[renBTC] MIP6 Collateral Application

1. Who is the interested party for this collateral application?

MakerDAO community in conjunction with the Ren community.

2. Provide a brief high-level overview of the project, with a focus on the applying collateral token.

renBTC is a tokenized representation of BTC on the Ethereum blockchain. It is an ERC20, and backed 1:1 with real BTC locked in RenVM, a decentralized custodian. It is redeemable at any time for real BTC.

RenVM is a byzantine fault-tolerant protocol that provides ECDSA threshold key generation and signing via sMPC. What makes RenVM unique is that it does all key management and rotation using its sMPC based protocol that the team has pioneered. The state, inputs, and outputs of all programs that RenVM runs (e.g. ECDSA private keys) are kept hidden from everyone, including the Darknodes that power it.

This allows RenVM to securely manage (ECDSA) private keys of different assets, making it possible to mint or burn tokenized representations of these assets on external blockchains in a trustless, permissionless, and decentralized manner.

One of the core features of RenVM is bringing BTC to Ethereum (i.e renBTC). renBTC serving as collateral within the MakerDAO ecosystem is the sole focus of this application, although RenVM also supports renBCH and renZEC.

3. Provide a brief history of the project.

Q1 2018 - Decentralized Darkpools

Ren (Republic Protocol at the time) sold out a $35mm ICO. The original mandate was to build darkpools for digital assets - a way to prevent front-running and price slippage by trading large amounts in a private, decentralized manner. This idea placed the project in the ‘interface’ layer of the stack. Rather than just building a single darkpool, the intention was to provide infrastructure for third parties to build multiple dark pools, pooling liquidity and providing a better end-user experience. RenEx and SwapperD were built and delivered (Q4 2018)

Q1 2019 - Republic Protocol Evolves to Ren

Ren team realizes that what they have built applies to much more than Darkpools, pivots down the stack to an ‘interoperability (+ privacy) protocol’ and RenVM is born. Rather than operating a single darkpool, or allowing multiple dark pools to build and connect, the protocol will now provide key interoperability infrastructure for DEXs, OTC desks, loan & leverage platforms, liquidity pools, NFTs, dApps, etc.

Q3 2019 - Formal RenVM Testnet: August 2019 - Present

This is still utilized to test features prior to implementation on Mainnet.

The RenVM Mainnet Rollout Plan articulates the steps for testing and gradual decentralization of the protocol. Follows the recommendation of Progressive Decentralization from Andreessen Horowitz. (Published September 2019)

Q4 2019 - RenVM Chaosnet | RenVM Mainnet Unaudited

Formal RenVM Chaosnet: November 2019 - Present
The sole purpose of this was to put RenVM Mainnet through as many stress tests as possible prior to Mainnet release. The Ren team believes this prudent approach (a 6 month testing period) to RenVM’s security (in addition to formal verification from security auditors) has been crucial for its robustness and subsequent success. Chaosnet is still utilized to test features prior to implementation on Mainnet.
(Published November 2019)

Q2 2020 - RenVM Mainnet | Subzero

RenVM Mainnet is released May 27th, 2020.

RenVM Mainnet Dashboard (Network Stats)

Q3 2020 - Open-Sourcing RZL MPC

One of the most important technical goals for the project is getting to a stage where the team is comfortable open-sourcing the implementation of the RZL MPC algorithm.

Over the last month, the Ren dev team has begun decoupling the MPC implementation from the rest of the codebase, making it easier to iterate, test, and understand. As a part of this, they have been implementing new optimizations, building multiple versions of some parts of the codebase to gain even more confidence in its correctness, and moving to a new design centered around easy-to-understand state machines. All of this comes together to make a codebase that is simpler, safer, faster, and easier for everyone to test/review/audit. An overview of this logic, can be found here.

The Ren team has engaged with several auditing teams to review these changes, and once they are completed, will be ready to make the codebase available under the GNU GPL v3 license. This is planned for release by the end of Q3 2020, depending on the timeframes of these audits.

