Wake’s Vision — A Ren Community Blog Series
**Disclaimer: This is purely a community effort with no affiliation to the Ren/Alameda Team and should by no means be taken as financial or legal advice.**
In this article, I share the history of the protocol, my opinion on the current state, and potential future of Ren protocol. My analysis is geared toward beginners who have never heard of Ren, but also crypto enthusiasts who want to read what is the current state of Ren Protocol.
What is Ren Protocol and why should you care?
I will start with a short history of Ren. The protocol was initially named “Republic Protocol” and was designed to be a decentralized exchange with support for assets on multiple blockchains (in the first version, Ethereum and Bitcoin).
The vision was revolutionary at the time and required cutting edge solutions for problems tackled by the protocol. First, the protocol needed to handle private keys in a decentralized and secure way to interact with these blockchains. For example, think of a platform like Coinbase and Binance and how you can buy and hold crypto on these platforms, but they handle your addresses and private keys for you. This requires you to trust them in keeping your assets secure. The infrastructure of Republic Protocol allowed for holding of assets without having to trust a third party, by using zero-knowledge and secure multiparty computation magic.
As the crypto market evolved and different needs emerged, the team pivoted and created what is now Ren Protocol. It leverages the same technology to build cross-chain bridges which allow users to securely bring assets from one blockchain to another. With the latest version RB3, it now supports multiple ERC20 and native assets, as well as over seven destination chains.
Why should you care?
Is Ren just another bridge to bring assets from one blockchain to another? How is it different from Wormhole, Multichain, or Binance bridge?
Well, for now it offers more or less the similar functionalities as these other bridges with some key differentiators. You could argue that Ren is superior because it is more secure (in fact, it has a proven track record of zero hacks and exploits). Ren also offers better services for other platforms (Their ren.js framework allows seamless integration of cross-chain assets in any dApp).
The roots of Ren had ambitious goals, and is currently maturing towards that greater destiny. The underlying architecture of the protocol was developed to support a multitude of features. Misjudging this powerhouse for a simple cross-chain bridge doesn’t fully capture the realm of possibilities for Ren.
Quo Vadis?
The Ren team has a track record of being discreet about their development status, as well as their overall goals. This approach has made some in the community quite unhappy, which is understandable. But recently a lot of new information came to light through RFCs and community AMAs, that I want to quickly summarize to paint a picture of what I think the future of Ren could look like (keep in mind, that all of this is subject to change, as more information is released by the core team of developers).
Ren Layer 1
Each of the following points are based on this development: Ren will finally utilize its full power to provide dApp developers the possibility to build their applications directly on Ren. However, it is not going to be like any other Layer 1 blockchain like Ethereum or Solana.
Creating a new blockchain ecosystem, usually carries a foundational problem: You don’t have anyone building applications, and you have no assets running in your ecosystem. But since Ren is connected to other existing blockchains, it can utilize those existing assets for all kinds of applications (such as decentralized exchanges, lending, yield farming, etc….).
Additionally, RenLabs was founded and is responsible for not only driving the development of the protocol but also to research and develop new applications that run on top of the new Ren Layer 1.
This brings us to the second point:
Catalog Finance
Catalog Finance is the first application that will run on REN’s new infrastructure. It has elements to what the original Republic Protocol envisioned.
So far, we know it will be a decentralized exchange (such as Uniswap, Pancakeswap, …), that behaves like a centralized one (such as Binance, Coinbase, etc…) but without the trust issues.
So, you can easily buy, sell and exchange crypto from multiple blockchains from a single account. Additionally, you can send crypto to other Catalog users without having to know their address on each chain, you can simply use their Catalog username. Of course, you can still send and receive crypto from users that are not on Catalog yet by using their addresses, similar to how you would deposit and withdraw crypto from centralized exchanges.
There is also an even better part: You can earn crypto by just holding it in your Catalog account. Holding crypto in a centralized exchange does not provide you with any benefits unless you actively stake or provide liquidity (which some exchanges don’t even allow). But with Catalog, you automatically provide your held tokens towards the liquidity of the exchange and earn a rewards from trades, just by doing nothing. Holding tokens on Catalog is not the only way to earn additional crypto using Ren, which brings us to the next point:
Running REN Nodes
Right now, it is fairly simple to run your own Ren node. Provided you have the required 100k REN and a bit of knowledge on running cloud services. There are simple guides for hosting nodes on AWS, Digital Ocean, and Google Cloud. With a bit more technical knowledge you can run it on any server.
Unlike almost any other digital currency, running a Ren node will not reward you with Ren tokens. Instead, for now, you will receive a portion of the bridged asset as a reward. If someone bridges 1 BTC to the Ethereum blockchain you will receive BTC as a reward. This means, that you will automatically build a portfolio for the most bridged (i.e. used) assets. If you don’t like that, you can always swap your reward for something else.
In my opinion, this reward system makes Ren truly unique since it rewards people based on how much usage there is of the protocol. In contrast, people who stake Solana will be rewarded mostly with the fixed block reward, which is much higher than the transaction fees. So, their profit is mainly based on the price of one asset (Solana), which is subject to speculations. Ren’s profit is based on many assets, some of which are now stablecoins, which makes the system fairer for everybody.
However, with the new proposed Layer 1, this system will not work without changes. A lot of applications will not require bridging or minting assets on other chains. Therefore, there is still a lot of active discussion on what the fee model of the future will look like on Ren.
Thus here is my call to action for you: If you are already involved in the protocol or I piqued your interest, please inform yourself about the upcoming changes (RFCs) and share your ideas on how the system should evolve.
There is also a proposal that leaves the fee structure open to app developers by providing a subnet model. Applications can run in different subnets with different fee structures and even different programming environments. Again, do not hesitate to share your thoughts on that idea. Will the protocol benefit from the added flexibility, or will the whole ecosystem become messier? (Subnets, Fees)
…and beyond.
The previous points will define the near future of the Ren protocol. However, I shortly want to touch upon other use-cases that are currently being researched.
The multiparty computation framework that Ren uses could be leveraged to run more complex decentralized computations. The original Ren founders started a fellowship program to support researchers in the field of computational biology. Running these types of computations securely on a decentralized network could bring great advances to biological and medical applications. Think of projects like folding@home, a promising initiative where volunteers contribute computational power to build a virtual supercomputer that solves difficult and complex medical problems. The computers of the volunteers receive small problem chunks from the main servers, and send back their solution. I believe Ren could harness the power of its decentralized nodes and bypass the coordination from centralized servers, so that researchers do not have to set up new infrastructure, rather leverage the one already in place by Ren.
Additionally, thanks to secure computations, critical data such as medical information can be processed without being compromised. I like to think of the new decentralized world of more than just DeFi and the Metaverse. If you have any additional ideas, please join the Ren discord (and of course the Catalog Discord) and give your input and feedback, we look forward to it! (Ren Discord, Catalog Discord)
Until next time,
@Wake_222
