What Are Darknodes?
RenVM is a cross-blockchain liquidity network made up of thousands of darknodes, or autonomously managed nodes.
A darknode can be hosted by anybody, however certain conditions must be fulfilled such as:
- Each node must use a virtual private server to run the RenVM software.
- Each node must invest 100,000 REN coins into the darknode registry contract.
These conditions create an incentive for node operators to resist malicious behavior by putting their deposits at risk.
Darknodes function as decentralized, trustless custodians for digital assets that users store on the RenVM platform. When the platform transforms a digital asset into an ERC-20 token, it enables users to collect fees. In peer-to-peer networks, nodes play a crucial role in establishing protocol security as well as facilitating network operations and the decentralized dark pool of the Republic Protocol is no exception in this case.
A darknode's primary function is to correlate orders from the Republic Protocol's scattered hidden orderbook which represents a more cooperative effort that is less computationally costly than Bitcoin mining.
When Darknodes find a match and confirm it in the orderbook, they employ order fragments to rebuild the private data of the orders after identifying the matched ones and validating them. The matched orders are sent to the relevant dark pool's settlement layer. At least one settlement layer must be defined by third-party dark pools. Similar orders are collected to be verified where Darknodes are subsequently rewarded for initiating the settlement. The reward goes to the first Darknode who acquires a sufficient quantity of matching order pieces and begins the settlement in a timely manner.
It's important to note that order shares are distributed evenly throughout the network. Transaction settlement costs are not paid solely in REN; instead, nodes are allowed to receive fees in other currencies such as ETH and various arbitrary tokens.
The REN token is often utilized as fuel to boost the sMPC network, which is powered by a Darknode (RenVM). Although the Darknode network is permissionless, in order to avoid the fabrication of a significant number of aliases, a bond of 100,000 REN tokens is mandatory to register and run. This prevents malevolent attackers from launching an unlimited number of Darknodes and flooding the network with errant ones.
According to the official documentation of RenVM, it is a big responsibility to run a Darknode for RenVM. It necessitates a reasonable level of participation in the network and community and introductory technical knowledge such as a familiarity with a command-line interface (CLI) is required. Users must update their Darknode and replenish it with ETH on a regular basis. Moreover, they should not participate in the RenVM ecosystem if they are not dedicated to contributing to the network's security, according to REN.
