Ren operates as a bridge network that enables the transfer of digital assets to DeFi networks. The project was designed to improve interoperability and liquidity between different blockchain platforms. The platform improves blockchain adoption by enabling users to participate in a multi-chain decentralized finance ecosystem.
What Problems Does Ren Attempt to Fix?
The main issue that Ren was created to address was a lack of interoperability in the market. The expansion of the DeFi space has led to a variety of networks emerging. However, these networks operate as separate islands of data. Ren introduces a streamlined manner to connect these networks.
The protocol enables users to transfer any token between any blockchain. Users can now integrate cross-chain assets such as Bitcoin and Bitcoin Cash into existing DEX or liquidity pool infrastructures. Investors who had thousands tied up in their long-term investment strategies can now bring assets into the DeFi sector to secure low-risk rewards.
Benefits of Ren
There are a lot of benefits that Ren brings to the table. For one, it enables investors to access all the DeFi wealth-generating features without relinquishing ownership of their assets. You can use popular assets like Bitcoin and Zcash on Ethereum and Binance Smart Chain platforms. Etherum is the largest DeFi ecosystem in the world. it hosts thousands of tokens and a multitude of DeFi networks. Each of these platforms provides unique ways to increase your holdings using DeFi tech.
This approach provides more liquidity to the sector. It unlocks locked funds in these assets and helps to drive DeFi ROIs higher. As such, it increases the value of the assets you already hold and the network you join. Notably, with the price of BTC close to $50,000, every coin that enters the DeFi space adds a lot of liquidity to the market. This also enables NFT collectors and other high-value asset holders to free up funds and take advantage of other profitable market opportunities.
Ren provides a more efficient manner to handle cross-chain swaps when compared to earlier methods such as Atomic swaps. The RenVM is capable of transferring assets 100x faster than atomic swaps according to company documentation. Users and developers enjoy more scalability and lower fees when they use Ren over the alternatives.
Advantages over Wrapped Bitcoin
Wrapped Bitcoin (WBTC) is the main competitor of Ren. While both of these platforms provide ways for investors to transfer assets into the DeFi realm, Ren is far more efficient and secure. For example, your asset’s digital information is stored in a decentralized manner. In comparison, protocols such as WrappedBTC require you to trust the network to custodian your private keys to your assets securely.
Additionally, there are no KYC requirements needed to create assets like RenBTC. WrappedBTC requires you to undergo an intrusive KYC protocol that functions as a gatekeeper. Ren falls in line with the overall spirit of DeFi by providing these features in a privacy-centric manner.
Over the Counter Trading
Another area where Ren shines bright is in securing large volume over the counter (OTC) Bitcoin trades. The protocol provides a secure smart contract atmosphere to conduct these actions in a trustless manner. The assets are never released until the payment is fully confirmed. This strategy can help to reduce fraud and theft in the market.
How Does Ren Work
Ren introduces a new virtual machine to allows anyone to move value between blockchains. The RenVM enables the creation of Ethereum-based tokens that represent other cryptocurrencies at a 1:1 ratio. Smart contracts ensure that the original asset remains locked until the Ren token is converted back.
Ren is the main utility token of the network. Ren is a multi-use asset that can be transferred across the globe in a frictionless and peer-to-peer way. Notably, you need to hold Ren tokens to convert assets from one network to the next. There is a small fee that must be paid in Ren for every conversion.
Ren crypto is an Ethereum-based token. As such, you can store it in any ERC-20 compliant wallet such as MetaMask. You can trade this token on any Ethereum-based DEX such as Uniswap. It’s also used to pay rewards and as bond by Darknodes.
The Ren protocol enjoys high scalability and low power consumption thanks to the use of a Proof-of-Stake (PoS) consensus mechanism. PoS networks provide an efficient alternative to earlier Proof-of-Work networks like Bitcoin because they eliminate the use of miners and expensive mining rigs. A PoS network replaces miners with regular token holders.
Instead of purchasing expensive and energy-consuming mining rigs, you simply lock your tokens in a network staking contract. The more tokens you stake, the higher your rewards. Staking provides a more democratic way to validate a decentralized network. It also reduces the overall power needed to keep these networks secure.
The Ren network enables regular users to stake tokens to become Darknodes. These nodes operate as Validators. They are responsible for monitoring and verifying network bandwidth, computational power, and storage capacity. To become a Darknode, you must stake 100,000 Ren.
Darknodes earn rewards for their efforts. Specifically, they get a share of the network transaction fees. Darknodes are incentivized to act in an honest manner. If a node starts to provide malicious information, it can lose its staked tokens and be subject to other penalties such as slashed rewards.
History of Ren
Ren didn’t start off as a DeFi protocol at all. Interestingly, the original purpose of the project was to operate a dark pool exchange. A dark pool exchange gets its name from the fact the order book is private. In these early days, Ren went by the name the Republic Protocol. It was in 2019, that the developers decided to enter the DeFi race.
Ren Interoperability When It’s Needed Most
Ren provides a valuable service to the market. It helps improve the liquidity issues faced by early DEXs and the ROI potential of long-term HODLers. Bitcoin investors continue to search out protocols that enable them to unlock these funds stored in their assets. As such, Ren is wisely positioned in the market moving forward.