Thursday, September 3, 2020

Why Fusion’s DCRM is The Best Option for DeFi Users

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The race for blockchain interoperability was very much a trending topic during the bull market of 2017. Back then, we witnessed the birth of very promising projects like Fusion and Wanchain. Then the bear market started, and interoperability was no longer as hot as it once was, similar to every other topic related to blockchain development. However, these two projects continued to develop their respective ecosystems; they were even joined by a third project in this same niche, Ren.

Why Fusion, Wanchain and Ren?

However, there is still no single project that can be considered as the leader of the interoperability niche, and which links all blockchains and facilitates their communication – despite the architectural differences between them. Needless to say, sooner or later, the blockchain space will need such a project!

This need arose even more during the recent DeFi boom, where the majority of the tools and applications used were limited to the Ethereum blockchain, with the involvement of only a small portion of Bitcoin (somewhat above 0.1% of the circulating BTC). At the same time, the other giant blockchains like Ripple and Litecoin are almost totally absent. Billions of dollars are locked in these blockchains and they can’t be used in the DeFi space.

In this article, we will review Fusion, Wanchain and Ren, three potential projects that could solve these DeFi limitation issues, and take this space to the next level. The projects will be compared based on essential criteria and other aspects, then we will determine which project has the highest chance to become the blockchain that connects all the blockchains. But before that, let’s just first explain why these three projects in particular were picked.

Why Fusion, Wanchain and Ren?


It is true that there are many projects that specialize in the interoperability niche, but having considered several factors like technology, a team’s experience, a project’s quality, its development, and its community; these three projects stand out as the main potential projects that could become the internet of blockchains.

Many people in the crypto space think that projects like Cosmos or Polkadot specialize in interoperability, while in fact, they use a compatibility model. The main difference between interoperability and compatibility is that the communication between parachains in the compatibility model is made possible through a central Hub which forces a certain standard, and other chains have to stick to it in order to be part of the ecosystem. It seems that the top priority of these two projects is more to replace Ethereum and attract new chains and projects to build on their platforms than it is to connect the different blockchains.

Fusion, Wanchain and Ren on the other hand, use a “true” interoperability model based on cryptographic concepts. These three projects aim to create ecosystems that facilitate a trustless decentralized communication between different blockchains.

These cryptographic solutions aim to use a decentralized technology for custody. The process of cross-chain communication is similar to existing models such as WBTC (minting assets with 1:1 ratio on other blockchains). However, unlike WBTC which keeps your original assets in a centralized entity (BitGo) and requires KYC, the three projects in our comparison use very advanced solutions to hold your assets in a fully trustless and decentralized way.

Fusion

Fusion is a fully decentralized smart contracts platform. The primary goals of the project are to become an ecosystem that links the different blockchains, allowing them to communicate with each other, and to connect global finance to blockchain technology. Fusion was founded by DJ Qian, one of the pioneers in blockchain research and mining in China.

The main component of Fusion’s technology is the DCRM “Decentralized Control Rights Management”. It uses “private key sharding” and “Shamir’s Secret Sharing” concepts to secure users’ assets. Fusion has also introduced the Time-Lock function. It is the first blockchain to use the concept of time in its smart contracts. This will open the door to complex financial transactions involving time such as derivatives, loans and mortgages.

The Fusion ecosystem is growing fast, with new projects joining the DCRM Alliance and decentralized applications being launched on the platform, such as WeDeFi and Anyswap.

WeDeFi: It is an easy-to-use wallet that is available on Android and iOS. It allows users to store and manage their assets. WeDeFi offers a no-loss lottery where users can deposit their FSN coins and participate in the lottery. They will get back their coins no matter if they win or lose.

Anyswap: It is currently the only swap protocol in the blockchain space that can carry out cross-chain transactions. Anyswaphas its own automatic pricing and liquidity systems, and it uses Fusion’s DCRM as a cross-chain solution. Therefore, it will support all the coins and tokens that the DCRM technology can integrate, including: BTC, ETH, XRP, LTC, ADA, ERC-20 tokens and many other coins and tokens. Anyswap introduced its governance token “ANY” and has recently added USDT to the platform and announced a strategic partnership with Hotbit.

