Unot one of the projects that has caused the most stir in the world DeFi de Bitcoin es Ren Protocol, and all this thanks to the launch of its token RenBTC and the heart of all its operation, the RenVM virtual machine.
ButWhat is exactly RenVM? And is RenVM really a secure and decentralized build? Well, this and many more details you will know below.
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RenVM, a VM to bring Bitcoin to the DeFi ecosystem
RenVM is a virtual machine that serves as the basis for the operation of the so-called Ren Protocol. This is a protocol that aims to create interoperability mechanisms blockchain between various cryptocurrencies and the ecosystem DeFi on Ethereum. All this while guaranteeing the following principles:
- Speed in your operations
To achieve this, RenVM is built on a framework of smart contracts about Ethereum who interact with the so-called dark nodes. These Darknodes are no longer decentralized nodes that are in charge of making interoperability possible blockchain enjoying the aforementioned principles. To achieve this, the Darknodes make use of a series of powerful cryptographic technologies such as Sharing Secrets Shamir (Shamir's Secret Sharing or SSS), secure multi-party computing (sMPC) systems and the high-speed consensus algorithm, Hyperdrive. We are talking about a set of tools designed to offer a work environment that meets the objectives set by the developers of Ren Protocol.
Origin of RenVM
Now, developing RenVM is definitely not something that can be done overnight. RenVM's journey to development began on November 24, 2017, when the Ren company whose founders are established in Singapore Tai Yang Zhang y Loong wang. By February 2, Ren began what would be the ICO For its financing, an ICO that would last only 24 hours, and in which a total of 34 million USD was raised.
From that moment, the Ren development team began their hard work to create the entire RenVM framework. A job that ended successfully on May 27, 2020 with the official launch of its mainnet. With this they demonstrated the potential of a technology capable of joining various blockchains easily and quickly with the Ethereum DeFi ecosystem.
How does RenVM work?
Broadly speaking, the operation of RenVM does not differ from systems such as wBTC, where the user enters his bitcoin and in return he is offered a ERC-20 token which has the same value as your locked BTC. That is, if you block 1 BTC, the wBTC protocol will return 1 wBTC, which has the same value and will allow you to enter the Ethereum DeFi ecosystem as it is a token. ERC-20.
However, this similarity ends there, because the way RenVM achieves this is completely different, and we will begin to detail it below.
Darknodes, the RenVM execution nodes
First of all, the blocking of RenVM funds is up to the Darknodes. These Darknodes are a set of nodes that are part of the huge network that makes RenVM work. In this way, these nodes form a peer network (P2P) that allow the execution of smart contracts and they also offer computational power and storage for the different RenVM actions.
The creation of Darknodes allows the creation of a decentralized processing infrastructure that facilitates the interaction of other blockchains with the Ethereum blockchain. In short, Darknodes are responsible for executing everything necessary for the cross-chain activity that RenVM performs.
Given the important role of the Darknodes, they have a series of protections. In the first place, its start-up requires carrying out a staking important of more than 100 thousand Ren token. Additionally, the complete supply of Ren tokens is limited to one billion REN tokens, so the maximum possible Darknodes is 10 nodes. This protection is intended to prevent someone from taking control of the Darknodes network and tampering with it.
However, the main function of the Darknodes has to do precisely with their role in the decentralized custody of funds in cross-chains operations. Let's think about it a bit, in a system like wBTC, the custody of the blocked BTC is in the hands of a centralized custodian (BitGo in this case). This can be considered a single point of failure, as a theft at BitGo would put our money at risk.
To deal with this problem in a decentralized way, RenVM uses the Darknodes to perform said custody. This is made possible by the Secure Multi-Party Computing (sMPC) system and the Shamir's Secret Sharing scheme that the system uses. The sMPC system allows you to create and run scripts that are completely private within the system. That is, no one outside the creator of the script or transaction can see the information executed by the Darknode and the RenVM. This makes it possible, for example, to maintain custody of Bitcoin and other cryptocurrencies on their respective chains, while the system relates those coins to an equivalent number of ERC-20 tokens within Ethereum, a relationship that can be easily undone by applying the reverse process.
Of course this creates a problem How are the private keys of the system controlled for the chain custody of the cryptocurrencies contributed by the user? At this point, Shamir's Secret Sharing gives us the answer by dividing this access among several participants. Thus, RenVM smart contracts are capable of maintaining custody of the tokens in their respective blockchain, dividing that access between the Darknodes and the user who has entered those tokens into the system. And since all this information is encrypted by the sMPC it is practically impossible to breach the system to steal funds from it.
This operating scheme:
- Allows the user to store their cryptocurrencies in an on-chain address of their own cryptocurrency. That is, your cryptocurrencies NEVER pass into the hands of a third party, they are only locked in one address of that blockchain, whose private keys are divided between the RenVM and the user.
- As cryptocurrencies never leave the blockchain, operations are usually very fast, and have the native security of that same cryptocurrency. This means that these transactions can be taken as valid even being in the mempool or with a single confirmation from the blockchain network.
- Given the importance of private keys to handle these blocked cryptocurrencies, it is divided using Shamir's Secret Sharing, with which access control is divided between the Darknodes network and the user. The activation of access to these tokens is limited to very well limited scenarios, which improves the security of the system.
- As a final line of security, the smart contracts or scripts executed by the Darknodes and RenVM are protected by a secure multi-party computing (sMPC) scheme. In this way, nodes can run the script but cannot reveal sensitive information about it.
zkSNARKS, the secret of RenVM's multi-party computing algorithm
Now, we know that Ren has always aimed to have a highly secure and private system, and with that goal in mind, they have chosen to use the well-known tests ZK-snarks for your Secure Multi-Party Computing (sMPC) system.
The choice of zk-SNARKS responds to having a highly tested, secure and privacy-focused algorithm. In this way, Ren's sMPC system, called zk-COMPUTE, which is in charge of protecting our operations in the Darknodes network, can guarantee that no one will be able to see the information of our operations, providing security to them.
On the other hand, zk-COMPUTE complies with another important condition, which is that it is a simple cryptographic function, highly tolerant to errors, and which, together with the Hyperdrive consensus protocol, guarantees high scalability in the network.
Hyperdrive, a high-speed consensus protocol
On the other hand, due to the multi-interaction nature of RenVM, the network formed by the Darknodes must have a fast, secure, and error-proof consensus protocol. The Ren development team's choice in that sense is to take the Tendermint protocol and adjust it to their needs, thereby creating the Hyperdrive protocol.
Hyperdrive is a Byzantine fault tolerant consensus protocol that allows large networks to interact safely. Being based on Tendermint, this protocol works based on the principles of a high speed and low latency gossip protocol, which provides enormous scalability to your network, which is ideal for creating cross-chain interaction networks as is the case. by RenVM.
Hyperdrive assumes the existence of a peer-to-peer network that can transmit messages to all peers and a storage device that can keep data on disk, but does not specify how these functionalities are implemented.