I have been fascinated by crypto for a long time now, and I enjoy sharing what I have learned about it on ToughNickel.
What Does Ren Do?
The DeFi (decentralized finance) sector is growing rapidly on the Ethereum blockchain. There are many projects like Aave that allow crypto investors to earn interest on their crypto holdings in a safe and decentralized way. Nevertheless, there are, at the moment, millions of Bitcoin, Zcash, Dogecoin, and many other coins that are being held long-term without gaining interest.
This is because Bitcoin and Co have their own blockchains and are not compatible with Ethereum. If you want to use BTC on a DeFi protocol, you first have to swap your Bitcoin for WBTC (Wrapped Bitcoin), which is compatible with Ethereum.
However, the problem with WBTC is that it is handled by BitGo, which is a centralized entity that you have to trust with the private keys of your Bitcoin if you want to swap it for their Wrapped Bitcoin. A decentralized and trustless alternative would be preferable.
The whole point of Bitcoin and DeFi is decentralization. If you depend on a centralized third party, then there is no point in even using cryptocurrency. Many Bitcoin holders are not using DeFi for this exact reason—because they don't have a truly decentralized method of using their BTC on Ethereum.
Ren is a solution to this problem; it offers a method to wrap Bitcoin into renBTC, an alternative to WBTC, which can be used on Ethereum in a decentralized and safe way. This finally makes it possible to use Bitcoin on a DeFi protocol without relying on a centralized entity.
So far, Ren allows its users to wrap Bitcoin, Bitcoin Cash, Zcash, and Dogecoin so that they can be used on Ethereum. Additional coins will likely be added soon.
How Does the Ren Network Work?
The Ren network is run by "Darknodes" that are like miners on the Bitcoin network. The Darknodes offer their network bandwidth, computing power, and storage capacity to the network in order to process transactions like swaps from one cryptocurrency to the Ethereum-compatible Ren version of that currency.
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The Darknodes do this to earn transaction fees as rewards. The fees are paid in the cryptocurrency that is being traded. If you swap BTC into renBTC, then you have to pay fees in BTC to the Darknodes. So, running a Darknode can be an effective way to earn passive income.
Any person or institution can be a Darknode but in order to become one, you have to stake 100,000 REN coins as collateral; this is to make sure that Darknodes don't do anything to harm the network as that would hurt the value of their coins.
What Is REN Coin?
REN is the native token of the Ren network. It is an ERC-20 standard token and had its ICO in 2018. REN has a fixed max supply of 1,000,000 tokens. It is right now the #135 cryptocurrency in market cap ranking with a market cap of $356,966,327. This means it is still relatively cheap and has a lot of room to grow.
Overall, REN has been gaining value ever since its ICO in 2018. However, the 2021 crash of the crypto market hit REN very hard. That is because its value directly depends on how much DeFi is being used. In times of uncertainty, people are either selling or holding their cryptocurrencies in cold wallets. Almost nobody uses decentralized finance during a crash, which temporally lowers the value of REN and other coins. In mid-June of 2021, Ren had a value of $0.40, which fisar lower than its all-time high of $1.80.
Is REN a Good Investment?
The reason why I believe REN will gain a lot of value in the coming years is that the DeFi space is growing, so there will be an increasing demand for methods to use Bitcoin and similar cryptocurrencies on smart-contract platforms like Ethereum. However, using a centralized method like WBTC destroys the whole point of decentralized finance. I think the demand for a decentralized alternative for WBTC will grow together with the DeFi sector.
As more people want to swap their BTC into renBTC to use in on Ethereum, it will become more lucrative to run a Darknode, so more people will want to set one up to earn the transaction fees. Yet, the number of possible REN coins, which are necessary to run a Darknode, is limited. Growing demand and a limited supply should lead to a higher price. For this reason, I think REN could be a very good long-term investment in the crypto market.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2021 Krypton Currency