Wanchain


Wanchain is another smart contracts platform project specializing in blockchain interoperability. It allows the exchange of data and value between private, consortium and public blockchains. The platform supports private transactions based on ring signatures.

Wanchain uses “secure multiparty computation” and “Shamir’s Secret Sharing” concepts to ensure the safety of users’ assets. This cross-chain solution has already integrated Bitcoin, Ethereum and EOS blockchains into its ecosystem, with future plans to create direct bridges between these different blockchains.

Earlier this year, two projects built on Wanchain were launched:

Rivex (RVX): It is an interoperable and scalable layer-2 solution that aims to combine the strengths of public and side chains to empower the next generation of decentralized applications.

FinNexus (FNX): It is a DeFi focused project specializing in building open finance protocols. FNX has released its first product which is a decentralized options protocol powered by a single liquidity pool on both Ethereum and Wanchain.

Ren


Ren is a protocol that enables permissionless and private transfer of values between different blockchains. The core product of the project is the virtual machine “RenVM”, a trustless custodian that brings interoperability to DeFi on Ethereum.

Cross-chain communication is handled by RenVM. It holds the assets that users want to transfer, and mints an ERC-20 wrapped token to be used within the Ethereum blockchain. RenVM allows the minting of Bitcoin, Bitcoin Cash and Zcash on the Ethereum blockchain, with future plans to mint coins on the Polkadot blockchain.

For example, if you want to use BTC in the Ethereum blockchain: You hand it to RenVM, it holds it and mints that BTC as an ERC-20 token (RenBTC) on Ethereum with 1:1 ratio. This process is secured by – you’ve probably guessed it – Shamir’s Secret Sharing and secure multiparty computation.

RenVM can be used as a plugin for decentralized applications built on Ethereum. Once integrated to a smart contract, users will be able to benefit from cross-chain liquidity provided by Ren.

Ren cryptocurrency is an ERC-20 token. It is used to run the dark nodes that are entirely governed by code.

Comparative Analysis

Project’s Nature

Fusion, Wanchain and Ren are three projects that are focused on connecting siloed blockchains using cryptographic interoperability. However, there are some fundamental differences between these projects, starting with their nature.

Fusion and Wanchain are infrastructure projects. In addition to their interoperability components, each project has its own mainnet and its own smart contract platform for dApps development and token issuance, while Ren is an interoperability protocol built on Ethereum.

In addition to its cross-chain solution based on the DCRM technology, the Fusion team developed unique concepts to create a convenient ecosystem for DeFi. For example, the Time-Lock function allows users to perform complex financial transactions that involve time by using the Multi Triggering Mechanism, which is considered as the next generation of smart contracts. Fusion offers many other DeFi-oriented features such as quantum swap and USAN swap. Currently, there are two projects that are built on the Fusion platform. WeDeFi, and Anyswap.

Wanchain is also an interoperability project, it has already integrated Bitcoin, Ethereum and EOS blockchains into its ecosystem. So far, two DeFi projects have been built on Wanchain: FinNexus and Rivex.

Interoperability and Decentralization

Now let’s talk about the interoperability of these three projects!

Through DCRM, Fusion has created an ecosystem that supports the integration of blockchains that have ECDSA (Bitcoin, Ethereum, Litecoin, etc) or EdDSA (Cardano, NANO, Stellar, WAVES, and even Facebook’s Libra!) as signature algorithms. This means that almost every blockchain out there could be integrated into Fusion’s ecosystem.

DCRM has currently around 45 working nodes. Once a user locks-in his assets in the Fusion blockchain, these nodes will only receive shards of his private key, and will never have access to other shards, so assets are completely safe. The majority of DCRM nodes do not belong to the Fusion Foundation. Fusion’s cross-chain solution is therefore fully decentralized.

Wanchain is another blockchain that aims to create an ecosystem to connect all the blockchains. The process is somewhat slower, and blockchains are integrated one by one. However, according to the roadmap released recently, Wanchain started working on direct bridges between blockchains, and will launch their first “two-way bridge” later this year.

Wanchain interoperability uses storeman nodes (equivalent to Fusion’s DCRM nodes). These nodes still belong to the Wanchain foundation, but their decentralization is under testing and the full storeman nodes decentralization is planned to be finished in 2021.

