Ren Project Review: Interchain Blockchain Liquidity Protocol

If you are a CoinBureau veteran, you will probably remember our in-depth review of REN from 2018. Since that time, Ren has seen some remarkable developments.

As such, it is time to take another close look at this exciting DeFi project. Formerly known to as the Republic Protocol, Ren has evolved to become an ecosystem which seeks to bring unparalleled privacy and interoperable liquidity between blockchains.

If what you just read seems like a whole lot of mumbo-jumbo, fear not. We are here to break it down for you, bit by bit. In a sentence, Ren makes it possible for you to transfer cryptocurrencies and other supported assets (like tokens) between blockchains in a manner that is decentralized, trustless, and fast.

By the end of this article, you will understand just how important Ren is and why it has changed much more than its name in the last year and a half.

A Brief History of Ren

The history of Ren starts with its two founders: Taiyang Zhang and Loong Wang (pronounced “Lewng”). They were classmates at the Australian National University and worked together at the same start up after they graduated.

Shortly afterwards, they founded their own software company. Around that time, Zhang was asked by a friend to program a trading algorithm for his cryptocurrency hedge fund. This hedge fund became known as Virgil Capital, with Zhang as co-founder.

While working at Virgil Capital, Zhang noticed that there was a lack of support for over the counter (OTC) cryptocurrency trading. More importantly, there was absolutely no way for investors to purchase a large amount of cryptocurrency without disrupting markets.

This is because all transactions are publicly available on the blockchain, including OTC purchases. Automated applications such as Whale Alert draw attention to these large transactions, resulting in price volatility from speculative traders.

Whenever someone moves a large amount of cryptocurrency from a wallet to an exchange, this is often interpreted as an intention to sell that asset. Conversely, a large exchange to wallet or wallet to wallet transaction can signal that this investor believes that cryptocurrency is valuable and worth holding on to (or purchasing).

OTC trading is almost exclusively for wealthy investors looking to buy an asset without making a scene. The openness of cryptocurrency blockchains like Bitcoin makes this impossible without the use of centralized third parties.

The Republic Protocol

When Zhang heard about Ethereum, he decided it would be the best platform to build what would eventually become the solution to the OTC problem: the Republic Protocol.

Given that Wang had extensive experience coding distributed database technologies, even creating his own coding language for blockchain-like technologies, Zhang invited him to work on the project. Wang immediately realized that there was a second issue in the cryptocurrency space: a lack of blockchain interoperability.

In 2017, the Republic Protocol was officially founded by Zhang and Wang. It sought to make OTC cryptocurrency trading decentralized and trustless, and to create a protocol for separate cryptocurrency blockchains to interact.

Recognizing that cryptocurrency trading was no less private on exchanges due to things like order books, the Republic Protocol also made it their mission to make crypto trading possible without these revealing indicators. All they needed now was a little bit of cash.

The REN ICO

In 2018, the Republic Protocol launched two rounds of initial coin offerings (ICOs) for the Republic token (REN). The first was a private ICO which took place in late January of 2018 and raised a handsome 28 million USD. The second ICO, this time public, was held a few days later in early February and raised a modest 4.8 million USD.

Investors who took part in these ICOs were able to buy REN at a price of just over 5 cents USD per token. Slightly more than 56% of REN’s total supply of 1 billion was sold. As you might have guessed, REN is built on the Ethereum blockchain and is an ERC-20 token.

Ren Explained

If you’re wondering how Ren works, you’re in for a wild ride. The technology behind Ren is quite sophisticated and can be hard to wrap your head around.

This section will give you an explanation in laymen’s terms as to what exactly Ren does and how its central platform, RenVM, operates. If you want a more technical explanation, you can get it directly from Loong Wang himself in this YouTube video.

How Does Ren Work?

Before we dive into Ren, we need to briefly explain what a “darkpool” is. Darkpools are OTC markets where investors can anonymously purchase large amounts of an asset.

These exist in both legacy markets and even cryptocurrency markets. However, in both cases you must trust that the centralized party providing this service will in fact keep your transactions anonymous and secure.

Ren allows for the decentralized and trustless exchange of cryptocurrency assets across blockchains using its central platform, the Ren Virtual Machine (RenVM). The RenVM does this using a network of “Darknodes” which provide the necessary computing power to identify and process cross-chain cryptocurrency orders.

This is done using a complicated algorithm called the “Shamir Secret Sharing Scheme” which fragments the orders such that the Darknodes do not know the amount or destination of the crypto being transacted.

Since RenVM is built on Ethereum, cross-chain transactions are executed on the Ethereum blockchain using ERC-20 token equivalents of the asset being transacted. Put simply, you are not actually moving your Bitcoin or Zcash on to Ethereum’s blockchain.

Instead, ERC-20 tokens of these other cryptocurrencies are minted and burned in accordance with how much of it is being held or released by the RenVM decentralized platform.

What is REN used for?

REN is the token used within Ren’s ecosystem and has two functions. The first fuction is to pay the trading fees for any orders made on the RenVM. The second function is to pay bonds to the “Registrar”, a smart contract which manages Darknodes in the Ren ecosystem.

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

The Ren Roadmap

Unlike many other cryptocurrency projects, Ren has a clearly outlined roadmap and has been very consistent in providing development updates on Medium and Github.

In fact, they have been releasing detailed summaries of what they have been up to at the end of every month this year so far. Before we dive into their more recent updates, let’s get up to speed on what Ren accomplished in 2019.