4. Link the whitepaper, documentation portals, and source code for the system(s) that interact with the proposed collateral, and all relevant Ethereum addresses. If the system is complex, schematic(s) are especially appreciated.

RenVM 101
RenVM Technical Overview | Wiki
RZL sMPC Whitepaper PDF
Fees & Economics
Safety and Liveness

Github
Developer Documentation

RenVM Mainnet Dashboard (Network Stats)
Ren Resource Center

renBTC ERC20

Contract Index

5. Link any available audits of the project. Both procedural and smart contract focused audits.

RenVM Audit Homepage

Smart Contracts by ChainSecurity, November 2019

Hyperdrive by ChainSecurity, May 2020

RZL MPC by Consensys Diligence May 2020

6. Link to any active communities relating to your project.

Telegram
Twitter
Reddit
Medium

7. How is the applying collateral type currently used?

renBTC is a one for one representation of BTC on Ethereum via RenVM. As an ERC20, it is/can be utilized in a variety of capacities within the DeFi ecosystem; lending, leveraging, trading, etc.

8. Does one organization bear legal responsibility for the collateral? What jurisdiction does that organization reside in?

No, decentralized protocol

9. Where does exchange for the asset occur?

Individuals can acquire renBTC by minting it with real BTC via the RenBridge.

The same minting process can be achieved on 3rd party platforms such as Curve Finance, and others who choose to integrate RenVM (as its SDKs are permissionless).

Further, renBTC is an ERC20 and can be found throughout the DeFi AMM ecosystem.

10. Has your project obtained any legal opinions or memoranda regarding the regulatory standing of the token or an explanation of the same from the perspective of any jurisdiction? If so, those materials should be provided for community review.

Yes, legal opinion can be distributed individually upon request.

11. Describe whether there are any regulatory registrations for the token and provide related documentation (including an explanation of any past or existing interactions with any regulatory authorities, regardless of jurisdiction), if applicable.

N/A

12. List any possible oracle data sources for the proposed Collateral type.

Existing MakerDAO BTC/USD oracle.

Median BTCUSD
OSM
Setzer BTC model
Prior BTC/USD feed forum discussion

Note: RenVM (and its ERC20 based assets) itself does not utilize oracles, renBTC is a 1:1 peg to BTC.

13. List any parties interested in taking part in liquidations for the proposed Collateral type.

An existing keeper has informally indicated they will take part in liquidations.

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Bumping now that this is visible again. Many thanks to @tbone for putting this together!

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Man nice to read this. renBTC very interesting project. Amazing what is being done on the Ethereum blockchain. I also wonder what else they will use the tech for.

Literally still trying to wrap my head around this one as the implications of the technology across the space seem pretty huge.

Won’t help with ETH tx capacity AFAIK but still very interesting.

One thing I don’t see in these lists is markets that trade renBTC and their current liquidity. I think I had a suggestion to add this as one of the questions in the MIP6 Collateral Application.

What markets does the token trade on and how much is the daily volume?

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Thank you @tbone for putting this together.

renBTC is definitely a very interesting product. A way to access tokenized Bitcoin directly on Ethereum. Low friction to unwrap and wrap directly to the Bitcoin blockchain.

@MakerMan Liquidity is on some highly liquid curve pairs with other bitcoin tokens.

217 BTC ($2m) in reserves - renBTC/WBTC - https://www.curve.fi/ren (https://wbtc.cafe/)
1740 BTC ($16m) in reserves - renBTC/WBTC/sBTC - https://www.curve.fi/sbtc

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So one thing that might need to be mentioned is the scalability of renBTC. Look at the Fees and Economics page for more information. Ren is constrained by the marketcap of the Ren token. It is best if the locked value is less than a third of the bonded value, or at the very least, the locked value needs to be less than the bonded value.

