Many times we look at the projects, their advantages and the products they offer us, but we don’t look at how they work or the components that make it possible. This is the example of Ren Protocol and its RenVM, a virtual machine running on the second layer Ren protocol which in turn is developed on the Ethereum network.
Most of us know or have heard about Ren Protocol, however, we do not know what it is or how its virtual machine works. This machine aims to allow the development of tokens anchored and controlled by a structure that is completely decentralized.
The development of such a powerful machine cost time and dedication. The creation of this great tool has its origins in November 24, 2017. On that day, Ren’s Singapore-based company was established. It wasn’t until February 2 of the following year that the ICO was held to start with the funding of the Ren project. The said ICO lasted 24 hours and managed to raise no less than $34 million.
The company’s co-founders are Taiyang Zhang and Loong Wang. After the first ICO, they and their development team started the hard process of creating the whole structure of the virtual machine. This development was officially and successfully completed on May 27, 2020 with the launch of the mainnet. After the launch of the project’s mainnet, they demonstrated the potential of their technology by linking blockchain technologies quickly and easily, using Ethereum’s decentralized finance ecosystem.
This virtual machine represents the basis of the entire Ren Protocol project. This project aims to develop various blockchain interoperability mechanisms between the Ethereum network and other cryptocurrencies.
One of the objectives of this machine is to guarantee certain principles such as system decentralization, security, speed of operations and privacy of users and transactions.
A few months ago RenVM was also activated in Avalanche, allowing users to record and mint assets in the Avalanche network. The integration establishes a direct deposit and withdrawal function to/from the network at reduced gas rates.
To achieve its main objectives, RenVM works on a structure of smart contracts developed on the Ethereum network. These contracts constantly interact with what we know as Darknodes. Darknodes are decentralized nodes that enable interoperability between blockchains ensuring security, decentralization, privacy and speed of transactions.
Darknodes that interact with smart contracts employ cryptographic technologies known for their high power and in turn form a set of tools with the goal of achieving an environment that meets the expectations of Ren Protocol developers. Some of these tools are Shamir’s Secret Sharing (SSS), the Hyperdrive consensus algorithm (known for its high speed) and sMPC (Secure Computing Systems).
The operation of RenVM is not very different from other classic projects where we enter a cryptocurrency and in exchange we receive an ERC-20 token that has the same value of the blocked coin. For example, if we enter 1 BTC, in the case of the wBTC project, we will get back 1 wBTC, which is equivalent to the same value and with it we will be able to access the Ethereum ecosystem, since it is an ERC-20 token.
The way in which Ren’s virtual machine achieves this transaction is somewhat different from the classic way we all know. To do so, it uses three key tools that we will see in detail below.
Darknodes are a set of nodes which together form an indispensable part of the network that makes RenVM work. These nodes are in charge of blocking funds. Together they form a large peer-to-peer or P2P network that enables the execution of smart contracts, as well as offering great computational and storage power.
Thanks to these nodes there is the decentralized processing infrastructure that facilitates the interaction of the Ethereum blockchain with other blockchains. In other words, they are responsible for carrying out all cross-chain activity of the virtual machine.
If you are thinking of forming a Darknode, you should know that, being such an important tool, it has certain protections. One of them is that for its creation it is necessary to keep in staking more than 100 thousand REN tokens. To get an idea of how important this investment is, we should know that the REN token has a limited supply of one billion tokens, which means that only a maximum of 10 Darknodes can exist. This measure was created to prevent anyone from taking control of the Darknode network and manipulating it for their own benefit.
Ren’s highly secure and private system is due to zkSNARKS testing, RenVM’s multiparty computation algorithm. The choice of zkSNARKS is due to obtaining a highly tested, secure, and privacy-centric algorithm for the network. With such an algorithm, the project’s sMPC system can guarantee users that no one will see the information contained in the transactions.
This sMPC system is called zk-COMPUTE and is responsible for protecting user operations on the Darknodes network. In addition, zk-COMPUTE fulfills another fundamental function and that is to be a simple and highly fault and error tolerant cryptographic function. This system, together with the Hyperdrive consensus, guarantees the high scalability of the network.
The Darknode network needs a fast, secure and error-proof consensus protocol due to the multi-interaction nature of RenVM. To this end, the Ren development team transformed the Tendermint protocol and adapted it to their needs, resulting in the new protocol called Hyperdrive.
This is a Byzantine fault-tolerant protocol that allows large networks to be securely integrated and, being based on Tendermint, it is based on the principles of the high-speed, low-latency gossip protocol. It therefore provides great scalability in the network. In addition, it has a storage device that preserves data on the hard disk.
All these elements allow the correct operation of Ren’s virtual machine, providing it with features that many projects do not have.