVM Bridge support, anyone can mint and burn the assets on a Fantom blockchain. This is a direct bridge so users do not need to use Ethereum network, allowing direct deposits and withdrawals to and from the Fantom network with minimal gas fees. Currently, the bridge supports to mint $renBTC, $renBCH $renDGB $renDOGE $renFIL $renLUNA $renZEC tokens on Fantom[12][13].
In June 2021, The team added support for the Avalanche blockchain. So anyone can mint and burn $renBTC, $renBCH, $renDGB, $renDOGE, $renFIL, $renLUNA, $renZEC tokens on Avalanche using direct Avalanche x RenVM bridge. The users do not need to go through Ethereum for deposits/withdrawals thus saving gas fees[14].
| Blockchain | Cryptocurrency | Minted ERC20 Token |
|---|---|---|
| Bitcoin | BTC | renBTC[15] |
| Bitcoin Cash | BCH | renBCH[16] |
| Zcash | ZEC | renZEC[17] |
| DigiByte | DGB | renDGB[18] |
| Dogecoin | DOGE | renDOGE[19] |
| Filecoin | FIL | renFIL[20] |
| Terra | LUNA | RenLUNA[21] |
Comparison with WBTC
RenVM is similar to Wrapped Bitcoin (WBTC) conceptually as both produce ERC 20 token backed by same amount of BTC but there are many differences under hood.
| Type | RenVM | WBTC |
|---|---|---|
| Fluid Value Exchange | RenVM stores the BTC in a network of decentralized nodes (called Darknodes). renVM mints a 1:1 RenBTC for BTC supplied immediately and it can be used in DeFi. An important quality is that this value exchange (i.e minting and burning) is fast and fluid and this can be done hundreds of times per minute, at any time and in any amount without any centralization, merchants, signatories, or friction, allowing the easy cross-chain movement | BTC is stored in the centralized custodial app (BitGo) |
| Composability | RenVM can be integrated in Any Defi project. The end result is that users can swap BTC on a DEX, lend/borrow BTC on a lending platform, or collateralize synthetic assets using BTC, and only ever use real BTC to do it. The user never has to see renBTC, or in some cases even Ethereum itself. | WBTC can be transacted just like any ERC20 token. |
| Decentralized, Trustless, and Permission-less | The ECDSA private keys used within RenVM are completely secret, even from the Darknodes. RenVM generates and signs data with its ECDSA private keys using a secure multi-party computation algorithm. No one can prevent users from minting renBTC with their BTC, burning their renBTC to redeem back BTC, or using their renBTC in any way they want to. | It uses custodial banks, which hold assets and keys to mint tokens |
Integrations
RenVM is currently integrated in DeFi protocols, inlcuding Uniswap, Balancer, Loopring, Virgox, Mooniswap, Kyber Network, Curve Finance and 1 inch Exchange.
Audits
Ren VM has undergone multiple audits which include smart contract and Hyperdrive audits from Chainsecurity and RZL, MPC by ConsenSys Diligence. In August 2020, Trail of Bits audited RenVM libraries, including RZL MPC paper and MPCwiki as documentation/guidelines for expected behavior. The results came out satisfactory[22].
DeFi Statistics
RenVM is growing at a rapid pace in the DeFi marketplace. Since its release on May 27, 2020, It has locked total $195M in USD in just three months and ranked 9th in DeFi project rankings. On October 17, 2020, RenVM surpassed 1 billion USD in Volume. It also achieves a huge milestone for the protocol’s participants, with Darknodes capturing over one million USD in fees in under five months[23].
Development
On September 5,2020 Ren team announced that Ren has collaborated with one of the popular crypto project, ChainLink on a new Proof of Reserve Consensus Mechanism (live on testnet and soon mainnet) to improve the transparency and audit-ability of its cross-chain assets bridged into the DeFi ecosystem, starting with renBTC, renBCH, and renZEC[24].
By leveraging Chainlink’s highly secure and reliable decentralized oracle network, smart contract Decentralized application (DApp) on the Ethereum blockchain now have the ability to autonomously verify on-demand the current collate.
