When it comes to decentralized finance (DeFi), one of the crypto assets and protocols that is often mentioned is REN, Or better RenVM, which allows interoperability between different blockchains.
What is RenVM?
RenVM is a BFT (Byzantine Fault Tolerance) network that facilitates interoperability between blockchains and uses the consensus protocol based on MPC algorithms (multiparty computation). This results in a decentralized, unlicensed, and trustless custodian who can lock assets directly into the chain and wedge them one by one, giving the user the ability to perform a single operation seamlessly.
What is RenVM used for?
One aspect of decentralized finance is to be able to block a token to benefit from it. The various loan platforms offer a fairly high and more convenient interest rate than they could have in a traditional system.
Not only that: if a user points to a deposit fund, they can still take advantage of their cryptocurrency and earn interest.
One of the assets that is considered a store of value is definitely Bitcoin (BTC) and therefore people tend to accumulate it for a future price rise to liquidate it, however, as is known, due to its safety negotiated inflexibility, does not allow to build particularly efficient tools and smart contracts and therefore using it becomes a problem in some way.
Well, as a solution to this problem, protocols were created that allow bitcoin to be managed in other blockchains, starting from Ethereum (ETH), which has currently become the main solution for transfer BTC faster than the original.
In this way we have:
- A smart contract that manages a bitcoin address to send funds;
- A party that controls the transaction and creates or burns a token linked to it, whose function is to emulate the supply of bitcoin;
- A platform that allows you to manage these new tokens and use them in dedicated protocols.
How does RenVM work?
Each respectful protocol in this type of application has its own operating system to decide how to achieve the various points mentioned above. To give an example, wBTC It uses a consortium system that has the disadvantage of being too centralized and insufficiently fast to enter and exit the protocol.
RenVM uses a system of thousands of independent machinescalls Darknodes, and in order to start such a machine it is necessary to block at least 100,000 REN tokens.
Taking into account that at this moment 1 REN is worth around $ 0.16, this system allows to deter malicious or inefficient players, who in this way could be punished directly through Slashing, that is, withdrawing part of these funds placed as "collateral "
Another level of security that has been implemented is that of fragments, that is, a grouping (at least 100) that is carried out periodically (every day) and at random from these dark nodes. Each snippet uses the RZL MPC algorithm that generates an ECDSA private key that nobody knows about and is used to move the funds, but only with the consent of more than 1/3 of the darknodes.
Obviously, like any protocol of this type, it requires a fee system to encourage darknodes to maintain the network, fees that users pay when they make the transaction.
How to use RenVM?
Now that we understand how it works, we can learn how to use it. To do this, we first have to go to the direction from the bridge, which allows not only to bring BTC in Ethereum but also ZEC and BCH, then connect our Ethereum wallet and choose the type of asset, in this case BTC:
By clicking "Next", you can see both the amount we will have and the fees, and confirm the transaction. The address of the asset we have chosen will appear, which is where the funds will be sent. A similar procedure should be followed when withdrawing funds. Select "Release", select the type of asset and enter the destination address, which can be ours or a different one, very convenient if we have to transfer BTC quickly.
Finally, we can see that this protocol can boast of fair use and the total of locked assets it is indicated as follows:
For a total of just over $ 8 million , shows that this protocol is widely used compared to the most famous ones like wBTC.