Republic Protocol is a decentralized darkpool exchange protocol. The term “darkpool” came from the traditional exchanges market – it is a platform for OTC trading. When traders want to sell a big amount of assets and to do it “silently”, without any market impact, they need darkpools. And the Republic Protocol team wants to give their solution to the rapidly growing market.
Republic Protocol Review
An important thing is that Republic Protocol it is not only a darkpool for the cryptocurrency world. It is the open-source protocol (you can view it on GitHub), which gives the possibility to create your own darkpool and to manage it. You will be provided with an order book, order matching engine and settlement by Republic Protocol. The official darkpool of Republic Protocol is RenEx: short for Ren Exchange.
How does it work?
For example, you want to sell 1000 BTC. It is a big amount of money which definitely has a market impact. But you don’t want anyone to know about it. You come to Republic Protocol darkpool and set an order. Then the decentralized network of nodes works to match orders, without knowing anything about the orders. The platform facilitates cross-chain trades through atomic swaps and implements the proper economic incentives to ensure that these trades are executed thoroughly.
Decentralized block order infrastructure
Republic Protocol uses Shamir Secret Sharing Scheme to break your big order in many small orders. After that, the decentralized nodes (called darknodes here) will look for corresponding buying orders. After two order’s fragments have been matched, an atomic swap is initiated between the two traders over the Republic Swarm Network, a decentralized peer-to-peer network. Using standard asymmetric encryption primitives, the details of the Atomic Swap are kept secure. The feature is that the order book is closed and nobody can assemble your full order from a lot of its parts.
Decentralized order matching
Order matching is the process through which the nodes match orders with each other without being able to observe the details of the order. To achieve this, traders first break up their order into a set of order fragments. Note that these fragments do not individually represent the fraction of the order’s value, but they simply represent the separation of sensitive data regarding the underlying order. Each node performs an order matching computation on the order fragments from multiple different orders and combines the results with the results from the nodes (that are using different fragments). The fragments are constructed in such a way that, after the computations have been applied, the resulting fragments can be combined to reveal not the underlying orders, but the result of the order matching computations for the underlying orders.
Atomic Swap infrastructure
The Republic Protocol also includes an Atomic Swapping protocol that is initiated between the traders that have their orders matched. The nodes facilitate passing messages (and where possible, setting up a direct P2P connection between traders) that executes the order.
REN Token is reward and payment token in the Republic Protocol ecosystem. The developers understand that the computational nodes must be incentivized to perform the order matching computations. It’s because the participants will not be willing to run order matching nodes if they have no financial incentive to do it, especially when running and maintaining order matching nodes is not free. The REN token is introduced to provide this incentivization. It is also used to pay bonds to the Registrar (Ethereum smart contract that organizes nodes into a network topology), allowing the traders and order matching nodes to participate in the Republic Dark Pool.
Also, REN is used for paying fees in the Republic Protocol. The fees provide a decentralized mechanism for the users of the system (i.e. traders) to remunerate those that are providing the computational power (i.e. nodes) necessary to fulfill the needs of the users. The traders pay an order fee in REN, when submitting an order. If the order expires before it is matched, the order fee is refunded to the trader. Any node that participates in the decentralized computation for an order that has been matched receives a share of the order fee (the shares are calculated by evenly splitting the order fee amongst all the participating nodes). The order fee is variable, orders with higher order fees will be favored by the order matching nodes.
REN Token Price
The Republic Protocol is able to guarantee that, unless the majority of nodes in the network are active adversaries, it is as secure as the ideal world protocol. If 50% of nodes are active adversaries, and they are enjoying the attackers’ best-case scenario, they are able to reconstruct all orders. However, the Republic Protocol ensures that it is impossible to achieve such a best-case scenario in the real world. In the typical case, 50% of nodes becoming active adversaries would only allow the adversaries to reconstruct 50% of the orders. An attempt to probe orders by submitting false orders is also an impractical attack surface, due to the financial commitment required to issue the required number of orders.
Regarding their roadmap in the whitepaper Republic Protocol team is dealing well with the deadlines. They promise to make official nodes maintained by Republic and they invite to test them on May 9th.
In Q3 2018 we should wait for full specification for Republic Protocol and partner nodes maintained by Republic partners. Also, REN-powered DAO will start its work.
In Q4 2018 more chains will be added. Litecoin is the first in a row (now Republic Terminal supports Bitcoin, Ethereum and ERC20 tokens). Also the scaling solutions for atomic swaps including Lighting & Raiden will be implemented.
Republic protocol Team
The head of the Republic Protocol team is Taiyang Zhang (CEO), He supported by Loong Wang (CTO), Noah Ingham, Susruth Nadimpalli, Yunshi Sun, Jaz Gulati and Divya Mary (developers). Hugh Greethead is the community lead with Sasha Pukhova in his team. Darren Toh is responsible for legal and communications) and Ross Pure – for the research.
Wall Street Journal says that in 2017, the total volume of OTC trading in USA was $270 billions. 15% of transactions were held on darkpools. This service became more popular on the cryptocurrency market as well. Some huge crypto-exchanges have their own darkpools – Kraken and Bitfinex among them.
Considering the rapid development of the project, Republic Protocol has a good perspective. You can find the latest news in their Medium blog or in the Telegram community. Wall Street Journal says that projects raised 35 000 ETH in total and the backers are «world’s biggest cryptocurrency hedge funds», so it may be a high-demand service in the future.
- Republic Protocol website
- Republic Protocol BitcoinTalk
- Republic Protocol White Paper
- Republic Protocol News