Brief description of the business evolution of the DeFi project Ren: from dark pools to blockchain interoperability

This article was published on June 17, 2020, on the public account Crypto Valley Live, by author Daniel Krupka, translated by Ling Jie.

Ren was previously known as Republic Protocol and has now evolved into an ecosystem aimed at providing unparalleled privacy and interoperability between blockchains. In short, Ren allows you to transfer cryptocurrencies and other supported assets (such as tokens) between various chains in a decentralized, trustless, and fast manner.

By the end of this article, you will understand the significance of Ren and why its changes over the past year and a half have far exceeded just a name change.

A Brief History of REN

The history of Ren began with its two founders: Taiyang Zhang and Loong Wang. They were classmates at the Australian National University and worked at the same company after graduation.

Soon after, they founded their own software company. Around that time, Zhang was asked by a friend to write a trading algorithm for his cryptocurrency hedge fund. This hedge fund later rebranded as Virgil Capital, with Taiyang Zhang as a co-founder.

While working at Virgil Capital, Zhang noticed the current lack of support for over-the-counter (OTC) cryptocurrency trading. More importantly, investors had no way to purchase large amounts of cryptocurrency without disturbing the market.

This is because all transactions on the blockchain are public (including OTC trades). Automated applications like Whale Alert draw attention to large transactions, leading to price fluctuations.

Whale Alert Bot Push Notifications

Whenever someone transfers a large amount of cryptocurrency from a wallet to an exchange, it is often interpreted as an intention to sell that asset. Conversely, large transactions from exchanges to wallets or wallet-to-wallet transactions can indicate that the investor believes the cryptocurrency is valuable and worth holding (or buying).

OTC trading is almost exclusively for wealthy investors who do not want to cause a market stir when trading. The openness of cryptocurrencies (like Bitcoin) makes it nearly impossible to avoid introducing a centralized third party (OTC).

Republic Protocol

When Taiyang Zhang heard about Ethereum, he believed it would be the best platform to ultimately solve the OTC problem: Republic Protocol.

Given Wang's extensive coding experience in distributed database technology, and even creating his own programming language for blockchain-like technologies, Zhang invited him to join the project. Wang immediately recognized a second problem in the cryptocurrency space: the lack of interoperability between chains.

Old Republic Protocol Logo

In 2017, Zhang and Wang officially established Republic Protocol. It aimed to decentralize and trustlessly facilitate OTC cryptocurrency trading and create a protocol for various blockchains to interact.

They realized that due to the existence of order books, cryptocurrency trading was no longer private, and thus, the mission of Republic Protocol was to enable crypto trading without these exposing indicators. All they needed now was a portion of funding.

REN ICO

In 2018, Republic Protocol launched two rounds of fundraising. The first was a private sale held at the end of January 2018, raising $28 million. The second was a public sale held a few days later in early February, raising $4.8 million.

REN Private and Public Sale

Investors participating in these ICOs were able to purchase REN at a price of just over 5 cents per token. Over 56% of the total supply of 1 billion REN was sold. As you might have guessed, REN is built on the Ethereum blockchain and is an ERC-20 token.

Understanding Ren

If you want to know how Ren works, then you are in for a "brain-burning" journey. The technology behind Ren is quite complex and may be difficult to understand.

This section will explain how Ren functions and how its central platform, RenVM, operates in an easy-to-understand manner. If you need more technical explanations, you can find them directly from Loong Wang's YouTube videos.

How Does Ren Work?

Before diving deep into Ren, we need to briefly explain what a "dark pool" is. A dark pool is an OTC trading market where investors can anonymously purchase large amounts of assets.

These existed previously in traditional markets and even in the cryptocurrency market. However, in both cases, you must trust that the centralized third party providing this service will guarantee your transaction's anonymity and security.

Overview of Ren Technology

Ren utilizes its core platform—RenVM—to achieve decentralized and trustless exchanges of cryptocurrency assets across chains. RenVM employs a network of "dark nodes" to accomplish this, providing the necessary computing power to identify and process cross-chain cryptocurrency orders.

This is done using a complex algorithm called "Shamir Secret Sharing Scheme," which fragments the orders so that dark nodes do not know the amount or destination of the cryptocurrency being traded.

How RenVM Works, VIA Blog

Since RenVM is built on Ethereum, cross-chain transactions are executed on the Ethereum blockchain using ERC-20 token equivalents of the traded assets. Simply put, you are not actually transferring your Bitcoin or Zcash to the Ethereum blockchain.

Instead, the ERC-20 tokens of these other cryptocurrencies are minted and burned according to the amount held or released by the RenVM decentralized platform.

Uses of REN

REN is the token used within the Ren ecosystem and has two functions. The first function is to pay transaction fees for any orders on RenVM. The second function is to pay a deposit to the "Registrar," which is a smart contract managing the dark nodes in the Ren ecosystem.

Ren Dark Nodes

This smart contract ensures the decentralization and stability of the RenVM protocol. If you want to run a Darknode, you must pay a deposit of 100,000 REN to the "Registrar."

