RenVM bridges blockchains
Cryptocurrencies,  Technology

RenVM bridges Bitcoin, Ethereum blockchains

Ren says its ultimate goal is to connect ‘any imaginable pair of blockchain-based tokens’—telling Modern Consensus this could start happening within months

An open decentralized finance protocol has launched its core product today: a bridge enabling Bitcoin, Bitcoin Cash, and Zcash to be brought to the Ethereum blockchain.

The mainnet for RenVM is now live—a milestone that parent company Ren has said will remove liquidity silos that have stopped DeFi from going mainstream within the crypto community and prevented the sector from being taken seriously by traditional institutions.

RenVM bridges blockchains
Ren CTO Loong Wang (Photo: Twitter)

Ren’s virtual machine serves as a decentralized custodian, using zk-SNARKs security. It holds the BTC, BCH and ZEC of users, minting a one-for-one representation in the form of an ERC-20 token.

Looking forward, the company’s ambition is to serve as a bridge that extends far beyond Bitcoin and Ethereum—connecting “any imaginable pair of blockchain-based tokens, including stablecoins like Libra and China’s digital yuan.” It will also be possible to bring digital assets to other smart contract protocols, including the likes of Polkadot and Tezos.

A consortium of more than 50 organizations is now involved in helping to secure, develop and utilize RenVM—including DApps, decentralized exchanges, and other DeFi projects. The crypto venture capital firm Polychain Capital is among those that have offered financial backing to Ren, and it is also involved in securing the new network.

“DeFi plays a critical role in advancing the global financial system by providing transparency and aiding in efficiency,” Polychain Portfolio Manager Sherwin Dowlat told Modern Consensus in an email.

Dowlat, who had earlier called RenVM an “elegant solution” to blockchain interoperability,” said in his email that technologies “like the RenVM, which promote decentralized cross-chain flow, are a critical component to accelerating the reach of DeFi.”

RenVM bridges blockchains

Ren’s co-founder and CEO, Taiyang Zhang, described the mainnet launch as a critical step in creating a decentralized platform that is both self-sustaining and helps the whole industry to advance.

“Generic interoperability has been a thorn in DeFi’s side, and we’re thrilled that RenVM is now solving this problem by enabling cross-chain liquidity to crypto investors everywhere,” he said in the release.

Loong Wang, the chief technical officer and co-founder of Ren, told Modern Consensus that the company plans to offer connections between seemingly unrelated blockchain-based tokens sooner rather than later.

He said via email: “Hopefully this year we will be able to have a simple and easy way for anyone to propose a blockchain to be supported by RenVM,” he said via email. That includes making it “easy to implement all of the nuts and bolts that go into such a proposal,” he added.

“And then, it’s only a matter of governance to see which ones get accepted by the nodes that power RenVM.”

So… why were the likes of Bitcoin Cash and Zcash tapped as the first altcoins to be brought to Ethereum’s ecosystem?

“We wanted to build RenVM to support multiple assets from the beginning, so that we could ensure its design wasn’t too specific to Bitcoin,” he explained.

“We chose Bitcoin Cash because of its high market cap, and Zcash because we really like its privacy model and this also makes it a bit different to work with, so that forced the design of RenVM to be more flexible.”

Wang also gave an insight into the cryptocurrencies that Ren has its sights set on next.

He added: “We will most likely look into Polkadot as a chain where we can move assets to, and Litecoin as another asset that can be moved. We’ll also look at being able to move assets out of Ethereum.”

The Ren executive also stressed that any decision will be “based on the needs and consensus within our community”—as well as the communities of projects that are already using RenVM.

Bridges galore

It has barely been two months since Ethereum co-founder Vitalik Buterin described the lack of a bitcoin-ether bridge as a serious shortcoming—calling for more resources to be put toward building a trustless, serverless platform.

At the end of March, Buterin had tweeted: “It’s embarrassing that we still can’t easily move between the two largest crypto ecosystems trustlessly.”

His main motivation in calling for greater levels of connectivity lay in how crypto consumers often face punishing fees whenever they are trying to swap assets on centralized exchanges.

It’s quite remarkable how much progress appears to have been made by the crypto industry since then—and not just by Ren.

At the start of this month, MakerDAO announced it was allowing users to bring their BTC to the Ethereum blockchain after beginning to accept Wrapped Bitcoin (WBTC) as collateral.

Although the process can be a little fiddly at times, this essentially allows Bitcoin to be converted into an ERC-20 token. Those tokens can then be used to access crypto loans on MakerDAO, along with the cryptocurrencies it accepts, including Ether, USDC, and Basic Attention Tokens. The hope for DeFi enthusiasts was that this would bring a substantial amount of new capital into the marketplace.

Indeed, data from DeFi Pulse suggests WBTC has enjoyed a substantial uptick in popularity ever since it was taken under MakerDAO’s wing. The total value locked in WBTC has gone from $9.7 million at the start of the month to $34.7 million at the time of writing—an increase of 257%. That isn’t bad going for a project that’s barely been running for a year and a half.

WBTC’s popularity has left more established competitors such as the Lightning Network—which aims to improve scalability by allowing multiple off-chain transactions to be recorded on a blockchain as a single transaction—out in the cold. DeFi Pulse figures show the total value locked in this protocol stands at just $8.2 million at the time of writing.

Updated at 11:01 a.m. on May 27, 2020, to change “company” to “community” in the second paragraph.

Updated at 11:18 a.m. on May 27, 2020, to add quote from Polychain Capital’s Sherwin Dowlat.

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Connor Sephton is a journalist with an interest in cryptocurrencies, personal finance, and financial inclusion—as well as the challenges the crypto industry faces in achieving mainstream adoption. He owns cryptocurrencies.