Recently, [Miami's Mayor](https://markets.businessinsider.com/news/currencies/miami-bitcoin-yield-miamicoin-crypto-francis-suarez-mayor-digital-wallet-2021-11?op=1) announced that the city would soon start paying residents Bitcoin yields. MiamiCoin, which launched last August, donates 30% of the rewards to the city when bought or mined. This initiative can be seen as an early version of a Local Trading Exchange System ([LETS](https://ergoplatform.org/blog/2021-07-01-lets-start-the-discussion/)) on the blockchain. With this kind of system, there are limitless possibilities for implementing different monetary policies for different localities.

El Salvador is planning to build a [Bitcoin City](https://finance.yahoo.com/news/el-salvador-create-bitcoin-city-045440657.html) by issuing tokenized government bonds on Bitcoin. Ten year-long tokenized bonds will be denominated in USD with 6.5% interest and the funds will be used to invest in mining farms, buy more bitcoin and build a city working off of a volcano power plant. El Salvador is setting the stage to lead mass adoption by creating real-life usage.

Tokenized bonds, stocks and ETFs will bring traditional finance to the decentralized which will unlock the potential of tokenized liquidity. However, these reside on the blockchain and could create network bloat. This is an issue known as the “scalability problem” of blockchains. Sidechains, state channels, non-interactive(zero-knowledge) proofs, SPV clients, [logarithmic space mining](https://ergoplatform.org/blog/2021-07-19-mining-in-logarithmic-space-nipopow-power-and-ergo/), roll-ups and sharding are some solutions that are being developed to overcome this problem. 

Ergo is perfectly positioned to address these issues as it already has many of the [tools](https://ergoplatform.org/blog/2021-10-29-ergo-ecosystem-scaling-solutions/) needed to tackle these future problems. Ergo scalability is limitless with the combined use of Layer 2 networks. Non-Interactive Proofs of Proof Of Work ([NIPoPoWs](https://nipopows.com/)) can power parallel second layers on Ergo’s eUTXO model.

Ergo’s infrastructure also allows trustless LETS, tokenized mutual credit systems as well as tokenized mutual funds. The extended UTXO model that Ergo employs is well suited for deploying private Layer 2 networks. Using Ergo’s Sigma Protocols, they can provide secure and scalable zero-knowledge cross-chain applications. 

As humanity marches towards mass crypto adoption, lack of bandwidth will be an ongoing issue for the tokenized world. The need for computers increased exponentially with new use cases in a wide range of sectors, thus causing a lack of supply in chip production. The same will go for blockchains with the need for network space. Ergo’s technology is built to scale for masses that live with limited bandwidth and hardware. Learn more about Ergo’s technology and ecosystem in [ErgoWiki](https://bit.ly/3x6Iak8).

Ergo Use Case: CityCoins

[The Ergo Auction House](https://ergoauctions.org/) is the open-source, decentralized NFT marketplace on the Ergo blockchain. Whether visual, audio or a custom token, users can list an NFT on Ergo Auctions or search for other NFTs to acquire. The first-ever NFT on Ergo was created almost [a year ago](https://ergoplatform.org/blog/2020-10-19-the-first-ergo-nft-auction-is-under-way/), and Ergo Auction House has been welcoming many artists ever since then. 

We are proud to present the newly revamped Ergo Auction House v2 website with a renovated user interface and new smart contract upgrades. 

![](https://lh5.googleusercontent.com/WyneQrI2oPwKd7tqzk0Lo8r_xLuyD22YscOKeZPLBymYVHAEWTFlZXk655aYlZ112JwXhrwr-jkvCaMOf5GrpPkfWu-CIZKW4QhsIBAnsx6DWIFpSiGnlLTmG35mXLDij32GJ1D_)

After many long nights, anon_real has implemented the V2 contracts which allow for **Artist Royalties**, enabling artists to claim a percentage of every resale for their artwork. Users can now mint NFTs and start an auction all from within the same website. Artists will also be glad to hear that Luivatra has integrated a warning in case of a suspected counterfeit of NFTs before bidding. 

Here are only some of the new features:

* Much easier user experience for issuing artworks, starting auctions, and placing bids for both buyers and artists. This is done by supporting the Yoroi dapp connector (currently only works with Yoroi Nighty) and ErgoWallet Android (by easy QR codes)
* Many UI improvements including notifications, in the AH artwork issuance page, owned artworks section, and more.
* Supporting other currencies alongside ERG. Currently, the AH supports ERG, SigUSD, SigRSV, and kushti token (in [@kushti](https://www.ergoforum.org/u/kushti)’s honor) as currencies.
* Royalty feature – artists can set royalty percentages for secondary sales upon issuance.
* Video NFTs.
* Audio NFTs with cover.
* Instant buy option.
* Better design for minimum bid which allows sellers to set the minimum bid amount as high as they wish without actually placing the first bid themselves.



If you are an artist there are several things that you should take into consideration for using the Ergo Auction House. Please consult the forum for [Artist Guideline](https://www.ergoforum.org/t/artist-guideline/2929)

The Ergo NFT community is buzzing right now with new drops and new artists appearing every day (See [this previous article](https://ergoplatform.org/blog/2021-11-01-ergo-new-standard-for-nfts/) for more). Ergo NFTs are already easy and cost effective to mint, and the gasless approach of Ergo is built to sustain cheap fees in the future. A non-custodial wallet like Yoroi or Android wallet will be enough to get your hands on Ergo NFTs.

If you are interested in NFTs, be sure to also visit our [discord](https://discord.com/channels/668903786361651200/892812133593677894)!

