Aave recently added Ren as a supported asset and in a few days it became one of their most popular assets. As of now there is over $5 million worth of Ren already deposited. There seems to be a lot of demand for Ren and Compound may benefit from its addition to the protocol.
What is RenVM?
RenVM serves as the engine that powers our decentralized interoperability solution.
RenVM provides one of the only practical interoperability solutions that can scale. It is also the only solution that allows for secret computation over multiple inputs and multiple parties. RenVM is not a product or an application in and of itself, it is a network (and an accompanying SDK) that allows developers to bring cross-chain functionality to their DeFi applications.
What are Darknodes?
RenVM is powered by a network of machines called Darknodes, earning rewards for contributing compute power and storage space.
RenVM is network powered by decentralized virtual machines. This virtual machine is replicated over thousands of machines that work together to power it, contributing their network bandwidth, their computational power, and their storage capacity. These machines are known as Darknodes.
What problem does RenVM solve?
RenVM enables the trustless and decentralized exchange of value between blockchains - bringing interoperability to DeFi.
This directly enhances DeFiās utility by adding more liquid assets to the Ethereum ecosystem. Regardless of the DeFi app, RenVM can provide a native cross-chain user experience allowing seamless and decentralized interoperability for the first time ever.
What can be built with RenVM?
RenVM serves as an plug-in for decentralized finance and therefore, any DeFi application can incorporate RenVMās capabilities into their applications and existing smart contracts.
If your project would benefit from cross-chain liquidity, then you stand to benefit from integrating with RenVM. Extra care has been taken to ensure RenVM is composable with existing blockchain and DeFi applications.
Very much in favor of this. While WBTC is scary as it requires full trust on centralized parties, renBTC is trustless, so a collateral factor of 75% in line with ETH would be very reasonable. That would make it very worthwhile to bring BTC to Compound to borrow a stablecoin while HODLing BTC. But I guess it needs to be listed on Coinbase first for the pricefeed.
Well, in that case, renBTC seems less likely to lose itās peg than WBTC. So if using the BTC price should be good enough then.
I just realized this post was about $REN not $renBTC. I think adding renBTC is more in line with the goal of Compound. For me a major use case for Compound is to take a dormant asset and loan against it. The largest asset in crypto is BTC, so being able to borrow against that is in my mind the primary use-case of Compound.
Letās look at some of the criteria for adding an asset:
Accurate price feed
Since we are happy to use BTC for WBTC, this should be ok since renBTC is secured by over 1000 nodes and REN collateral and WBTC is held by a centralized party we have to trust.
Sufficient liquidity
renBTC has limited liquidity on DEXs, however, thereās unlimited liquidity on the renBridge because anyone can mint renBTC from BTC or release BTC from renBTC without any registration or KYC. So in the case where the price of BTC drops and it leads to large liquidations, liquidators will have no problem receiving renBTC as they can convert that into BTC quite easily.
General token security
The security doesnāt rely on any central party or any oracle. The biggest security threat would be a major bug in the RenVM blockchain software, which is currently being audited. I would recommend that we wait until the audit is published, which should be soon.
So as someone who hasnāt been gifted 100.000+ tokens, what can I do to further this proposal? As a developer, Iām happy to prepare the code changes needed, etc.
My motive for this is of course selfish. I have some bitcoin sitting around and I would like to put it to work. I donāt trust a single party like WBTC, but I do trust renBTC. Once I can supply renBTC to Compound, I can borrow stablecoin against it and put that to work to earn interest (as well as farm some COMP). Also hodling some REN.