*The first ever PoW-backed NFT was generated by Ergo developer anon_real, and is being sold to help fund creation of the new Ergo DEX.*

Ergo recently announced two major new developments: the [ability to create non-fungible tokens](https://ergoplatform.org/blog/2020-09-25-nfts-on-ergo/), and the [Ergo Auction House, a Marketplace for NFTs](https://ergoplatform.org/blog/2020-10-16-announcing-the-auction-house-nft-marketplace-on-ergo/).

**The very first Ergo NFT is [now for sale on Auction House](http://ergoauctions.org/#/auction/active).**

This is a unique, indivisible token mined by anon_real, one of Ergo’s anonymous devs. It is also the **first ever proof-of-work-backed token** on the platform. Moreover, it has the word ‘ergo’ hidden in its id:

24550c2dc71646fb369f1603f39f3e587c4c454e069036**6572676f**e985668c02

(The bolded characters, "6572676f", are the base16 encoding of "ergo".)

Anon_real is also developing Ergo’s DEX, and the ERG received from the same will be used to help fund that project. Between NFT auctions and the DEX, anon_real is contributing important infrastructure to Ergo’s DeFi ecosystem.

So, submit a bid, grab a piece of Ergo history, and help Ergo develop ground-breaking new DeFi technology!

The First Ergo NFT Auction Is Under Way!

*The platform allows users to sell Ergo’s NFTs – an important development in the growing DeFi movement – securely and easily.*

Non-fungible tokens, or NFTs, aren’t a new development, but with the rise of the DeFi space they are gaining significance and finding new use cases.

NFTs are indivisible unique or limited-edition tokens that can be used to represent physical or digital items: anything from a house or car to a piece of digital art, a series of images, an in-game item or other collectible. It’s already a booming sector for blockchain, and one that’s forecast to grow rapidly in the coming years.

[Ergo’s NFTs take a different approach](https://ergoplatform.org/blog/2020-09-25-nfts-on-ergo/) to conventional non-fungible tokens on platforms like Ethereum. Like so many areas of the Ergo ecosystem, the extended-UTXO model offers benefits and entirely new use cases.

**NFT auctions**

New dapp comes thanks to huge support of one of our anon developers, **anon_real**, who pioneered a user-friendly interface that makes it easy to form joint spending groups that require a quorum of signatories to make a transaction. [Auction House](http://ergoauctions.org/) enables users to sell NFTs securely and easily, auctioning them to the highest bidder.



![](/img/uploads/auctionpic.jpg)



*Users need to run a full node to connect to the marketplace, but access via Yoroi will be possible in due course.*

The ability to sell NFTs has lots of applications, both in its immediate form and in future developments.

Firstly, the NFT marketplace provides liquidity for a market that is typically illiquid. The physical art market, for example, is difficult to access for various reasons. That means it’s very difficult to value a painting; something is worth what someone will pay for it, and if there are only a few people who can bid, price discovery is inefficient. Tokenising the painting (or a digital image) and selling it securely online opens the process up to a global market of participants.

This can be combined with the ability to buy and sell NFTs using a conventional DEX. An artist might initially sell their work at auction to realise the highest price, but the new owner can then trade it on the secondary market – a useful feature if the artist subsequently becomes famous.

These two types of marketplace can also be used for the initial and subsequent distribution of governance tokens. A new DeFi initiative might mint, say, 100 NFTs, each representing a 1% vote in the project and conferring 1% of the platform revenues to the holder. These can be sold at auction for the initial distribution. If the owners ever need or want to sell their stake in the project, they can do so on an efficient and global market.

There are lots of other potential use cases for NFTs and their marketplaces. Many platforms integrate interesting and valuable features, such as the ability for the original creators of NFTs (e.g. artists) to receive revenues every time their work is sold in the future – something practically impossible in the physical world.

Check out [Ergo’s Auction House, NFT marketplace](http://ergoauctions.org/)! You can find the source code and installation instructions [here](https://github.com/anon-real/ErgoAuctionHouse) if you want to run your own marketplace.