Ergo Auction House V2

[ErgoDEX](https://app.ergodex.io/swap) is a decentralized cryptocurrency exchange on the Ergo blockchain. The extended UTXO design of ErgoDEX allows it the unique ability to implement cross-chain liquidity among Cardano and Ergo exchanges. ErgoDEX uses the already familiar Automated Market Maker(AMM) and will also implement a decentralized order-book model.



The first UI release was meant to give early access in order to test ErgoDEX’s capabilities. The new UI release brings an elegant look with Day/Night viewing modes. Tokens are updated with their new logos and now the team is passing on to the next stage in the roadmap.

The ErgoDEX team is now implementing the decentralized order-book model on shared liquidity pools with AMM pools. After this stage, the next step in development will be Cardano integration. The team has already implemented the Plutus Port and now they are waiting for Cardano smart contracts to become functional.



![](https://lh6.googleusercontent.com/fFMG1PfRL27PO2Al6JF70qxKmoQt6z5dWlumKcx-rV4G522jda9y16PPKEmHShgxu52lpquVHLscnYlQ3yn7xc6ctkEd_CS3fxDpAfIVC2H8IfD-pCWiVea-PcbDbioj0kpT38qB)



Currently, the ErgoDEX Beta release can be used with Yoroi Nightly Connector. Users can swap ERG, SigRSV, SigUSD and provide liquidity for ERG/SigUSD and ERG/SigRSV pairs. There are also community token trading pairs Erdoge/Kushti. 



The new Yoroi release will soon enable using ErgoDEX directly and the Ergo team is working collaboratively with the EMURGO team to launch the wallet. 



The off-chain logic of ErgoDEX relies on nodes and the Off-Chain Bots design of ErgoDEX enables all participants to be able to run an ErgoDEX node and earn protocol fees. The decentralized off-chain bots will secure the decentralized nature of ErgoDEX and incentivize participants to host their own node.

**\
To check out the roadmap and the new ErgoDEX release, please see the  [ErgoDEX](https://ergodex.io/) website.**

ErgoDEX New UI Launch

During ErgoHack II, a community member initiated an ETH/USD oracle connector project!. The ETH/USD oracle pool is now live on the Ergo mainnet and can be seen on [Ergo Explorer](https://explorer.ergoplatform.com/en/oracle-pools-list). The ETH/USD connector is implemented similarly to the ERG/USD connector contract using the Oracle Core - a framework for deploying oracle pools of any asset on Ergo Platform.



Ergo Platform’s Oracle Core design facilitates setting up different oracles. With just 15-20 lines of code, almost anyone can deploy a connector to the Oracle Core. 



Oracles are the messengers between on-chain and off-chain data. Any kind of information verification between two parties will necessitate involving oracles. Therefore, decentralized exchanges, decentralized betting platforms, etc. will have to use the oracle services to get the information.



If you wish to verify the ETH/USD connector, learn about Oracle Core, and possibly launch your own connector, we recommend you check out the [GitHub release](https://github.com/Luivatra/oracle-core/tree/eth-connector).



Oracles are the backbones of decentralized finance, and they always need to have more validators. In order for oracles to be even more stable, they need to be more decentralized. As more people deploy their own pools as financial incentives increase, Ergo oracle pools will become more and more commonplace in DeFi ecosystems.

ETH/USD Oracle Pool Now on Ergo!

Ergo Raffle Beta version is live! Ergo Raffle is an incentivized crowdfunding platform for the community to gather funding for their ideas. You can now create fundraising campaigns using [beta.ergoraffle.com](http://beta.ergoraffle.com) with the support of Ergo smart contracts. 



Ergo Raffle is a prototype for decentralized crowdfunding applications on Ergo. Applications can include the collection of funds for doing academic research to fund blockchain improvements as well as creating sophisticated initial coin offering contracts. At this stage, Ergo Raffle Beta is in its testing phase but it is available for use by the Ergo community.



## Terms Of Use



Before creating or participating in a raffle, users should agree to the following terms:



* Creating or participating in raffles and receiving donations is not illegal in your country.
* You are over the legal age required to use financial services such as raffles and are not creating a raffle on behalf of an underage person or anyone who is not legally allowed to create raffles.
* You are solely responsible for all legal and/or moral obligations and liabilities - the service you create does not have any obligations or liabilities.
* You are participating in a raffle for the described purpose. You are making donations solely for supporting the project without any intent to win the prize.
* The raised funds will be used solely for the described purpose of the raffle.
* You are solely responsible for reporting earnings and paying the appropriate taxes.

 

## Using Ergo Raffle

There are two ways for a user to participate in the platform: creating or joining a crowdfunding raffle. 

When creating a raffle, the following parameters must be indicated:

![](https://lh6.googleusercontent.com/nxFsQV0w1VslPeiM9JBzXrDZzv_-Q32kh1rwpWWeMdlCU-Rcc-HJpU-kjg1w1eVCZ6LPwhCdypxI5xMHx37C8W2yXaZOrsRYj7hNv4joLyg3hMedkMT-BY2ToozQPHMOlvmH3qW3=s0)

\- **Name and Description**: Information about crowdfunding proposal

\- **Ticket Price**: The price of each ticket

\- **Deadline**: The end time of the crowdfunding (in Blocks)

\- **Donation Goal**: Total amount of ERG to be raised. This amount, if met, will be shared between charity, winner, and service.

\- **Shares**: What percentage goes to the raffle winner and what percentage goes to charity. There is a 5% fee that goes to the application.\
\
When you are creating a raffle, you should define your funding goal and the deadline. If the funding target is not reached before the deadline, the raffle gets canceled and participants get their donations back.

