Name: Onboarding new token support and blockchain integrations
Scope: To kick off discussion about how we select new token support and blockchain integrations.
This RFC aims to initiate formal discussions with the community to determine the proper framework for analyzing and onboarding new blockchain integrations and collateral types in the future as the multichain is later launched. I understand that this is still months out as the Ren development team is currently fully utilized, but hopefully, this can help illustrate the opportunity ahead of us.
From what I’ve observed in many other protocols, the selection process appears to be relatively unstructured, arbitrary, and at many times, opaque. I hope with the Ren Project, we can differentiate ourselves with a leading class framework. If we aim to be the de facto cross-chain interoperability bridge for the crypto world, it is imperative that we have a robust framework to provide the greatest value for our users and the protocols of the destination chains.
To do so, I hope to set a strong foundation of guiding principles in order to vet and prioritize support/integrations based on:
- Community interest
- Impact/potential market size
- Ease of implementation
I invite the community to voice their opinions on how we best fine-tune these criteria and the prioritization framework.
At the onset of RenVM mainnet launch, we supported 3 renAssets, renBTC, renBCH, and renZEC. BTC was the obvious golden choice; however, I believe BCH and ZEC were selected to demonstrate the relative simplicity of integration of assets of similar nature of previous integrations. In other words, once the BTC was supported, BCH and ZEC support was relatively straightforward.
Since then, there have been many discussions of new coins and chains in Medium articles and the Github. I’ve listed them below, please let me know if I’ve missed any:
Tokens in Progress (TBC)
- Dogecoin (DOGE)
- Digibyte (DGB)
- Filecoin (FIL)
- Polkadot (DOT)
- Acala Network (ACA)
- Binance Smart Chain (BSC)
- Polkadot (DOT)
- Solana (SOL)
- Cosmos (ATOM)
- Terra (LUNA)
Other potential tokens
- Stablecoins: (USDC, DAI, TUSD, etc)
- Ripple (XRP)
- Litecoin (LTC)
- Bitcoin SV (BSV)
- Dash (DASH)
- Monero (XMR)
To summarize the above Overview and Background sections, I propose that we align on criteria and consider establishing thresholds on those criteria.
1) New Token Onboarding
I hypothesize that users will find RenVM to be of greatest utility for:
- Store of value tokens with relatively high market cap.
- Communities open to interoperability
- Tokens adopted by dApps on destination chains
Drawing insights from our main data point: renBTC, renBCH, and renZEC on Ethereum, mint/burn volume appears to be a function of market size, community interest, and destination chain dApp options.
F(Mint/Burn Volume) = Market size * Community interest * Destination chain dApp options
To support this function, ZEC market size is ~$733M while BCH is roughly 6.2x larger at ~$4.6B. However, there is actually 1.16x more renZEC volume than there is renBCH volume. I believe this to be the case as the BCH community has shown minimal interest in the Ethereum blockchain let alone any sort of interoperability solution while the ZEC community has recently become more interested. The key takeaway from this example: token-maxi communities such as BCH are less likely to utilize RenVM than relatively more open-communities with lower market size.
Finally, aside from BTC being the largest market size by far (~$200b), renBTC is also much more widely adopted in DeFi protocols allowing for more utility.
For reference, protocols such as Maker, Curve, and Aave appear to loosely use the following criteria for their own onboarding:
- Market size of token (in Ren terms: volume minted),
- Quantitative Risk: Token price volatility (for vault stability and Loan-to-Value ratios (LTV)), and
- Qualitative Risk: Smart contract and counterparty risk (because as tokens are onboarded, risk flows through the protocol).
In theory, protocols should adopt all renAssets as each renAsset (3) shares relatively similar low risks, but until then, (1) volume and (2) price volatility appears to be their largest deciding factors.
For the Ren community, it makes sense to assess factors that we can relatively control: community interest, market size, and ease of implementation. I’ve made a table below of an example of how we might assess and prioritize. Due to my lack of technical background, I’ll leave the last column blank.
|Token||Community Interest||Market Size as of Oct 13||Ease of Implementation|
|USDT||TBD (Likely high)||$15.23B|
|XRP||TBD (Interest shown)||$11.62B|
|BSV||TBD (Likely low as BTC forks tend to be maxi-type)||$3.16B|
|USDC||TBD (Likely high)||$1.4B|
|DAI||TBD (Likely high)||$0.45B|
2) New Blockchain integrations
As non-Ethereum based DeFi protocols are still in development/have yet to be widely adopted, it’s difficult to provide historical assessment. However, the high-level factors here should include
- Chain adoption measured by users and value and
- Security robustness/risks of the chain.
I hope the structure and examples that I laid out help the community in determining an appropriate framework for the vetting and prioritization of tokens and chain integrations in the future.
- Section 1 Variable 2 above: Community interest can be stoked with a balanced outreach approach. These approaches should be based on facts and taken with a collaborative energy
- Section 1 Variable 3 above: renToken adoption by dApps on destination chains is something the Ren team and we as a community can further support. There are 3rd party governance proposals that we can create and support to garner wider RenVM adoption.
- Currently 0.63% of BTC is on Ethereum, ~20% of which is by RenVM. That’s 0.126% of BTC currently minted as renBTC (not including mint + burns that have removed renBTC)… If we were to capture 0.126% share of the coins I’ve listed above, that would be $48M in volume (not including mint+burns that have removed renBTC)
- Further on point 3: Total volume appears to be roughly 3.25x the circulating supply (981m vs 302m currently in RenVM). This means mint+burn of the 48M could potentially reach $156M additional volume for RenVM in just the 5 month period assuming similar rates of adoption.
- Points 3 and 4 do not even consider the upcoming cross-chain volume to come from the burn+mint mechanism.
- With the launch of the multichain, onboarding new assets may be much smoother/easier than many of us realize. We wait in anticipation for the launch and additional information. (This applies to the ease of implementation column)
Nothing to implement yet. I believe additional information will come as the Multichain is released