REN productivity

Product Products
1

Building on @overanalyser 's ideas around Intrinsic Productivity, I wanted to propose a way to win with REN from the DeFi Pulse Index.

Background

With 100,000 REN tokens it is possible to run a Ren Darknode and receive rewards in return. The DPI token currently has over 4,652,000 REN tokens, enough for 46 nodes. It stands to reason that the Index Coop may realise some income from this.

Ren Darknodes bridge blockchains such that BTC may move from the Bitcoin blockchain to Ethereum where it would be represented as renBTC. Moving assets this way incurs a fee which is rewarded to nodes.

Supported blockchains:

  • Bitcoin
  • Ethereum
  • Bitcoin Cash
  • Zcash
  • and more coming

Income

Fees charged each day are increasing (rough averages):

11,000 / 1463 = 7.52 per day per node e/o November.

24,000 / 1523 = 15.76 per day per node e/o December.

45,000 / 1713 = 26.27 per day per node last week.

Payments come at the end of epochs that last 28 days. In the previous two epochs, earnings per node were:

  • Epoch 9 - Dec 14th - ~>$279
  • Epoch 10 - Jan 11th - ~>$545

Deregistration of a node and return of REN takes 3 months. Due to this, it would be unwise to invest all DPI REN.

Committing 1 million REN (less than 25%) would allow ten nodes that would currently produce around $5000 per month.

The returns are not giant but they are entirely within Index Coop control, only require setting up once, and need minimal upkeep.

Considerations

Upsides, aside from income:

  • Participating in community - key to growth
  • Shows commitment to the ecosystem
  • Is in the spirit of DeFi
  • Generates topics for twitter and blog materials - helping increase publicity

If we’re being idealistic, we could even choose 10 locations around the world to site the nodes, use different hosting providers, and help spread the word even wider.

Risks:

  • Keeping an eye on DPI REN reserves is essential, so that we can wind down gracefully if needed.
  • Keeping an eye on REN’s position in the index is essential in case de-listing looks likely.
  • Forgetting to maintain nodes - updates and ETH balance. Minimal but needs doing.

Next steps:

  • Contact Ren and see if they would be open to input and publicity.
  • Establishing specific setup requirements and costs.
  • Determining Index Coop tolerance for risk regarding REN commitment and 3 month exit.

Overall, the returns for the Coop would be modest (though they could cover competition or translation rewards :hushed:). However, taking into account ecosystem participation, and the Coop being active in it, will help strengthen both the Coop and it’s environment.

Unless this seems like an idea to immediately and easily run with, or if someone wants to pick it up right away, then I hope it may help as input on the intrinsic productivity opportunities open to the Index Coop. What are your thoughts/interest?

2 Likes
2

Thanks @mrvls_brkfst

I must admit that I’ve not looked at REN staking. @ $0.55 price it’s $55,000 per node so 545 works out at about 13 APY. Better than most options we have.

I think, I would be very cautious about rolling out such a form of IP. The lock up tome of 3 months is very large, so we would need to be very very confident that we would not need to redeem the REN (and the REN would not get delisted by DeFI Pulse).

Also, what would be the legal aspect to consider when running a darknode, is it the equivalent of ETH staking?

It’s certainly an interesting idea for Intrinsic productivity, but I think it would be the last one we would plan to implement (unless there becomes a secondry market like stETH).

1 Like
3

This is very cool. We really have a massive opportunity with DPI to deploy the capital in ways to help the broader ecosystem. Active participation in governance was the most obvious way, but this is fascinating too. Pushing the bar on what we even think we can do.

As a holder of DPI, I’m sure you would want your assets to be put to work in a way that boosts the value of your token!

Thanks for bringing this up.

2 Likes