Ren Roadmap

Unlike other cryptocurrency projects, Ren has a clear roadmap and has consistently provided development updates on Medium and Github.

Ren Roadmap

In fact, they have been releasing detailed summaries at the end of each month this year, outlining their work. Before delving into their recent updates, let's first look at the achievements Ren made in 2019.

Ren Roadmap 2019

2019 was a paradigm shift for Ren. At the beginning of 2019, they officially changed their name from Republic Protocol to Ren. At the same time, their focus shifted significantly from decentralized dark pools to decentralized interoperability between blockchains. As Wang articulated in a Medium article:

"Our vision for Ren is to provide a private, interoperable liquidity layer for a decentralized world, powered by zero-knowledge proofs (a cryptographic protocol) to enable the free flow of value between blockchains."

The second half of 2019 primarily revolved around the development of the first version of the RenVM mainnet, named SubZero. This was completed through two rigorous testing phases, first with the RenVM Testnet in August, followed by the RenVM Chaosnet in November.

During these two phases, the development team focused on refining the platform by collecting community feedback and even offered rewards to users who discovered bugs (program errors or vulnerabilities) in the RenVM protocol.

Ren Roadmap 2020

In the first quarter of 2020, Ren focused on two things: continuing their development and testing of RenVM, and establishing the Ren Alliance (described as a "coalition of DeFi companies/projects").

At the time of writing, the alliance has over 50 members, including many well-known names such as Kyber Network, Matic, Polychain Capital, and IDEX.

Ren Alliance Members Via Ren

The purpose of the Ren Alliance is threefold: to enhance the utility, security, and development capabilities of RenVM. In other words, the Ren Alliance brings a healthy influx of new users, investors, and developers to the Ren project.

On May 27, Ren officially launched RenVM SubZero. With the mainnet's official release, users can utilize Bitcoin, Bitcoin Cash, or Zcash in any DeFi application.

RenVM Subzero Launch, Image via Ren

This was previously only possible through third-party custodians, which created "wrapped" ERC-20 tokens on the Ethereum blockchain (like WBTC).

In contrast, RenVM SubZero allows you to achieve this in a decentralized and trustless manner—you do not have to hand over your cryptocurrency to any third party. Tokenized cryptocurrencies through RenVM are represented as renBTC, renBCH, renZEC, etc. These tokens can also be transferred to RenVM in exchange for actual cryptocurrencies (BTC, BCH, ZEC, etc.).

Although RenVM is designed for Ethereum DApps, Ren has developed two tools, RenJS and GatewayJS, which allow coders to integrate RenVM into other blockchains like Tezos. They have also created a simple tool to help Ethereum DApp developers integrate RenVM into their applications.

REN Cryptocurrency Wallets

Since REN is an ERC-20 token, it can be stored in any wallet that supports Ethereum. Therefore, there is no shortage of hardware or software wallets that can store Ren tokens.

Digital cryptocurrency wallets that support REN include My Ether Wallet (MEW, desktop), Atomic Wallet (mobile), Trust Wallet (mobile), and Exodus Wallet (mobile and desktop). Hardware cryptocurrency wallets that support REN include Ledger, Trezor, and KeepKey.

Our View on REN

The Achilles' heel of cryptocurrency is the first impression that its various complex platforms and technologies leave on ordinary people. For most, conventional cryptocurrency trading is already hard to accept.

Even transferring between wallets can be a burden for newcomers. Understanding the value of Ren's technology requires some knowledge of crypto trading, but very few people understand it (even within the cryptocurrency space).

We believe that Ren is on the right track by shifting its focus from dark pools to blockchain interoperability. The reason is simple: use cases, as mentioned in the introduction, OTC trading fundamentally serves and is used by extremely wealthy investors.

Image via Ren

While Ren's dark pool is theoretically appealing due to its decentralization and privacy protection, it is questionable whether cryptocurrency traders would abandon trading platforms like Gemini or Coinbase in favor of Ren in practice.

That said, Ren has created a protocol that makes cross-chain trading fast, trustless, and decentralized, making it a highly valuable project.

The development team has been tirelessly ensuring that their protocol operates accurately in a way that minimizes the technical and cognitive burden on users within the system.

In short, they are gradually approaching the ultimate goal of RenVM Mainnet One and have received strong support from participants both within and outside the cryptocurrency space through the Ren Alliance.

Conclusion

While REN's price history may not be particularly outstanding compared to other cryptocurrencies, it is not sufficient to predict its future price trajectory. The price of any asset in the cryptocurrency space will ultimately be determined by the actual utility of that cryptocurrency.

Since Ren's mission is to become an interoperable trading layer for almost all major blockchains in the crypto space, we may not see any significant price movements for Ren until cryptocurrency as a whole experiences mainstream adoption and investment.

In terms of its value, it seems that era is approaching, and it is only a matter of time before Ren's value is recognized beyond the niche circles of current cryptocurrency enthusiasts.