The share ratios define how much of the funding will go to charity and how much will go to the winner of the raffle. In the end, it is an incentivized crowdfunding application. Participants may choose to join the raffle for the chance to win while also supporting an idea that they like. 



## Team Raffle



This system was created to build decentralized crowdfunding for a variety of purposes. The project is open source and its [documentation](https://github.com/ErgoRaffle/raffle-documentation) provides an example for creating a decentralized funding application on Ergo. It combines randomized selection with deadlines. Applications that utilize Ergo Raffle’s properties can implement several of its features, such as “refunds” for an ICO, “time-released buys” for a DEX, and “randomized selection” for a decentralized choosing mechanism.



Ergo Raffle is a project initiated by community developers. They are the winners from the [first ErgoHack](https://curiaregiscrypto.medium.com/ergohack-results-f7d72711a9db) and they did a lot of work to improve UTXO based Multi-Stage Contracts. They garnered a lot of attention from the Ergo core developers and continued to improve their hackathon project to complete their dApp's smart contract application. We applaud their efforts and creativity, and look forward to seeing how their work continues to evolve.



## GET READY FOR ERGOHACK II



The next ErgoHack event will be held from October 8-10 and the application form will be available soon. If you are interested in contributing to the Ergo ecosystem, meet with like-minded people, learn from Ergo developers and win prizes, we invite you to apply. You can enter with a team or apply individually and join a team with other solo developers. Stay tuned for further announcements!

Ergo Raffle

As we approach the [ErgoDEX](http://ergodex.io) launch, it is important to highlight the capabilities of UTXO based DeFi (Decentralized Finance) smart contracts. More recent Layer 1 projects tend to be built on the Accounts model of Ethereum while Ergo is one of the few blockchains working to improve DeFi on the UTXO model that Bitcoin introduced. UTXO offers greater functionality and scalability for DeFi contracts through its lighter design when compared to the Accounts model.

Disclaimer: Decentralized Finance platforms are still in the experimental phase, therefore it is important to VERIFY and RESEARCH before TRUSTING the properties of a smart contract. When investing in new projects on decentralized exchanges, users should verify that the smart contract is designed in the way the ISSUER claims.

## Initial Coin Offering on ErgoDEX

An Initial Coin Offering (ICO) is somewhat similar to an Initial Public Offering for traditional financial instruments such as stocks. It is basically a crowdfunding phase for independent developers who want to build their particular DeFi project. 

A decentralized exchange creates an equal playing field for both developers and investors. It removes certain entry barriers and allows each participant to participate in the crypto ecosystem. With ErgoDEX, users can initialize coin offerings without the need for a centralized structure (eg. Binance’s Initial Exchange Offering) with the potential to reach a larger user base. 

Similarly, investors can participate in an ICO (or in the case of a decentralized platform, Initial DEX Offering - IDO) with amounts as little as five  dollars without the need for KYC compliance. During the ICO process, users enjoy full control of their funds while interacting with the ErgoDEX. The user’s private wallet (like a Yoroi wallet) interacts with ErgoDEX and holds the assets until transactions are verified and completed.

The ErgoDEX is a decentralized finance platform where all users can participate in the ecosystem confidentially and securely.

## Investor Safety

An ICO contract consists of 3 parts: the issuer, the buyer and the liquidity pool. Smart contracts can verify: 

1. If the issuer created the token, 
2. If the buyer has the ERGs to invest,
3. If the liquidity pool contains enough liquidity for the desired exchange pair.

After that, the issuance stage takes 3 phases

1. Funding: Buyers send ERGs to liquidity pools in a predefined time.
2. Control: The funding epoch closes and the issued tokens become unlocked
3. Withdrawal: In this phase investors can claim the tokens.

Because everything is on-chain, there can not be a point of failure in the process. If a user examines the offering’s smart contract, they can verify whether each step will be executed as proposed. Questions dealing with how to participate, how to receive tokens and when tokens will be received can be verified through an analysis of a particular ICO contract.

## Your Keys, Your Funds

It should be kept in mind that although ErgoDEX is designed as a fail-proof exchange application, it does not mean that every project listed on ErgoDEX will be fail-proof. Users will need to verify the issuance contract in order to secure their funds because decentralized Exchanges can allow anyone to create an ICO contract. Therefore it is wise to use common sense to be aware when investing in new ICO’s and the contracts that govern those tokens. After all, it is a contract and it is always prudent to review a contract before agreeing to any terms.

In addition to the aforementioned DEX properties, ErgoDEX can provide “time released orders” where investors funds are released gradually while funding a project. There is also the option to provide a “buy-back order” which creates the ability to refund investors. These features offer a layer of security and oversight by potentially prohibiting developers from receiving the investments in the event they do deliver on the promised project. If the project is not proceeding as advertised, investors can withdraw their remaining funds and exit with minimal loss. 

With Ergo, we are trying to create an equal playing field for all users while building safeguards to prevent malicious actors.

### ErgoDEX is coming soon!

It is already designed so that users will be able to provide liquidity pairs for tokens such as SigRSV / SigUSD / ERG / ADA while earning commission fees. For more information on the features of ErgoDEX, please visit [ergodex.io](https://ergodex.io/) and check out this [interview with the ErgoDEX Team](https://en.cryptonomist.ch/2021/08/14/interview-ergodex-decentralized-exchange-ergo/). Additional resources include our article, [ErgoDEX: A Cross Chain Workhorse](https://ergoplatform.org/blog/2021-07-21-ergodex-a-cross-chain-workhorse/), as well as a write up on how users can try out the release of [ErgoDEX Beta](https://ergoplatform.org/blog/2021-08-11-ergodex-beta/).

