What is RenVM?
RenVM provides one of the only practical interoperability solutions that can scale. It 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.
Minting and burning
RenVM utilizes an approach called tokenized representation. This process allows you to lock up an asset and mint a one-to-one representation of that asset in return, typically in the form of an ERC-20 token. You can then burn this tokenized asset to redeem your locked asset. RenVM does not utilize a centralized custodian to hold the locked assets; instead, it uses a novel security model reliant on a network of private and randomly grouped nodes to ensure privacy.
RenVM uses bonding and algorithmically adjusted fees to make sure that attacks are never profitable and to make sure that it can always restore the one-to-one peg if an attack ever does succeed.
Darknodes
RenVM is composed of thousands of nodes called Darknodes. Anyone can run a Darknode, but each node must run the RenVM software via a Virtual Private Server and deposit 100,000 REN tokens into the Darknode Registry Contract. This mechanism incentivizes the node operators to refrain from malicious behavior at the risk of forfeiting their deposit.
Darknodes are randomly arranged into groups called shards once per day, a process that fortifies RenVM against attacks on the network by keeping potential data targets constantly moving and regenerating. Darknodes also collect fees every time RenVM converts a digital asset into an ERC-20 token. These fees are denominated in the cryptocurrency of the locked asset and are algorithmically adjusted according to demand and a discounted cash flow model.
Cross-chain transactions
RenVM supports three kinds of cross-chain transactions. Using BTC-on-Ethereum as an example, these three kinds of cross-chain transactions enable:
sending BTC from Bitcoin to Ethereum (known as a lock-and-mint),
sending BTC from Ethereum back to Bitcoin (known as a burn-and-release), and
sending BTC from Ethereum to Polkadot (known as a burn-and-mint).
More information on RenVM
https://medium.com/renproject/how-renvm-actually-works-c2f76a2630c4
https://www.gemini.com/cryptopedia/ren-token-and-renvm-crypto-platform
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