RenVM Documentation Highlights.md

• Jak działa RenVM

  How RenVM Actually Works. What exactly is RenVM? And, how does it… | by Loong | Ren Project | Medium #📈Kryptowaluty #DeFi #RenVM #Bitcoin #Ethereum #ERC20
  • Versatile Decentralized, Trustless, and Permissionless Custodian
  • You give BTC to RenVM, it holds that BTC, and it mints that BTC as an ERC20 (a.k.a. renBTC) on Ethereum with 1:1 ratio to ensure your renBTC is always backed by the same amount of BTC.

  • 1. Fluid Value Exchange

    • RenVM stores the BTC in a network of decentralized nodes (called Darknodes).
    • Once RenVM receives BTC, it immediately mints a 1:1 ERC20 representation, that individuals and DeFi apps can use
    • it can be done hundreds of times per minute, at any time and in any amount without centralization, merchants, signatories, or friction, allowing the seamless movement of cross-chain digital assets (i.e. interoperability).

  • 2. Composability

    • RenVM is composable
    • It can be abstracted away from end-users, and integrated directly into DeFi apps
    • DeFi apps can bring cross-chain functionality to their users without users needing to worry about minting/burning/wrapping/unwrapping
    • users can swap BTC on a DEX, lend/borrow BTC on a lending platform, or collateralize synthetic assets using BTC, and only ever use real BTC to do it. The user never has to see renBTC, or in some cases even Ethereum itself

  • 3. Decentralized, Trustless, and Permissionless

    • **The ECDSA private keys used within RenVM are completely secret, even from the nodes themselves. RenVM generates and signs data with its ECDSA private keys using a secure multi-party computation algorithm. No party can prevent users from minting renBTC with their BTC, burning their renBTC to get back BTC, or using their renBTC in any way they want to.
    • Any asset minted on Ethereum by RenVM is a 1:1 backed ERC-20. This means that if you have 1 renBTC (an ERC-20), you can always redeem it for 1 BTC

  • To mint renBTC, you simply need to send BTC to a Bitcoin address:

    • Bob sends 1 BTC to the address provided, and waits for 6 Bitcoin confirmations.
    • Once 6 Bitcoin confirmations have passed, RenVM immediately produces a minting signature using one of its secret ECDSA private keys, and Bob takes this signature and uses it to mint 1 renBTC (minus the RenVM fee) to Bob’s designated web3 wallet (e.g. MetaMask).
    • Now Bob can take that renBTC and use it in any DeFi app that he pleases.

  • Redeeming is as simple as minting, and X renBTC is always redeemable for X BTC

    • When Bob is ready to switch back into BTC, he burns his renBTC to redeem the same amount of real BTC:
    • Bob provides his Bitcoin address (the destination for the redeemed BTC). Once provided, he submits it as part of a burning transaction to Ethereum.
    • Bob pays a small amount of gas for the transaction on Ethereum, waits a short period for Ethereum confirmations.
    • RenVM then sees that the renBTC has been burned, and releases the respective amount of BTC to his specified Bitcoin address (minus the RenVM fee).
    • Now Bob has his real BTC in his wallet and can do what he pleases with it.