Ren is awesome, but we need an updated and clarified security model.
My two reasons for investing early in REN
Using fees from transactions to incentivize a large diverse set of nodes seeking profits is a brilliant new model for decentralization. It’s like mining, but instead of solving math puzzles, we are moving Bitcoin to Ethereum!
Hiding the private key with ZK proofs looks like an important innovation.
I agree that projects do not need to start fully decentralized and I also agree that it is wise and necessary to take it slow.
In April, this article
In order to dis-incentivize bad actions (e.g. stealing collateral), Ren validators for each shard must collectively bond greater than or equal to 3x the value (in REN token) of the BTC secured in each shard.*
3x seems like overkill for several reasons, and Loong confirmed this on a recent forum post. Value of REN securing nodes too low
“RenVM are, even at today’s TVL and TVB (total value bonded) more expensive than 51% attacks against Bitcoin or Ethereum themselves.”
If the value of REN nodes does not need to be 3x higher in value than tokens locked on the network, then
what is the correct equation?
And how many nodes do we need to be decentralized?
Meanwhile, RENbtc locked on the network has been growing at a faster rate than transaction fees since launch. We need to change that direction.
Raising fees further incentives big players to lock more BTC onto the network. The continuous fee might be a solution, but I agree to not implement that just yet.
Ren should instead focus on the key to its security model,
thousands of nodes operating profitably around the world .
How can we make it easier for investors to become node operators?
How can we make it easier for nodes to measure and remain profitable?
Another problem with raising fees, is if it works!
If transaction fees double again, and that drives the price of REN to go up 5x again, the network may end up controlled by a few whales.
In order to get a diversified world wide group of node operators, we need a lot of investors to become node operators before most of the world is priced out of 100K REN. Ren’s decentralization may be impossible if it doesn’t have enough nodes and it costs $150K to buy into a node.
But that brings us back to the same questions.
How many nodes do we need?
And how much profit do they need to secure the network?
If we don’t have a security model goal, how can we even test solutions?
One final point I have learned after launching projects on the internet for 20+ years. Winners win immediately, and duds stay duds. This means, that RENbtc is a huge winner. Adoption rates like we have seen in RENbtc do not come often. Lets
double triple quadruple down on bringing BTC to Ethereum. What can we do to make it easier for Bitcoiners to use the Ren Protocol?
Meanwhile, expectations regarding volume from ghost town chains and shitcoins are too high in the short run. One year from now, 95% of volume on REN will still be RENbtc. Five years from now, hopefully we can diversify, but if anyone thinks Dogecoin on Ethereum can move the needle, they will be disappointed.