Initial Coin Offerings on ErgoDEX: Security and Peace of Mind 

 We're pleased to announce that the ErgoDEX team have launched their first beta!

To access the beta, you’ll need to follow the steps below and install Yoroi Nightly, the dApp connector - and get your hands on some test tokens. 

The ErgoDEX Team has put function first for this initial beta. However, there is a beautiful interface already designed which is being implemented - stay tuned!

### dApp Connector

To interact with the ErgoDEX Beta UI you will need to install the following two extensions which are available on either Google Chrome, Brave or Sidekick. The Chrome versions can be found below;

* [Yoroi Nightly](https://chrome.google.com/webstore/detail/yoroi-nightly/poonlenmfdfbjfeeballhiibknlknepo) - Yoroi wallet’s test environment
* [Yoroi-Ergo dApp Connector Nightly](https://chrome.google.com/webstore/detail/yoroi-ergo-dapp-connector/chifollcalpmjdiokipacefnpmbgjnle) - Enables the ErgoDEX UI to connect to your wallet

Once these extensions are installed, create a new ERG wallet within the freshly installed Yoroi Nightly extension and send a small amount of ERG (~1) to cover protocol fees from your current wallet. 

### Tokens

In order to test the tokens, there’s a faucet available at this address that provides *WT_ERG* and *WT_ADA*. Simply replace *YOUR_ADDRESS* with your ERG address in this link. 

[mint.ergodex.io](https://mint.ergodex.io)

This will provide 10k WT_ERG and 10k WT_ADA tokens (one request per address). These are test tokens and do not have any monetary value

Congratulations! You are now completely ready to start testing the beta interface available at [beta.ergodex.io](https://beta.ergodex.io/)

### But wait… there’s more. 

In order to give the initial system a good test, we’ve partnered with the esteemed Erdoge token which is tradeable on ErgoDEX under an ERDOGE/KUSHTI liquidity pair. These are Ergo native tokens (with no real value) and are available for free from members throughout the Ergo Community chats. (That's if I don't get them first).

![ErgoDEX and ERDOGE best partnership logos](https://lh3.googleusercontent.com/PeWh8JR8_AMyX5o4twZmBMfKD10dfd710qbtuWfNChl1WxTU7m65FJedNvSyupDZQohuoKqa4Af5l_68xH0BN9TflH2hRvM5mpWmtH9a3rTo-7q-p-YNP8sgi9S_IU4HTsNEUi1n)

### Next Steps

Once there has been some testing with the existing native tokens outlined above, the tokens from SigmaUSD (SigUSD/SigRSV) can be added -- freeing them from the constraints and limitations of their existing contract.

Please open an issue on the ErgoDEX [Front-End Github page](https://github.com/ergolabs/ergo-dex-frontend) with any comments or suggestions!

ErgoDEX Beta - Everything you need to know

AgeUSD is a decentralized stable coin issuance protocol. That means everyone can mint [SigUSD](https://sigmausd.io/#/) (that is pegged to the US dollar) or mint SigRSV, providing the reserve for the platform. Via smart contracts, people can hold USD that is backed by ERG and earn commission fees by locking their ERG as reserve capital. This model can also be known as the [future-growth-backed](https://medium.com/reserve-currency/why-another-stablecoin-866f774afede) stablecoin model.



SigUSD is backed by reserves and not by collateral debt positions. A reserve-backed model is a superior option in preventing cascading liquidations during extreme volatility. This is achieved by locking the reserve tokens to protect the pegged value. In a collateralized-debt model, such as MakerDAO, sudden spikes in prices can create deep liquidation shocks if users of the protocol do not hold enough collateral to deal with the volatility. This has been seen in the [12 March Collapse of MakerDAO](https://blog.makerdao.com/the-market-collapse-of-march-12-2020-how-it-impacted-makerdao/) where ETH went on sale for as low as 0 dollars.



AgeUSD has also endured an attack during the initial launch of SigUSD. A whale ([bearwhale saga](https://ergoplatform.org/blog/2021-05-13-bearwhale-saga/)) did not use the SigUSD interface but instead interacted directly with the contract. Most of the community was led to believe that the ERG price went up so they correspondingly minted large amounts of SigRSV. The reserve ratio then went over 2300% when the ERG price was facing volatility. By directly using contracts with script, BearWhale profited from sudden price changes at the expense of the initial SigRSV holders. This was because when users jumped in at the initial launch, the reserve ratio skyrocketed and created exit liquidity for the bearwhale. Since this attack, the contract has been redefined to work on a 400-800% reserve ratio.



## Tokenomics

The protocol holds the reserves between 400% and 800% to create healthy liquidity for both buyers, sellers and holders. 



The contract stops users from redeeming SigRSV if the reserve ratio goes below 400%, to maintain USD and SigUSD parity. If the reserve ratio goes above 800%, it stops SigRSV minting to prevent congestion for SigRSV holders and to incentivize a healthy SigUSD issuance.