Ren does not offer an ecosystem where it can connect all the blockchains. Instead it offers interoperability through its core product, RenVM. This virtual machine is used to create direct bridges between different blockchains. Currently, RenVM brings liquidity from BTC, BCH and ZEC to Ethereum applications, with possible support for ECDSA blockchains. Ren has future plans to bring liquidity to the Polkadot blockchain.

Currently in Mainnet SubZero, RenVM cross-chain technology is still centralized. The team claims to offer a “semi-decentralized” solution due to the fact that no KYC is required, however, Ren nodes (called Darknodes) are run by the Ren team and other partners from the Ren Alliance.

Another important point to mention is that Fusion and Wanchain code are open-source, and can easily be accessed. On the other hand, some important parts of Ren’s code are closed-source, and a lot of questions are being asked about the reasons behind this decision. No clear answer has been given by the team.

Token Use cases

The use cases of a certain token are definitely an important factor to estimate its real value. Markets are not always rational, but sooner or later, tokens usually end up reaching their real value depending on the quality of the services they provide to users.

Fusion coin (FSN) has many use cases within Fusion’s cross-chain DeFi features and applications. FSN is used to pay network gas fees and to run DCRM nodes. It can be used in the different Time-Lock transactions: such as borrowing, lending, loans, etc. FSN holders can also stake their coins and earn passive income.

FSN coin can also be used within Fusion dApps. WeDeFi allows coin holders to use their Safebet no-loss lottery and to borrow Time-Locked FSN. The other dApp on Fusion is Anyswap, and Fusion coin was the only way to get its governance token ANY.

Wanchain coin (WAN) has similar use cases to FSN, it is used to pay gas fees for network transactions including Rivex and FinNexus transactions. It can also be used in the different dApps of Wanchain. Wan holders can stake their coins to earn passive income, or run nodes as validators. Wancoin will also be required to run the upcoming cross-chain storeman nodes.

Ren is a protocol, not a platform, therefore, Ren token has much less use cases than FSN or WAN. The main use case of the Ren token is to run a Darknode. Around 100k Ren tokens are required to run a node, this large number has been chosen to increase the amount of locked tokens, and the effect it could have on token price.

Speaking of price, let’s take a look at the current prices and market caps of the three projects and determine which coin or token offers the best buying opportunity right now.

Which is the best Project to invest in?

Of the three projects, Ren is the one that has been in the spotlight during the DeFi boom. Mainly because the DeFi space has been limited to Ethereum, a blockchain to which Ren provides liquidity. The current market cap of Ren is around $ 400 M, Wanchain’s market cap is around $ 54 M, and surprisingly, the market cap of Fusion is only around $ 26 M.

Yes, Fusion, the decentralized cross-chain platform that offers unique DeFi features such as Time-Lock, and dApps like WeDeFi and Anyswap is the one that has currently the lowest market cap. It is without a doubt the most undervalued project of the three, but even beyond our comparison, it is one of the most undervalued cryptocurrencies in the whole market. According to CoinStats, Fusion has the second highest adoption score in the crypto space. It is a score that compares the adoption of a certain project to its market cap, it helps investors to find the projects that could potentially take off at any moment.

Conclusion

Fusion, Wanchain and Ren are three interesting projects working on a fully decentralized cryptographic interoperability. The other solutions that are currently available in the market include centralized custodians such WBTC, or hub and zone models such as Cosmos and Polkadot that force new chains to adopt a certain standard.

The three projects in this comparison have a lot of features in common, but they are also different in some important aspects. Fusion and Wanchain are smart contracts platforms, they both have their own blockchains, and allow issuance of tokens. Ren is a protocol built on the Ethereum blockchain, with RenVM as a core product.

Fusion’s cross chain solution is based on the DCRM technology, it offers more integration possibilities. It is currently the only fully decentralized technology out of the three cross-chain solutions. The adoption of Fusion is increasingly growing after the launch of decentralized applications and platforms such as WeDeFi and Anyswap, and the implementation of convenient features for decentralized finance such as the Time-Lock function.

Surprisingly, Fusion has the lowest market cap out of the three projects. This can be seen as an excellent opportunity to invest in a project that offers a better technology than some of the top 30 cryptocurrencies by market cap.

Sources

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