Layer-2 scaling solutions for Ethereum like Polygon (MATIC) and Ethereum alternatives like Fantom have become increasingly popular over the last few months, one of the major hurdles to the adoption of these. Protocols has been the relative absence of popular assets like Bitcoin on their smart contract chains.
REN makes it possible to use Bitcoin (BTC), Bitcoin Cash (BCH), Digibyte (DGB), Dogecoin (DOGE), Fileoin (FIL), Terra (LUNA), and even ZCash (ZEC) on other blockchains via its REN Bridge. This makes REN one of the most powerful projects in the cryptocurrency space and it's one that I still believed to be insanely undervalued given its utility.
Rather than locking your BTC with a centralized party like BitGo or Binance to mint wrapped BTC or BTCB, you lock your crypto in smart contract custody by a network of dark nodes to mint RenBTC.
Moreover, REN’s bridging between assets introduces much-needed liquidity to decentralized applications, which significantly increases user experience. I’m going to guess that most of you have got REN’s price open on a new tab already while you read to this post and you’re probably wondering why it’s so far down the rankings. Well, the short answer is that REN’s value is fundamentally dependent on how many wrapped cryptocurrencies it has issued on the smart contract blockchains it currently supports.
Right now, the markets are extremely volatile and this has weak hands dropping their crypto and diamond hands clutching their crypto rather than using it in DeFi protocols.
Make no mistake, however, as soon as the market starts to rebound and DeFi starts to take center stage, REN will be an invaluable part of that.
The REN mainnet launched in May of 2020, making it possible to use Bitcoin, Bitcoin Cash, and Zcash on the Ethereum blockchain. This is thanks to REN’s unique cryptocurrency wrapping protocol called the Ren Virtual Machine or RenVM for short.
This nifty piece of tech except for cryptocurrencies from supported chains, like Bitcoin and automatically mints an equivalent amount of tokens on the desired destination chain. If this destination chain happens to be Ethereum, the minted token would be an ERC20 token called renBTC.
The RenVM is operated by a network of dark nodes which perform the computations required to do this. The kicker is that these dark nodes can’t actually see how much cryptocurrency is being converted, nor where it is being sent because of an advanced privacy algorithm called Shamir’s Secret Sharing.
They also can’t steal the cryptocurrency in the RenVM and you don’t have to give over any personal information for them to provide this service. This is in stark contrast to another popular cryptocurrency wrapping service called wrapped BTC (WBTC), which requires KYC to use and holds your BTC with BitGo a centralized cryptocurrency custodian.
Dark nodes on REN must stake 100,000 REN tokens to process transactions, and earn transaction fees in the currency being converted. This high barrier to entry exists to prevent malicious nodes from joining and corrupting the network. In case you’re wondering, you are able to convert REN tokens like renBTC back into actual BTC using the RenVM.