RenDAO Votes to Raise $10.8 Million to Fund Development of New Protocol 

RenDAO Votes to Raise $10.8 Million to Fund Development of New Protocol 

The Ethereum-based DeFi token bridging platform is transitioning its network to a new protocol. Ren has been permissioned by its DAO to issue 180 million new REN tokens that will be used to fund the process. The protocol was funded by Alameda Research until its bankruptcy.

The decentralised autonomous organisation (DAO) behind Ren Protocol, a token bridging platform that issues wrapped versions crypto assets like Bitcoin (renBTC) to help users transfer tokens to Ethereum, has voted in favour of mining 180 million REN ($10.8 million) which will be used as fresh capital to fund its new protocol called Ren 2.0. The initiative comes following the collapse of its main backer, Alameda Research. 

On November 19, the Ren development team announced in a Medium blog post that it is severing all ties with the crypto hedge fund owned by Sam Bankman-Fried. The DeFi project also said that it will be shutting down operations of its centrally run protocol – Ren 1.0, which was financed by Alameda. In February, the hedge fund acquired Ren and its development team as part of an effort to expand interoperability between Ethereum Virtual Machine (EVM) compatible chains supported by the Ren ecosystem, and Solana (SOL) and Serum (SRM) – both crypto projects were also funded by Alameda Research. 

RenDAO Votes to Raise $10.8 Million to Fund Development of New Protocol 

With Ren’s ability to move ETH and other ERC-20 assets across networks, this partnership would have allowed for tokens deployed on the Solana blockchain to be bridged to Ethereum-compatible networks. However, Alameda, which had been funding the development team on a quarterly basis, filed for Chapter 11 bankruptcy in November. This resulted in funding for Ren 1.0 coming to a halt, putting its future in jeopardy. The team then revealed that it only has finances to support the network until the end of Q4 2022. 

Ren then made a formal decision to wind down its existing protocol and replace it with an open-source and community-managed network called Ren 2.0. In a proposal submitted to its DAO on December 15, the development team asked permission for minting new REN tokens that will be used to fund the transition. 

Community members were presented with four options to choose from on the number of tokens that will be minted: 50 million REN, 100 million REN, 150 million REN or 200 million REN. The DAO was also given the option to reject the proposal. In order to pass, the proposal requires at least 51% votes in favour of one of the given options, before reaching a weighted average value by combining all votes. If the proposal made by Ecosystem Advocate Maximillian Roszko is passed, Ren was expected to raise somewhere between $4 million and $17 million.

According to data from the polling Snapshot, 80.78% of the members voted in favour of issuing 200 million tokens, while 1.08% chose 150 million, 2.05% voted for 100 million and 10.97% were in favour of minting 50 million REN tokens. Only 5% of voters rejected the proposal. After combining the weighted average value of all votes, the DAO decided that the dev team will be allowed to issue 180 million new REN tokens worth $10.8 million at current market prices. Funds gained from the sale of freshly minted REN will be distributed among the Ren Foundation and node operators.

Even though the transition will ensure survival of the Ethereum-based DeFi ecosystem, the process does come with its own set of associated risks to investors. Ren, which is known for issuing wrapped versions of popular crypto assets such as BTC, DOGE and BCH, has warned users that there is a possibility that they may not be able to recover their original assets once REN 1.0 is discontinued. According to data from The Block, currently there is $12.5 million worth of renBTC on Ethereum that is at risk of getting stuck.

“As compatibility between Ren 1.0 and 2.0 cannot be guaranteed, holders of Ren assets should bridge back to native chains ASAP (as soon as possible), or risk losing them,” noted the team in its proposal. 

At the time of writing, REN is trading at $0.05 – down 0.9% in the last 24-hours. 

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