What is Ren?
As the crypto ecosystem grows, more individual blockchains are being created with their own native assets and functionalities. But many decentralized finance applications—DeFi apps or dApps—want to leverage the liquidity of assets native to other blockchains, not just their own. Interoperability between blockchains, primarily between Ethereum and other blockchains, would mean that participants can exchange, stake, and otherwise make use of any crypto asset in any DeFi app.
Founded by Taiyang Zhang and Loong Wang, both experienced blockchain developers, Ren is a secure network of virtual nodes—referred to as DarkNodes—that facilitates interoperability between blockchains using complex, trustless, and decentralized consensus algorithms and cryptography. Ren takes deposits of one asset (e.g. BTC), holds that in custody, and creates a complementary Ethereum token which can be used on any Ethereum-powered app. Ren is currently in its Mainnet SubZero phase of progressive decentralization, which means that its core team still maintains control of its nodes and of development, but its development roadmap is public.
Ren does not use a centralized custodian to hold the deposited assets; instead, Ren’s virtual machine network (RenVM) is powered by DarkNode operators which use something called the RZL MPC algorithm to manage the creation of private keys without sharing that key with any individual DarkNode. RenVM creates these crypto asset pairs on a 1:1 scale, in contrast to methods like borrowing which usually require an overcollaterization of the borrowed assets, and users burn the newly created Ethereum token when ready to reclaim their deposited assets.
In order for a participant to operate a DarkNode, a participant has to stake 100,000 REN tokens, and in return, node operators earn REN as rewards.
What is the REN token?
REN is an ERC-20 token that powers the Ren network. The Ren virtual machine network, RenVM, is maintained by decentralized nodes called DarkNodes and in order to operate a DarkNode, a participant has to stake 100,000 REN in a smart contract. In exchange for operating a DarkNode and helping to power the network, DarkNode operators earn rewards (in REN) which are calculated as a portion of Ren network fees.
Users of the Ren network, e.g. someone depositing BTC in exchange for renBTC, an ETH token, do not have to pay network fees in REN; rather, Ren network fees are collected from the deposited, locked assets.
There is a fixed maximum supply of 1 billion REN tokens. Since being founded in 2017 (then called Republic Protocol, renamed to Ren in 2019), Ren has sold 65.2% of the total supply in various private and public token sales. The raised funds were used for protocol development. The protocol maintains a reserve fund of REN.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.
No securities regulatory authority or regulator in Canada has evaluated or endorsed the Crypto Contracts or any of the crypto assets made available through the platform.
Wealthsimple has performed an assessment of whether REN can be supported by Wealthsimple’s platform, including whether REN is a security and/or a derivative and is being offered in compliance with securities and derivatives laws.
We evaluated REN based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of REN, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created Ren;
- The supply, demand, maturity, utility and liquidity of REN;
- Material technical risks associated with REN, including any code defects, security breaches and other threats concerning REN and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them;
- Legal and regulatory risks associated with REN, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of REN; and
- Statements made by regulators or securities regulatory authorities in Canada and other jurisdictions regarding whether REN, or generally about whether the type of crypto asset, is a security and/or a derivative.
Wealthsimple monitors ongoing developments related to crypto assets available on its platform for significant changes that may affect Wealthsimple’s original assessment of those assets, including Wealthsimple’s assessment of the application of securities and derivatives laws. Any significant changes relating to REN may result in changes to this Crypto Asset Statement and/or Wealthsimple’s ability to support REN.
Like all other crypto assets, there are some general risks to investing in REN. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Please review the Wealthsimple Crypto Product Risk Disclosure for additional discussion of general risks associated with the crypto assets made available through the platform.
Additional Risks / Information
The REN protocol has faced significant financial challenges following the bankruptcy of FTX, a major crypto trading platform. When FTX became insolvent in November 2022, a significant portion of the REN project's treasury was lost. The REN team relied on this treasury to fund ongoing development, maintenance, and operational costs. Since FTX’s collapse, the REN team has attempted to restructure and find alternative funding sources or strategies to ensure continued development of the REN protocol. In anticipation of the launch of REN 2.0, the REN Foundation was founded in September 2023. REN 2.0’s launch date has yet to be determined.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading REN. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
Wealthsimple is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Investments Inc. dated December 18, 2023 (the Decision).
The statutory rights of action for damages and rescission in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under securities legislation of other jurisdictions of Canada, do not apply in respect of this Crypto Asset Statement to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.
Last updated: January 1, 2024