If the contract does not hit a 400% reserve ratio, a user can not mint SigUSD by locking their ERGs. Above a 400% reserve ratio, users can purchase SigUSD. So when the price of ERG grows, more SigUSD can be issued according to the total market cap of Ergo.SigUSD will always be $1 and it will be backed by four times more SigRSV to prevent the reserve ratio from going below 100%. This makes it equal to a 75% collateralized debt position. If someone mints 100$ worth of SigUSD, there will be 400$ worth of SigRSV to back the corresponding SigUSD. This way SigUSD’s peg to the USD will be protected while also preventing flash crashes if the reserve ratio falls below 400% in AgeUSD protocol.Please see the InfoGraphic below:

![](/img/uploads/sigremeed-purchase.jpg)

SigRSV holders benefit from the transactions on the protocol. When one mints SigUSD or redeems SigUSD, they pay a 2.25% fee to the protocol which goes to the reserve holders. If one is a speculator, they can also bet on the ERG price going up or down to profit from reserve ratio volatility by minting or redeeming SigRSVs. However, AgeUSD is still very new so speculative bets on its protocol metrics may not be suitable for the average user.





## Algorithmic Stable Coin



A smart-contract-based stable coin issuance protocol is important for providing liquidity to decentralized finance platforms. Cash, or asset backed stable coin protocols, are prone to legal issues and are controlled by central entities. That makes them unreliable for truly decentralized and immutable DeFi platforms. Users should have a chance to hold their own choice of digital fiat.

\
Fiat pegged tokens are a vital part of the cryptocurrency ecosystem for integrating traditional finance into a new one. National currencies are inevitable at this stage because we pay for goods and services with the fiat of our respective countries. Therefore, we will continue to valuate cryptocurrencies on their denominated values to place them within our current economies. 

**\
The AgeUSD protocol will give a boost to the upcoming [ErgoDEX](https://ergodex.io/) release by providing USD liquidity. With the introduction of SigRSV-SigUSD pairs, liquidity on theDEX will balance itself with the AgeUSD protocol. As usage increases, this will affect both ErgoDEX and the AgeUSD protocol in a mutually beneficial way, creating a sustainably flourishing environment for new projects.**

Ergo’s AgeUSD Protocol: SigRSV and SigUSD

*You can [vote](https://cardano.ideascale.com/a/dtd/ErgoDex-Plutus-Port/352410-48088) for ErgoDEX in Project Catalyst Fund 5*



Within a few weeks, Ergonauts will witness the highly anticipated debut of Ergo’s decentralized exchange: ErgoDEX. A decentralized exchange (DEX) allows users to trade assets and provide liquidity through the execution of smart contracts - there is no need for any intermediary. Ergo’s PoW (Proof of Work) consensus utilizes the eUTXO model (extended unspent transaction output) when performing transactions. With its use of Σ-protocols (a type of zero knowledge proof), Ergo smart contracts are highly efficient and secure with features such as ring-signatures, multi-signatures, multiple currencies, advanced privacy and self-replicating scripts.



Before diving in any further, it might help to discuss terminology that may be unfamiliar to some readers.



Automated Market Maker (AMM) - AMM’s enable users to commit trades through smart contracts. These smart contracts provide a trustless environment where algorithms execute the trades from liquidity pools. An AMM also incentivizes participants to provide token liquidity for transactions on the exchange.



Order Book - This type of trading tool allows users to list buy/sell prices for different trading pairs. When a trader lists a price they are willing to buy/sell at, it is called a limit order. An order remains open until cancelled or another user agrees to buy/sell at the price listed. Users who are familiar with centralized exchanges like Coinbase and Binance will recognize this type of order book.



Atomic Swap - This type of exchange allows users to connect their wallets to do straight swaps between different tokens via the DEX.



In order to get a better understanding of how ErgoDEX will be situated in the DEX market, it helps to take a look at pre-existing DEX’s. Those who are familiar with the crypto industry have probably heard of Uniswap, Pancakeswap and Mdex. These DEX’s exist and operate on several different chains: Uniswap on Ethereum (ETH), PancakeSwap on Binance Smart Chain (BSC), and Mdex on Huobi Eco Chain (HECO) and BSC.



Uniswap offers an AMM and the ability to swap ERC-20 tokens but since the transactions happen on the ETH network, costs can rise with [gas fees](https://coinmarketcap.com/alexandria/article/what-are-gas-fees). PancakeSwap and Mdex also offer AMM’s but there are [serious concerns about the centralization](https://bitcoinist.com/get-educated-on-binance-smart-chain-decentralized-or-centralized/) of BSC. Of these three DEX’s, Mdex is the only to offer cross chain interoperability.



ErgoDEX will be a signature dApp in the Ergo ecosystem, offering secure and efficient cross chain liquidity and interoperability on both the Ergo and Cardano networks. Through the eUTXO model, ErgoDEX will also allow for shared liquidity between the various exchanges on top of the two blockchains. Users will have the option of an AMM, Order Book and/or Swap function while also having the opportunity to earn incentives when providing liquidity on ErgoDEX. The DEXes we discussed earlier offer only some of these functions. With ErgoDEX, users will have access to a fully decentralized cross chain DEX without needing to worry about their privacy or high transaction fees (such as gas fees).



There are several other DEX projects being developed for deployment on the Cardano network, but none offer all the combined features that ErgoDEX promises. With Ergo’s Σ-protocols and NIPoPoWs operating as dynamic tools in the design and implementation of ErgoDEX, we may be looking at the new standard in the DEX market. 

**\
For an overview of the roadmap and development team, visit [ergodex.io](https://ergodex.io/)**

ErgoDEX: A Cross Chain Workhorse

A local exchange trading system --- or ‘LETS’ for short --- facilitates exchange between members by providing a local currency and a directory of offers and needs. LETS allows people to create value within their community, and barter collectively - exchanging their skills and services in return for skills and services they would have otherwise paid for. 

