RenVM

Bridge

The RenVM (Ren Virtual Machine) is the software that enables the Ren protocol to move assets across blockchains. It acts as a trustless custodian that creates tokenized assets at a 1:1 ratio to provide liquidity across DeFi.

Risk Rating
Watch Out
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
RenVM provides an optimal user experience: users can interact with multiple assets, applications, and chains with only one transaction.
What we like less
The system is heavily reliant on third-party support from partner projects for long term success and broad adoption.
What it means for you
RenVM enables universal interoperability between blockchains: you can use RenVM to send any asset to any application on any chain in any quantity.
Information
Exploit/Hacks
None
Info
Key Metrics
  • TVL: $30.2M (Rank #110)
  • TVL Ranking by Bridge: #5
  • Blockchain: Ethereum, Solana, Binance, Avalanche, Fantom, Polygon, Arbitrum, Optimism, Kava
  • Chain TVL
    • Ethereum: $25.84M
    • Solana: $1.71M
    • Binance: $768.16K
    • Avalanche: $679.85K
    • Fantom: $482.71K
    • Others: $700.76K
Risk Assessment
Watch Out
Protocol Code Quality
Protocol Maturity
  • Core protocol launched in 2019; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Top 5% by total value locked reduces risk
  • Core contracts are fully immutable
  • Timelock is at least 48hrs, which provides users with sufficient time to exit if any malicious upgrades are approved
  • At least one critical governance issue documented
  • Low voting power concentration reduces risk
Protocol Design
  • No death spiral concerns
  • Externally verified bridge system that is reliant on an external set of validators who have to post collateral that gets slashed in case of malicious activities; the slashed collateral is used to reimburse user funds if stolen due to malicious actions
  • Bridge messages are validated by an external third-party that usually comprises a limited multisig
  • RenVM locks assets on the native chain (like Bitcoin) to mint token receipts on a target chain. This increases liquidity on the target chain and the new token is always redeemable 1:1 for the original asset. RenVM keeps a record of how many assets are locked and minted to mantain transparency
Things to know about RenVM

How RenVM works

RenVM can be thought of as a trustless custodian that moves your assets from blockchain to blockchain. You deposit a native asset like BTC into RenVM smart contracts and receive a synthetic representation in exchange, renBTC, at a 1:1 ratio to always ensure full collateral backing. It operates similar to WBTC in that RenVM takes deposits, stores it, and then mints 1:1 synthetic asset on the destination chain. The difference is that RenVM stores the BTC in a decentralized network of nodes (Darknodes) rather than a centralized custodial setup. The system is powered by thousands of independently operated machines, or Darknodes, which require bonds of 100K REN tokens to function. The bond of every Darknode incentivizes good behaviour and can be slashed if the Darknode behaves maliciously or if it is responsible for the loss of assets (and the slashed bonds can then be used to restore the lost assets). The minting and redeeming of renBTC is permissionless and can be done at anytime and for any amount. RenVM generates and signs data with its private keys using a secure multi-party computation (MPC) algorithm. No party can prevent users from minting renBTC with their BTC, burning their renBTC to get back BTC, or using their renBTC in any way they want to.

How RenVM makes money

Darknodes are incentivized to power RenVM to earn protocol fees. Darknodes are rewarded with fees that are paid by the user in return for their work. If the user transfers BTC from one chain to another, the Darknodes earn a small adjustable percentage of that transfer. Fees are algorithmically adjusted in response to demand. Since REN is only used for bonding, RenVM can use a discounted cash flow model to adjust fees such that the total value of REN bonded by Darknodes is always greater than the total value of assets locked in RenVM. This means that if assets are ever stolen, RenVM can slash the bonds of the responsible Darknodes and use the bonds to restore the one-to-one peg by buying-back-and-burning the same amount of pegged assets. Even if the bonded value temporarily drops below the locked value, RenVM can adjust fees to bring the values back into alignment.

How you make money on RenVM

You can operate a Darknode to earn a percentage of fees for every cross-chain transfer of synthetic assets using RenVM. However, you need to bond at least 100K REN tokens to operate a Darknode. There is no delegation option available currently for those with less REN.