Ren darknodes mainly profit from minting and burning fees. But they can also add a continuous fee on holdings if there’s too much demand for renBTC.

So you just need to keep in mind that there’s some constraint to the amount of BTC that can be locked on the renVM. And if it gets too popular there’ll be continuous fees charged.

Currently $10m Value Locked. $14m Value Bonded. https://mainnet.renproject.io/

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Are there any thoughts about including renZEC (ZCash) or renBCH (BitcoinCash) as collateral types anytime soon? I also think MakerDAO should strongly consider those options, especially if the general MIP Application is the same. I don’t think ZCash or BitcoinCash HODLers are wildly interested in the DeFi applications of their particular coins, but it could be a way to add more collateral to the system and help bring the Dai price down, especially if it’s low effort to copy an MIP.

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It hasn’t been heavily discussed, but I don’t think anyone would object to someone posting MIP6 applications for those assets too.

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When is the greenlight poll planned for this guy? Our WBTC ceiling has been consumed yet again. Seems like there is a decent amount of leverage appetite in the BTC space, but we soon might be hamstrung by the WBTC market cap. That said, adding another BTC collateral option might alleviate those concerns.

Update:

Looks like it is due 7/20.

Is there any way we could start the greenlight poll before that? Perhaps put it up with this week’s monetary polls?

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Given that the domain teams also need to do the work in order to get renBTC in, I don’t think expediting the greenlight poll would actually help get this done any faster. And as a general rule, I don’t think we want to be expediting governance processes unless it’s absolutely necessary.

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Maybe? There is likely a bit less work with this guy in particular since it shares some risk and pricing characteristics as WBTC.

Given that we have been able to get users to take on 10MM in leverage in the past 4 days via WBTC i would argue that it is worth considering assuming i am right about it being lower effort. Especially since the alternative here would put us like 4+ weeks out on ratifying.

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renBTC hasn’t been live for very long yet. I’d be more comfortable adding additional exposure to BitGo in the meantime until a few more months have passed and the REN system economics remain stable.

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Maybe! I mainly brought this up bc this app is further along in the process.

Realistically speaking though there isn’t but so much leverage renBTC can be expected to generate in the short term. I’d wager around a 5MM DC to start. That isn’t much exposure in comparison the rest of the portfolio, but would increase or ability to offer BTC leverage by about 25% until more WBTC is minted or another option makes its way through the collateral application process.

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renBTC is not mature enough, we should now continue to increase the WBTC debt ceiling and further expand the market share of BTC with strong demand for DAI.

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I’d be more comfortable increasing WBTC DC while risk analyzes RenBTC or it has some more time operating without issues, either way in the meantime ren users can swap in curve and deposit WBTC If I’m not mistaken.

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the problem there is that ~ 50% of the WBTC in existence is locked up in mkr vaults. Now I’m not necessarily saying we can’t raise the ceiling higher, but where do we stop?

Also it is worth noting that we just decided on the current ceiling 4 days ago. What is the point of the ceiling if we are raising it every week?

I want to note, that even though almost 50% of Wbtc is locked in maker, this is better than when we initially onboarded it at $10 million DC, where the total supply locked exceeded 60%. So, it’s nice to see that the market cap is growing by more than the demand from vault owners.

I think there is a balance here we need to take for sure, and hopefully the market cap continues to grow faster than the percent locked. Seems like we could safely raise the DC by another $10 million though.

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I agreed to add renBTC, initially setting the debt limit to 5 million.
But I also agree to increase WBTC’s debt limit by 10 million at the same time.
Since the market capacity of BTC will be more than double that of ETH, we need to continue to expand the debt limit of various XBTC no matter now or in the future.

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The Greenlight Poll for renBTC is active.

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The Community Greenlight Poll has concluded, Outcome:

Yes: 21,315.38 MKR
No: 0 MKR
Unique voters: 30

Thank you to everybody who took part in the poll and helped shape the future of Defi.

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