LETS can be thought of as a mechanism to facilitate the velocity of trade, goods, and services out-with the existing monetary system, allowing us to create sustainable local economies. To give a tangible example; one member may offer a couple of hours of tech support and use those tokens gained to buy a piece of art listed by another member. 

LETS have historically become popular during times of crisis. One of the first LETS' was founded by Michael Linton in a Canadian town stuck in depression back in 1981. LETS were also popular during the 1998-2002 Argentine Great Depression. Most LETS groups are small and consist of maybe 50 to 250 members, usually with paper-based credit notes and ledgers maintained by a committee. Similar systems have arisen in recent months amidst the pandemic --- [Tenino, Washington, started printing wooden money to facilitate trade between its residents](https://edition.cnn.com/2020/06/20/us/tenino-washington-wooden-money-trnd/index.html). However, these analogue systems are inherently prone to counterfeit notes, dishonest activity by administrators, and, perhaps most importantly - human error. 

As lockdowns across the world effectively shut down whole sectors and a large part of the economy, we are entering a new era at a breakneck pace. Technology like Ergo can efficiently address this problem, building bridges between local economies without commercial or central banks. These separated communities could still be connected via gateways, allowing liquidity to move between them and avoiding exposure to toxic debt, creating a system that is immune from both inflation and depressions. Many variations of LETS could exist for individuals and small businesses, with varying participation criteria, credit limits, collateralisation requirements. 

Additionally, thanks to Ergo’s [sigma protocols](https://ergonaut.space/en/sigma-protocols), creating a ‘[Trustless LETS](https://github.com/ergoplatform/ergo/wiki/A-Trustless-Local-Exchange-Trading-System)’ on top of Ergo is also possible. A Trustless LETS has no membership record, therefore, no management committee is needed for enrolment allowing it to operate with full autonomy. This will be discussed in more detail in an upcoming article. 

If the ideas discussed here interest you, LETS start the discussion! Join us on the [\#lets](https://discord.gg/BVpT8vRUMa) channel on Discord -- or on [Ergo’s Agora](https://t.me/ErgoAgora), a Telegram group chat used to facilitate open discussions around privacy, anonymity, trust, economics and related topics.

The need to reform the global financial system has been evident since the last crisis in 2008. Now, COVID-19 has forced our hands. We cannot delay, and the best way to start is from the grassroots. 

Cryptocurrency should provide tools to enrich ordinary people. Their small businesses providing no much above making ends meet, not depersonalized big financial capital. This is what inspired me. This is my dream.

* [The Ergo Manifesto](https://ergoplatform.org/blog/2021-04-26-the-ergo-manifesto/)

LETS start the discussion

#### Ergo Blockchain is Layer 1 Protocol for powerful Decentralized Finance Contracts that builds advanced cryptographic features and radically new DeFi functionality on the rock-solid foundations laid by a decade of blockchain theory and development. The Proof of Work consensus algorithm and underlying UTxO model enable robust scalability and security. Ergo is also partnered with [EMURGO](https://emurgo.io/) , the commercial arm of Cardano, to improve research on blockchain and zero-knowledge ecosystems. To check out some smart contract deployments, see our GitHub repositories [here](https://github.com/ergoplatform) and [here](https://github.com/Emurgo).

## Stablecoin

Blockchain assets can be extremely volatile. That’s why investors often seek digital assets which are pegged to national currencies. A Stablecoin is the most primitive integration of cryptocurrencies with the off-chain world. Until DAI, fiat custody services were provided by centralized services. The first example of a stable coin, USDT, is backed by [actual dollars](https://cryptobriefing.com/external-auditor-first-confirm-tethers-usdt-backing/) held in banks. However, for a decentralized financial system, we need other means of fiat-pegged currencies. 

Launched in February, Ergo’s native stablecoin SigUSD is based on AgeUSD protocol to provide a robust Reserve/Mint contract. Providing a truly decentralized finance experience. It’s collateralized with its own native cryptocurrency reserves ERG using SigRSV as the trust component which gives SigUSD’s $1 value. SigRSV collateral ratio is set to a minimum of a 400% ratio with SigUSD. This design prohibits liquidations such as we saw in [2020 March crash](https://forum.makerdao.com/t/black-thursday-response-thread/1433). As Emurgo states, "Black Thursday," when MakerDAO CDPs were triggered for liquidation due to volatility and then sold for $0 due to blockchain congestion that prevented others from bidding, demonstrated that a new design is needed. For SigmaUSD, this scenario is not possible.

## Oracle

Oracles are the backbone of a decentralized financial system. It connects off-chain data with the on-chain world. Normally, ETH has no info about the current market price. During a swap order in a decentralized exchange, a swap contract needs to call the data from various data sources to obtain market price. Thus, oracles are the messengers of the crypto ecosystem. Not only in atomic swaps but also in more complex interactions such as lending/borrowing assets or dynamic market-making need the data feeds provided by oracles. DeFi ecosystem suffered from Flash Loan attacks, caused by [misinformation from centralized price oracles](https://insights.glassnode.com/defi-attacks-flash-loans-centralized-price-oracles/).

Ergo developed [Oracle Pools](https://ergoplatform.org/blog/2020-08-31-ergos-oracle-pools-and-what-they-mean-for-the-ecosystem/) to maintain a robust DeFi ecosystem. Because of the eUTXO design and its rich programming language ErgoScript, oracle networks can be more decentralized. In the extended UTXO model, we have a lot of flexibility and power available to build new protocols. This can be utilized to construct oracle datapoint hierarchies of confidence. In short, they are an abstraction above oracle pools which allows us to scale the benefits of oracle pools as much as we desire, at the cost of price and speed. [ERG/USD oracle pool](https://explorer.ergoplatform.com/en/oracle-pools-list) is running on Ergo Blockchain.