Announcing the Auction House, NFT Marketplace on Ergo

*As with almost every other area of DeFi, Ergo Platform takes a different approach to NFTs that offers some interesting and unique use cases and benefits.*

NFTs look set to become the next major frontier for blockchain. Over the course of this year, crypto has become an accepted and [practically mainstream](https://ir.microstrategy.com/news-releases/news-release-details/microstrategy-adopts-bitcoin-primary-treasury-reserve-asset) (if still new) means of hedging against inflation and storing value. The [emergence of DeFi](https://ergoplatform.org/blog/2020-09-03-some-thoughts-about-defi-yield-farming-and-how-open-systems-should-be-used/) as a use case for blockchain has similarly been impressive over the past few months, regardless of the [issues that still need to be solved](https://ergoplatform.org/blog/2020-09-17-defi-finance-but-not-always-decentralised/).

Building on both of these, NFTs are an intriguing new asset class that offers functionality that is at once familiar to real-world users, but goes far beyond anything that has ever before been possible.

NFTs (Non-Fungible Tokens) are unique and indivisible blockchain tokens. They can be used to represent and prove ownership of digital products such as works of art, in-game items or characters, virtual trading cards and much, much more. Because an NFT can be used to represent ultimate ownership, they allow users to trade digital items and cryptographically guarantee provenance.

NFTs are becoming very big business. It’s an emerging sub-sector for blockchain, but one that is predicted to grow rapidly. The amount of tokenisable items has led one analyst to suggest this $100 million-plus use case for crypto will one day [become a trillion-dollar market](https://news.bitcoin.com/the-tokenized-metaverse-non-fungible-token-sales-to-surpass-100-million/).

**UTXO NFTs**

Most NFTs are currently hosted on Ethereum, while large marketplaces like [Rarible](https://rarible.com/) allow creators to sell their works and other users to buy and trade them on the secondary market. With soaring transaction fees, the costs associated with minting and trading NFTs can now be prohibitively high. Whatever the other pros and cons, there are benefits to using a platform that has both lower transaction fees and a long-term scaling plan.

However, just as Ergo’s extended UTXO model enables a [different approach to Oracles](https://ergoplatform.org/blog/2020-08-31-ergos-oracle-pools-and-what-they-mean-for-the-ecosystem/) and other core blockchain infrastructure like smart contracts, so it also enables innovation for NFTs.

One interesting feature is that Ergo can be used to create PoW-backed NFTs. For most NFTs, a user simply generates a UTXO with the token contract attached. But it’s also possible for miners to create special NFTs, where the id of the newly minted token is the id of a coinbase transaction. This has [all kinds of potential use cases](https://www.ergoforum.org/t/proof-of-work-backed-tokens/224/2), but the core idea is that a miner has the opportunity to create a special NFT when they mine a block. While any number of NFTs can be created via a regular smart contract, a finite number of these PoW-backed NFTs can exist.

A trivial application of this is creating memorabilia: imagine, for example, an NFT that commemorates the 1 millionth block of the blockchain. The block rewards are fungible and can be spent just like any other coins, but that NFT is unique. It can only ever be generated once, at the time the block is mined, and only the miner who added that block to the blockchain can do it.

**Unforgeable identity**

There are other applications of NFTs that use the extended UTXO model, including facilitating a new generation of complex dApps. For example, a dApp creator can generate an NFT associated with an address and smart contract. While anyone can use that contract, and even create a transaction using the private key of that address, the NFT owner can still maintain administrative rights or other privileges.

Let’s say you create a phenomenally successful exchange dApp, which pays a small percentage of trading fees to the owner – designated by ownership of that NFT. That token, and future revenues, can now be transferred and sold. The token can also be managed by a secondary smart contract, which could divide revenues among 100 tokens representing shareholders. The NFT could be used to update the dApp, or shut it down, if necessary – whatever conditions were coded into it. The point is that the NFT provides guaranteed, unforgeable proof of identity.

These use cases only scratch the surface of NFTs on Ergo. We look forward to seeing how the ecosystem develops, both on Ergo Platform and in the broader NFT space.