Ren Protocol is building something Special. Digibyte (DGB) coin’s renDGB is one of themJuly 31, 2020
Attention!!! This article includes the opinion of the writer
The Digibyte community became excited when Loong (@bzlwang), CTO of Ren Protocol made an interesting statement that Ren will be able to demonstrate the ability to wrap coins like DGB to Ethereum based renDGB. The official twitter account of Digibyte coin expressed its excitement about the development:
“We are very excited about the development with #RenVM @renprotocol The ability to wrap $DGB to $renDGB will provide us interoperability with #Ethereum’s #ERC20 network and DeFi protocols… More information and explanation soon to come.”
Interoperability of Blockchains- now a focus for Developers
Personally, I feel it is great news that reveals the ability and innovative creation of Ren protocol. Remember how the major weakness of blockchain technology has been interoperability. Blockchains could not interact effectively with each other before- this downplayed the effectiveness of tools like atomic swaps to date, many people seem to have forgotten what it is. Ren Protocol has really reinvented the interoperability of blockchain and it is quite interesting when I began reading about it.
Coins can be wrapped on another blockchain by sending the coins to a centralized custodian which in turn sends the wrapped coins to the user. The risk behind this is that users who are willing to have their coins on another blockchain need to trust the third-party custodian who now holds their coins- sure you know what ‘trust’ sounds like on a ‘trustless’ blockchain.
But for Ren protocol, the private keys of the wallets that hold the coins in their custody is operated by a set of Darknode operators. Darknodes can be seen as nodes in a proof of stake consensus model. They stake some REN tokens and earn rewards from fees they charge users who want their coins wrapped.
Thinking cap: Cool! can we say that the staked RENs are like collaterals, an assurance that the nodes will not act maliciously?
Essentially, Ren operates like a trustless blockchain and this opens up a wide range of applications for wrapped coins. Wrapped coins are on Ethereum blockchain, so we have renBTC for Bitcoins on Ethereum blockchain.
Wrapped coins can be used easily by DeFi applications. Eventually, we will have renDGB and then, you will be able to do some yield farming with Digibyte coins on the amazing pool of Defis on Ethereum blockchain- impressive right? The gist is that most popular Defis are on Ethereum blockchain, this is an opportunity for other blockchains to experience what Defis has to offer.
There are a wide variety of Decentralized exchanges- DEXes on Ethereum blockchain (one can say it has the largest number of DEXes). Ethereum DEX can only operate with Ethereum-based tokens. With Ren Protocol, we can begin to see coins from other blockchains appear on IDEX, EtherDelta, ForkDelta, etc.
I can’t wait to see renDGB on Ethereum Decentralized exchanges.
Other Smart Contract based D’apps
Blockchains and even ones that don’t have support for smart contracts can now have their coins used in one. This can be useful for smart contract-based applications. For example, using renDGB, renBTC, etc. to buy NFTs like a piece of crypto art or Lands on Decentraland.
The transaction fee on Ethereum blockchain is off the roof these days, so is the fate of any token on the same blockchain. DGB coins when transacted on Digibyte blockchain, for example, have super low fees charged on them. Having to transact a wrapped renDGB will now incur a much higher fee. But this must be a sacrifice to experience the opportunities Ren protocol has opened up with a decentralized wrapping.
Similar to transaction fees, blockchains that complete transactions in a few seconds have to sacrifice that for a much slower blockchain like Ethereum to enjoy the advantages.
Thoughts, Suggestions, and Considerations
I would have advised that Ren Protocol considers another blockchain that operates virtual machines just like that of EVM which are faster than Ethereum, so that wrapped tokens can be on those blockchains. On another thought, the suggestion above would defeat the purpose of having wrapped coins on DeFis which are currently largely domiciled on Ethereum blockchain. Or better still, RenVM should have support for multiple blockchains- I think that should be better.
DeFis should also begin to consider the use of other faster blockchains with lower fees for their operations else if they are waiting to migrate to eth2 at a date which no one knows.
Ren Protocol is building something special and its applications are only just unraveling.