## NFT

Blockchains aren’t only about cryptocurrencies. Audio or visual artworks can also be deployed on immutable smart contracts of blockchains. These artworks are represented by [Non-Fungible Tokens](https://en.wikipedia.org/wiki/Non-fungible_token). Furthermore, artworks can be traded in decentralized auction houses. This would help artists to reach the world without any restriction of governments or without any need for centralized licensing firms. It means the democratization of art markets with the help of public blockchain.

Some examples like [Rarible](https://rarible.com/) or [Opensea](https://opensea.io/) are auction markets running on Ethereum Network. Any artist can create and sell their artwork in there, however, gas prices to mint an NFT can take up to $100. Ergo’s scalable and faster design would reduce the gas costs to almost zero, without giving up security or speed. [Ergo NFT Auctionhouse](https://ergoauctions.org/#/auction/active?type=picture) is open for months and it allows listings for a picture, audio, or any other kind of non-fungible tokens.

## DEX

Until 2020 DeFi Summer, Value Locked in DeFi ([TVL](https://medium.com/coinmonks/google-sheets-analytics-total-value-locked-in-defi-33b926c18a9f)) was too low to use the platforms effectively. After an increasing interest and new token issuance every day, Decentralized Exchanges (DEX) came into the sunlight. Their benefits are for people who don’t want to give up the custody of their funds. DEXes democratized the exchange experience for both blockchain developers and crypto investors. 

[ErgoDEX](https://ergonaut.space/ergodex.pdf) can provide more functions than Ethereum based DEXes. ErgoDEX [has more properties](https://ergoplatform.org/blog/2021-04-06-ergodex-model-amm-and-order-book-type-exchange/) such as limit orders, partial filling, and buy-back supports. Ergo’s Multi-Stage Contracts allows for timed release payments, so a code implemented in the contract can help investors to cancel their order with a minimal loss if the developers of the project don’t deliver their promises. With the implementation of NIPoPoWS, DEX will be interoperable in both PoS and PoW blockchains. Users can enjoy the freedom of exchanges with self-custodial wallets.

## DAO

DAO stands for [Decentral Autonomous Organizations](https://www.investopedia.com/tech/what-dao/). Cryptocurrencies are decentralized (not all of them!), and so their platforms. The governance of these platforms is run by decentralized entities. Every decision is made by pseudo-anonym individuals of DeFi platforms for prohibiting the centralization of power. Therefore, certain tokens are used for voting or making enhancements to these DeFi platforms. [New coin issuances](https://wbtc.network/), redefinition of purposes etc. are all very vital features and can’t be left to a small group of individuals if the crypto ecosystem is for the masses. [Zero-Knowledge Treasury Vaults](https://ergoplatform.org/blog/2020-09-04-announcing-the-zk-treasury-on-ergo/) with multi-key signature are the first example of a DAO in Ergo Blockchain.

## Lending - Borrowing

Lending and borrowing are two components that increase liquidity flow in financial systems. For example, you have Bitcoins but you want to leverage your holding without selling your BTC. So, you can stake your BTC (you can also use your house as collateral in this sense) as collateral to borrow SigUSD and use it in exchanges or yield farming protocols. On the other side of your interaction, another user can leverage her unused SigUSD by staking in the lending protocol. Traditional banks have very low-interest rates and they might suck up a lot of revenue from your deposits. With decentral lending protocols such as [Compound](https://compound.finance/), users will be able to use lend/borrow services and move their funds across all crypto ecosystems without any need for centralized platforms such as banks or exchanges. Crypto lending protocols are open to more experimental designs such as [interest-free loans](https://www.ergoforum.org/t/interest-free-loan-contract/67), innovating even more use cases on blockchains.

## Derivatives

Besides buying and selling the tokens of a protocol, traders also want to monetize via various strategies such as options or leveraged future contracts. In traditional finance, these tools are provided by brokerage firms and in the crypto world by centralized exchanges. However, this can turn out to be very harmful towards traders by making exchanges big casinos who can see the player’s hands. That’s why in decentralized finance, there is also an alternative as options or derivatives trading smart contract platform. [Synthetix](https://www.synthetix.io/) is an example of leveraged assets trading platform. The platform token creates liquidity for the traders who want to take leveraged positions. [Hegic](https://www.hegic.co/) on the other hand provides an options trading platform for traders who wants to bet on call-put options via smart contracts. These are just two examples of derivatives protocols on Ethereum. Ergo Blockchain’s Multi-Stage Contracts can also provide these protocols on top of it.

## Insurance

Another big sector of the finance industry is Insurance. Every exchangeable asset carries a risk of losing it, whether by unprecedented risks such as taking a bullet to your Ledger Wallet or foreseeable risks such as [rug pulls](https://www.coingecko.com/en/glossary/rug-pulled). New protocols emerged such as [Nexus Mutual](https://nexusmutual.io/) to tackle the decentral insurance problem. If you think about insurance, it pays a premium to risk bearers in case a bad event happens, exchanging your money for security. In a Decentralized Insurance platform: Your participation, risk bearers’ participation and validation of the trade by oracles can all be governed by smart contracts to create a smoothly functioning DeFi ecosystem.