The Ren Roadmap 2019

2019 marked a paradigm shift for Ren. At the beginning of the year, they changed their official name from Republic Protocol to Ren. This was in tandem with a significant pivot in focus from decentralized dark pools to decentralized interoperability for blockchains. As articulated by Wang in a Medium post:

“Our vision for Ren is a private and interoperable liquidity layer for the decentralized world. Powering the free movement of value between blockchains in zero-knowledge.”

The rest of 2019 focused around the development of the first version of the RenVM main net, named SubZero. This was done in two rigorous testing phases starting with the RenVM Testnet in August and followed by the RenVM Chaosnet in November.

At both stages the development team focused on refining the platform by gathering community feedback and even offering rewards to users who found bugs in the RenVM protocols (program errors or exploits).

The Ren Roadmap 2020

In the first quarter of 2020, Ren was fixated on two things: continuing their development and testing of RenVM and establishing the Ren Alliance, described as a “consortium of DeFi companies and/or projects”.

Boasting over 50 members at the time of writing, you can find many recognizable names among its ranks including Kyber Network, Matic, Polychain Capital, and IDEX.

The purpose of the Ren alliance is 3-fold: to increase the utility, security, and development of RenVM. In other words, the Ren Alliance brings a healthy supply of new users, investors, and developers to the Ren project.

For those interested in becoming a part of the Ren Alliance, you can fill out the application form here. Ren has noted there is only one condition for joining: a desire to bring cross-chain assets to DeFi.

Ren officially released RenVM SubZero on May 27^th (while this article was being written). With the official release of the main net, users can use Bitcoin, Bitcoin Cash, or Zcash in any DeFi application.

This was possible before but only with the use of third-party custodians which created “wrapped” ERC-20 tokens of other cryptocurrencies on the Ethereum blockchain such as WBTC.

In contrast, RenVM SubZero allows you to do this in a decentralized and trustless manner – you don’t have to put your crypto in the hands of any third party. Cryptocurrencies that are tokenized through RenVM are denoted as renBTC, renBCH, renZEC, etc. These tokens can also be transferred to the RenVM in exchange for the actual cryptocurrency (BTC, BCH, ZEC, etc.).

Although RenVM is designed on and for Ethereum dApps, Ren has developed 2 tools, RenJS and GatewayJS, which makes it possible for coders to integrate RenVM onto other blockchains such as Tezos. They also created a simple tool to help Ethereum dApp developers incorporate RenVM in their applications.

REN Token

REN has a fairly predictable price history. When it became available for trading in February of 2018, the price dropped from 8 cents USD to 3 cents USD within 3 months before reaching a high of just over 13 cents USD in May of 2018. The price fell all the way down to 1.5 cents USD in the year that followed. This was about 1/4^th of the initial ICO price of ~5.3 cents USD.

The price of REN ballooned in accordance with Bitcoin’s sudden bull run in June-August of 2019, reaching an all-time high of almost 15 cents USD. The last year of price action has seen REN setting lower lows and higher highs – a good sign for many cryptocurrency investors.

REN has had an impressive rally in recent weeks from 3 cents USD to almost 11 cents USD and still appears to be in an uptrend despite a small correction to 9 cents USD.

Ren Exchange Support

Although REN has limited exchange support, you can find it on notable exchanges such as Binance and Huobi with good liquidity.

This is an improvement compared to when we last wrote about Ren, when 88% of the asset’s trading volume was on Binance. Still, the relative lack of exchange support and its relatively low trading volume may leave Ren more susceptible to price volatility.

REN Cryptocurrency Wallets

Since REN is an ERC-20 token, it can be stored on virtually any wallet which supports Ethereum. As such, there is no shortage of software wallets and hardware wallets where you can store your REN tokens.

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

Our Opinion of REN

The Achilles heel of cryptocurrency is the first impression its various platforms and technologies give to the average person. For most, regular cryptocurrency trading interphases are overwhelming enough.

Even transferring currencies to and from wallets can likewise be a burden to newbies. To see the value in Ren’s technology requires a level of understanding about crypto trading which a very small percentage of people have, even within the cryptocurrency space.

We think that Ren made the right move by shifting their focus away from darkpools to blockchain interoperability. This is for one simple reason: use case. As noted in the introduction, OTC trading is fundamentally catered to and used by extremely wealthy investors.

While Ren’s darkpools are attractive in principle due to their decentralization and protection of privacy, in practice it is doubtful whether cryptocurrency traders would favor Ren over trading platforms like Gemini or Coinbase.

That being said, the fact that Ren has created a protocol which makes cross-chain transactions fast, trustless, and decentralized makes it a seriously valuable project.

The development team has been tireless in making sure their protocol works exactly as it should in a way which minimizes both the technological and cognitive burden of users within its system.

In short, they are gradually moving closer to that final goal of RenVM Mainnet One with incredible support from major players both inside and outside of the cryptocurrency space vis a vis the Ren Alliance.

Conclusion

While REN’s price history may not be too remarkable compared to other cryptos, it is also not sufficient enough to forecast its future price action. The price of any asset within the cryptocurrency space will ultimately be determined by what that cryptocurrency actually does.

Since Ren’s mission is to become that interoperable transaction layer to virtually every major blockchain in crypto, we will probably not see any remarkable price action from REN until cryptocurrency as a whole experiences some serious mainstream adoption and investment.

For what it’s worth, it seems like that era is just around the corner and it is only a matter of time before the value of Ren becomes recognized outside of what is currently a niche circle of die-hard cryptocurrency enthusiasts. We will certainly be watching, and you should too by checking out our YouTube Channel!