There are many independent blockchains. As a result, users experience difficulties in carrying out cross-blockchain transactions when there is no direct interface among them. The end results are delays and high costs of transaction. Universal interoperability is the best solution for such challenges.
RenVM has broken a record by cracking the problem of interoperability, creating convenience to users and application developers.
What is RenVM?
RenVM is a network that provides decentralized interoperability service in the blockchain system. It enables developers to create applications which have cross-chain functionalities. This makes it possible and easy for users to carry out transactions that involve two or more blockchain networks.
For example, users can carry out transactions involving bitcoin and ethereum blockchain systems, such as converting bitcoins to ETH within a single network. Therefore, the RenVM network creates an interoperable ecosystem and enhancing high security of transactions. In short, RenVm enables users to transfer tokens between different blockchain networks using a single DeFi application.
To achieve this huge task, RenVM works with many virtual machines called Darknodes to power its system. The role of the Darknodes is to approve or decline transactions arising from inputs of various users. Thus, the major contribution of RenVM is to enable universal interoperability between blocks. Simply put, blockchain interoperability means the ability of users to share data between different blockchain networks without using intermediaries.
Challenges of lack of universal interoperability
When the blockchain lacks interoperability, several challenges arise. First, we need to understand the role of interoperability in real life. It enables decentralised exchanges to have sufficient liquidity. With interoperability, blockchain-based lending institutions can access more digital assets. It also leads to greater adoption of derivatives and synthetics.
The lack of universal interoperability means that all these functions are stifled in one way or the other. It is important to note that developers created several solutions to the problem of absence of interoperability in the past. However, the previous solutions have some limitations. A good example is the introduction of atomic swaps which enables the swapping of cryptocurrencies. Still, a limitation exists with atomic swaps, as they do not allow the swapping of all existing tokens using a single DeFi application.
As discussed earlier on, RenVM is powered by various computer networks around the world called Darknodes. RenVM pays owners of the computer networks reward commensurate with the services they offer. This ensures that there is a sustainable capacity to create universal interoperability.
By using a global network of virtual machines, RenVM replaces trusted custodianship by a decentralized one. The system also enhances high security of transactions through the use of bonding and algorithmically adjusted fees, which thwarts any attack.
Apart from security, RenVM system is highly scalable. Through easy adjustment of transactions fees, RenVM can increase its capacity in response to an increase in demand.
How does it achieve universal interoperability?
Several features enable the achievement of interoperability. For example, there is locking and minting of transactions. The minting and locking process starts when the user sends the digital asset from the host chain. The darknodes hold the asset until most them make a consensus to release it.
When a consensus is reached, the darknodes send an instruction to the user to mint a signature authorizing the release of the asset. Once the user sends the signature and the darknodes receive it, the asset is released. Through burning and releasing, the user sends a digital asset from the host chain to its point of origin. When the user sends the asset and the address it is going, the transaction is carried out by RenVM to completion.
The platform increases security through the shuffling of the darknodes. A group of darknodes form a shard and are composed of over hundred machines. Shuffling the darknodes increases the security of the system, as it becomes very difficult for them to come to a consensus and allow an unwarranted transaction to be released.
All these features create a user friendly and secure blockchain ecosystem. This allows many people to get involved in cryptocurrencies and the blockchain system.
How user benefit?
RenVM enables universal interoperability which benefits users and increases the adoption of cryptocurrencies. For example, a user can access BTC, ethereum and other cryptocurrencies from a single DeFi application. This is because the RenVm platform allows the minting of different cryptocurrencies. As a result, a single wallet allows transactions in various cryptocurrencies.
There is a high level of security. First, it is very difficult for anyone to carry out a successful attack on the platform. Second, in case of an attack, all the tokens are automatically and immediately recovered.
Above all, interoperability enables many users from different blockchain networks to interact with one another without using a lot of financial resources or intermediaries. There is high convenience and quick transactions.
RenVM has contributed greatly in the crypto space. It allows easy, secure and fast transactions across different blockchain systems. The ease of carrying cross-chain transactions should enhance greater adoption and use of cryptocurrencies.