## Yield Aggregation

So after an expansion of new decentralized exchanges such as [Bancor](https://bancor.network/), [Balancer](https://balancer.finance/), [Uniswap](https://uniswap.org/), [Sushiswap](https://www.sushi.com/), and [Curve](https://resources.curve.fi/), people are started to look for easier ways to move capital around those exchanges to create the best yields. Yield Aggregators are helping users to automate the liquidity farming actions. The first example of a yield aggregation protocol is [Yearn Finance](https://yearn.finance/). In the protocol, users can choose different yield farming strategies among the vaults deployed. Not only users but also developers can leverage yield farming platforms by creating their unique yield farming strategies and deploying them on protocols. Such examples will be very useful for market-making algorithms in the future by supporting deep liquidity all across DeFi.

## Index Coins

Not all crypto investors are conscient about different blockchain use cases. Some of the investors may want to benefit from indexed tokens to invest in various cryptocurrencies. For such an innovation dynamic market-making(DMM) algorithms would be necessary to adjust the funds after price changes. Besides, people who will release index tokens must have the market knowledge to decide which tokens must be involved in the indexed and for how many percentage. Some examples of index coins running on Ethereum are ASSY, YETI, PIPT, YLA issued by [Powerpool Protocol](https://powerpool.finance/). 

## Asset Tokenization

Asset Tokenization is meeting traditional financial assets with crypto. A centralized exchange [FTX](https://ftx.com/markets/stocks) provides US stocks in exchange for cryptocurrencies. This phenomenon, however, is very new due to regulation problems. Stock tokens are not yet traded on decentralized exchanges. Another example of tokenization of real-world assets would be real estate tokenization. With the help of cryptocurrencies, [houses can be fractionated](https://labsgroup.io/) into thousands of tokens representing real estate. These kinds of implementations will help retail investors to invest in houses all around the world with minimal savings.

*All the utilities of traditional banks are becoming decentralized applications on smart contract platforms. Ergo is providing robust and rich infrastructure with **ErgoScript** language to support a complex DeFi ecosystem powered by **Multi-Stage Contracts**.*

DeFi Ecosystem

*The design of Ergo’s oracle pools are more efficient and programmable than using multiple single oracle data points such as in Chainlink’s oracle design. We build hierarchies of confidence using oracle pools and pools of oracle pools in Ergo. It's faster, cheaper, and more beneficial to the end user.*



## What are oracles?



Oracles in blockchain serve as messenger agents, connecting two distinct points of data sources while guarding the reliability of the information. This is indeed a valuable job as many people and decentralised apps rely on these datapoints to ensure continuous operation. Furthermore, because decentralized finance doesn't use middlemen, the *accuracy and speed* of oracles are even more vital to sustaining a functioning blockchain ecosystem. Oracles keep both internal and external communication of an application and ensure its consistent and robust operation.



A real-world example of this is the sigmausd.io stablecoin, which utilises an ERG/USD oracle pool and  refreshed every 12 minutes. When such large amounts of collateral are at stake, it is vital that these data points are accurate and reliable. 



In DeFi, 3rd parties can also benefit from oracles via incentives to keep the network safe. This makes personal investors valuable participants in the ecosystem. Not only the banks or big institutions - individuals can also participate and get rewards for contributing to the system. People can benefit from this immense transaction of data by acting as a data feed themselves.



## Hierarchy of Trust



Yet the internet deals with a great amount of data and it's not true that everything is right. That's why it's important to access real information. This can be done via assessing a *trust score* to data sources, regrouping them and putting them on a hierarchical trust level. That's how we can effectively use an immense amount of data easily and fast. Chainlink's design doesn't allow that because it has an individualist design, and it's hard enough encoding hierarchical trust scores to individual oracles, nevermind oracle pools.



Ergo Blockchain utilizes Multi-Stage Contracts with an extended version of the original UTXO model that Bitcoin is based on. This allows creation of hierarchical trust structures that the Account-Based model of Ethereum isn’t capable of. Later on, this facilitates rewarding oracle initiators in a *top to downward mechanism* based on a trust score. This implementation isn’t possible on an Account-Based model like Ethereum and can lead to errors and increased transaction costs. 

## Governance And Incentives



There shouldn't be more complex governance ideas we believe, anyone who has skin in oracle pools should have a vote. That's how participants can decide what's best and everyone will have a chance to directly participate in governance without any protocol tokens. Oracle pools are very flexible in design, and it can be designed as more than a passive reputation system and also enables DAO governance models.



Because it's in their best interest, individual oracles will choose to behave in order to earn money and vote on parameters. Oracle Pool design boosts this incentive and makes participants more prone to cooperation, securing reliable data sources for users and dApps. When users can access data directly from pools, there's no need for oracle users to *waste their tokens* as they do in the oracle design used by Chainlink. This would reduce the cost a lot by direct access to on-chain data. However, because oracle pools work faster and much more effectively, these small fees can take up to a lot of revenue.



*Alexander Chepurnoy(aka Kushti), in 2014, was working with Sergey Nazarov in smartcontract.com, the former Chainlink. Ergo Blockchain's Oracle Pools have greater longevity, effectiveness and accessibility than Chainlink's oracle design. Moreover, the UTXO design of Ergo brings cheaper and faster transfer with robust security. Oracles are the backbone of a functioning decentralized finance system. For a robust DeFi ecosystem, oracle solutions are of great significance and need to be dealt with care.*



##### Sources



<https://veriumfellow.medium.com/oracle-special-4e36cfa6a852>



<https://ergoplatform.org/blog/2020-11-09-first-steps-towards-interoperability-with-cardano-oracles/>



<https://github.com/Emurgo/Emurgo-Research/blob/master/oracles/Oracle-Pools.md>



<https://emurgo.io/blog/emurgo-releases-oracle-core-for-developers>