RenVM, is one of the creations of Ren Protocol, this is a virtual machine that runs on a second layer protocol built on Ethereum and, whose purpose is to allow the creation of anchored tokens controlled by a completely decentralized infrastructure. 

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.

But what exactly is 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 blockchain interoperability mechanisms between various cryptocurrencies and the DeFi ecosystem on Ethereum. All this while guaranteeing the following principles:

  1. Decentralization
  2. Security
  3. Privacy
  4. Speed ​​in your operations

To achieve this, RenVM is built on a framework of smart contracts about us Ethereum who interact with the so-called Darknodes. 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 Shamir's Secret Sharing (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 Taiyang 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 then on, Ren's 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 in a simple and fast way with the DeFi ecosystem of Ethereum.

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 is offered a ERC-20 token which has the same value as your blocked 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 DeFi ecosystem of Ethereum as it is an ERC-20 token.

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 also offer computational power and storage for the different actions of RenVM.

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 a significant staking of more than 100 Ren tokens. Additionally, the complete supply of Ren tokens is limited to one billion REN tokens, so the maximum possible Darknodes is 10 thousand nodes. This protection is intended to prevent someone from taking control of the Darknodes network and manipulating 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 such custody. This is possible thanks to the secure multi-party computing (sMPC) system and the Shamir's Secret Sharing scheme used by the system. 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 in their respective chains, while the system relates these currencies to an equivalent amount of ERC-20 tokens within Ethereum, a relationship that can be undone without problems 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:

  1. It allows the user to store their cryptocurrencies in an on-chain address of their own cryptocurrency. That is, their cryptocurrencies NEVER pass into the hands of a third party, they are only blocked in one address of that blockchain, whose private keys are divided between the RenVM and the user.
  2. 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.
  3. 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.
  4. 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.

How much do you know, cryptonuta?

Can RenVM really create tethered tokens with decentralized operation?

TRUE!

The reason for the existence of RenVM is precisely to allow the creation of anchored tokens (such as RenBTC) whose operation and custody are decentralized. This is contrary to what happens with wBTC, where control and custody rests with BitGo, Kyber and other related companies. To achieve decentralization, RenVM uses zero knowledge protocols (ZKP), multi-party computing (MPC) and other techniques that guarantee the complete automation of the custody and control processes of the currencies that are represented within its systems.

Pros and Cons of RenVM

Now that we know the most vital parts of RenVM and its role within the system, it is time to recognize the pros and cons of this protocol.

Pros

First of all, RenVM is effectively a very decentralized solution for cross-chain interaction between Ethereum and other supported networks, such as Bitcoin, Bitcoin Cash or ZCash. This first point allows us to create ERC-20 tokens that represent 1: 1 each of the cryptocurrencies already mentioned. This seeks to offer the possibility to its holders to participate in the DeFi world of Ethereum.

Another strong point of this system is its privacy and high level of security. Using zk-SNARKS, Shamir's Secret Sharing and sMPC tests tells us that the RenVM development team has made security and privacy a core part of the protocol. Not only that, RenVM is even capable of running completely anonymous cryptocurrency DEXs, the so-called Dark Pools. A sample that the project meets this point in its entirety.

In addition, the use of protocols such as Tendermint, the limitation in the number of nodes, the extensibility of the protocol allow us to predict a growth and development of this system in the years to come. All this ensures that the system will be able to cope with a greater number of cryptocurrency users, without them posing any danger to the infrastructure or scalability problems associated with their speed of processing operations.

Its ability to integrate with DApps is very powerful as it has libraries designed for this purpose. This means that its extensibility and native integration with other DApps enhances its usability capabilities and provides users with direct interaction with this RenVM.

Cons

One of the problems that RenVM does not solve is related to the weakness of smart contracts in Ethereum. RenVM represents the different tokens supported on its platform as ERC-20 tokens. Once this is done, bridges are created that allow the interaction between RenVM and these tokens so that users can generate, use and burn them as required. The fact of needing Ethereum smarts contracts to do this opens a point of failure, since any failure or error in these smart contracts could lead to the theft or loss of tokens from their users. Of course, this has not happened to date, but it is a point of constant review and one that must be taken into account.

On the other hand, RenVM has a fairly limited scope of interoperability at the moment. The cryptocurrencies currently supported by the platform are BTC, BCH and ZEC. For now, the team promises to expand these functionalities in successive protocol updates.

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