REN Token Analysis
REN December 2020
Token Analyst: Alexei Udall
Release date: December 25th 2020
Global Summary:
👍 NEUTRAL/BULLISH
Thanks for reading my REN token analysis for the SwissBorg DAO Token Squad.
In this analysis, I will detail my thoughts on the REN token from a fundamental and technical standpoint.
REN Has held nicely over $0.025c since October. It has not been able to recapture its all time high of $0.53c it achieved on September 2nd during the DeFi fuelled bull run from $0.15. REN has been particularly tied to DeFi due to its use case as a tool to tokenise Bitcoin into the ERC-20 token renBTC which then allows people to leverage their Bitcoin and other non ERC-20 coins to use in Ethereum based DeFi Protocols like Curve.Finance and many others.
The last few months have been extremely exciting for the REN team and the TVL (total value locked) in the RenVM has stabilised at over $350 million.
Fundamental Analysis:
👍 BULLISH
As previously noted the biggest trend in Crypto during the first half of 2020 was DeFi which helped improve market sentiment as a whole and attract a wave of new investors and arguably triggered the current bull cycle we are experiencing.
REN was a fundamentally important component of the DeFi boom due to it allowing DeFi speculators to leverage their Bitcoin and other non ERC-20 coins with ERC-20 Protocols such as Curve.Finance, Uniswap and other DEXes .
I have detailed below some key features REN offers.
- It currently allows holders of Bitcoin, Bitcoin Cash and ZCash to interact with ERC-20 protocols. With more coins in the pipeline.
- Unlike alternatives like Wrapped BTC (wBTC) renBTC does not really in a centralised third party and is supposedly a lot more decentralised.
- The RenBridge easily allows to convert your coins.
- The protocol is maintained by people operating Dark Nodes which requires Staking 100,000 REN.
Dark Nodes Explored:
A very important component of REN is understanding Dark Nodes. These help secure the RenVM and keep it functional. This also should drive demand for the REN token as 100,000 REN is required to operate a Dark Node. Fees that are generated from people using the RenBridge get distributed to the operators of the Dark Nodes
Criticism:
Some have criticised REN for potentially creating a HoneyPot of over $100 million of Bitcoin in a single team controlled multi -sig wallet.
However, the REN team responded that this is a stepping stone on the path to true decentralisation. You can read about this in full in the article linked below:
This was reported in Decrypt on August 28th: https://decrypt.co/40110/massive-honeypot-ren-holds-100m-bitcoin-centralized-wallet
Technical Analysis:
👍 BULLISH — Long term
Despite having had a euphoric rise to $0.53c ending in September we can can see that a cool down in the DeFi space resulted in a pull back to around $0.25–0.30c.
However, generally, I would feel bullish regarding REN in the long term.
Looking at the various indicators detailed below we can learn a lot about the performance of the REN token. The RSI has maintained stability showing strength. Volumes have also stayed high at over $25 million daily.
👍 NEUTRAL— Middle term
A breakout over $0.40c within the next week or two could signal a move to new all-time highs of $0.60c.
Falling below $0.25 for REN presents strong support at about $0.17c which was nicely tested in early September and rejected to the upside.
REN/BTC:
We can see what appears to be a decoupling from the BTC price starting around the beginning of November as Bitcoin pushed to record all time highs.
REN vs S&P500 index
As you can see from the chart below savvy investors believing in REN would have seen incredible 410% annual returns if they had invested early in 2020.
Massively outperforming traditional markets which have shown a still good 29% rate of return.
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About the author:
Written by Alexei Udall. I reside in the Republic Of Ireland and work in Tech with a focus on business Solutions, SaaS and payment acceptance which now also includes in the crypto space. A proud father of two girls and a member of the SwissBorg DAO! You can connect with me on LinkedIn:
https://www.linkedin.com/in/alexeiudall/
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