When using the Ergo blockchain, it is important to choose the right wallet for managing your assets and interacting with dApps. With several options to choose from, deciding which wallet is best suited for your needs can be overwhelming. This article will offer a brief overview of some of the more popular Ergo wallets and their respective features.

## Ergo Wallet (Mobile)

The [Ergo Wallet](https://ergoplatform.org/en/ergo-wallet-app/), accessible on both Android and iOS devices, offers a unique feature for secure cold storage. Available under the name 'Terminus Wallet' on the iOS App Store, it enables users to convert a second mobile device (perhaps an old, unused phone) into a secure cold storage wallet. While it doesn't support the dApp connector, the wallet is compatible with sites that have incorporated ErgoPay. For users who prefer not to input their private keys on a mobile device, Ergo Wallet offers a 'Read-Only' option.

## Nautilus Wallet

Nautilus is a privacy-focused, web-based wallet with a simple and user-friendly interface. It offers cold wallet support (currently with Ledger devices in Dev mode), and it features a dApp connector that is compatible with the ecosystem’s most popular dApps. For those who want a simple wallet with an accessible user interface, Nautilus wallet is an excellent choice for those who prioritize privacy and ease of use.

Nautilus Wallet is available via [Chrome Extension](https://chrome.google.com/webstore/detail/nautilus-wallet/gjlmehlldlphhljhpnlddaodbjjcchai).


## Other Ergo Wallet Options

The wallets that have been listed so far offer some of the easiest gateways for storing Ergo native assets and interacting with the ecosystem. For those who would like to explore wallets with additional functionality, the following list offers a great deal of utility:

- [SAFEW](https://ergoplatform.org/en/blog/2022-03-25-storing-ergo-safew/): is a web-based wallet featuring support for both the dApp connector and an ErgoPay connector. It is well suited for developers, offering ErgoMixer access, transaction builder in Expert mode, and more.
- [Satergo](https://www.satergo.com): A desktop-based wallet with embedded node functionality and plans to support cold wallet and mixer functionalities soon.
- [Minotaur](https://github.com/minotaur-ergo/minotaur-wallet): is a multi-platform wallet that enables any dApp to be embedded directly in the app. For instance, Minotaur Wallet offers support for two dApps (so far!). This includes an integration for issuing SigUSD directly within the wallet. In the future, Minotaur will feature a protocol that will also allow for new dApps without the need for an update.
- [Ergo Full Node Wallet](https://docs.ergoplatform.com/node/install/): A desktop wallet with a wallet panel interface for developers who require full-node support.
- [Paper Wallet](https://anon-br.github.io/ergo-paper-wallet/): A quick and easy paper wallet.

When it comes to choosing the right wallet, prioritize your needs and requirements. For those who are new to Ergo, Nautilus and Ergo Wallet are excellent choices for easy-to-use and immediately accessible wallets. However, for users with more specific needs, such as dApp support or developer tools, the other wallet options may offer you the most utility for your needs. 

Always remember to follow best security practices when setting up your new wallet!


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What Wallet is Right for Me?

Stablecoins are a type of cryptocurrency that have their market value pegged to another currency, commodity, or financial instrument. For those who have been active in the cryptocurrency industry, you are no doubt aware of the high volatility of crypto assets. Although they may fuel speculation, it can hinder real-world adoption. With stablecoins, investors can temper their risk exposure with a medium of exchange that is pegged to traditional markets. These assets provide a ‘stable’ currency for everyday transactions.  

Today, the stablecoin market is worth about $150 billion and is rapidly growing. However, with massive growth comes the risk of failure. Collapses of widely used stablecoin projects have had significant consequences for the crypto space. With the collapse of Terra’s UST during the 2022 bear market, the contagion had a domino effect across the entire cryptocurrency industry. The rapid growth, and subsequent criticisms, of USDT have garnered increased scrutiny from regulators, especially since stablecoin failures have had a significant impact on broader financial systems.

## What Makes a Stablecoin Stable?

Simply put, stablecoins remain pegged to the value of an asset through algorithmic formulas or by maintaining reserve assets as collateral. There are three main types of stablecoins:

### Fiat-collateralized stablecoins: 
These stablecoins are backed by a reserve of real-world assets, such as U.S. dollars, euros, or gold. These assets are held in a bank or other financial institution and can be redeemed for cash at a rate of 1:1. Examples of fiat-collateralized stablecoins include Tether (USDT), USD Coin (USDC), and Paxos Standard (PAX).

### Crypto-collateralized stablecoins:
These stablecoins are backed by a reserve of cryptocurrency assets, such as Bitcoin or Ethereum. These assets are held in a smart contract on a blockchain and can be redeemed for the stablecoin at a rate determined by the value of the collateral. Examples of crypto-collateralized stablecoins include DAI and sUSD.

### Non-collateralized stablecoins:
These stablecoins are not backed by any physical assets or reserves. Instead, they rely on complex mathematical algorithms to control the supply of the stablecoin in order to keep its value stable. Examples of non-collateralized stablecoins include Ampleforth (AMPL) and Basis (BAS).

## Fiat-Collateralized Stablecoins
The simplest type of stablecoin to comprehend are those that are redeemable for the external reference to which they are pegged. That is, these stablecoins are collateralized 1:1 by fiat. For example, a fiat-collateralized stablecoin pegged to 1 USD can be redeemed for 1 USD fiat. This is less of a peg and more of a digital representation of a dollar, where it requires a centralized custodian to hold the reserve. Not only do you have to trust this custodian, but you also have to trust that auditors ensure the custodian is using best practices to maintain the proper reserves. If the centralized entities in charge of the reserve truly maintain the proper collateral, then fiat-collateralized stablecoins can withstand any amount of cryptocurrency volatility.

_Benefits_

- 1:1 price stability through fiat reserves.
- Simple mechanism that makes it easy to understand.
- Collateral is held off the blockchain, so this system is less vulnerable to hacks.

_Drawbacks_

- Antithetical to the adoption of DeFi - it requires a trusted custodian to manage a fiat reserve (centralized).
- Expensive and slow to liquidate into fiat.
- Requires regular audits to maintain transparency and ensure that fiat reserves are maintained.

Tether’s USDT is a stablecoin with the largest market cap (among stablecoins), and is an example of a stablecoin backed by a reserve. Between 2014 and 2017, Tether promoted that USDT was 100% backed by fiat reserves and could be exchanged 1:1 for USD at any time. Since 2017 however, Tether has been embroiled in controversies. In 2019, [Tether admitted](https://www.marketwatch.com/story/tether-reverses-claim-of-100-dollar-backing-sparking-criticism-2019-03-14) that their reserves were not backed by fiat, but instead were a mix of “traditional currency, cash equivalents, [and] other assets and receivables from loans made by Tether to third parties, which may include affiliated parties.”

Since then, [Tether has disclosed](https://tether.to/en/transparency/) that only ≅8% of reserves were actually held as cash. Tether has also had consistent delays when it comes to the audits on its finances, which were finally completed in [December 2022](https://cointelegraph.com/news/tether-assets-exceed-liabilities-in-new-reserves-report-by-bdo). The current breakdown of Tether Reserves are highlighted in the graphic below:

![Tether Reserves Breakdown.png](https://storage.googleapis.com/ergo-cms-media/Tether_Reserves_Breakdown_68b94f905d/Tether_Reserves_Breakdown_68b94f905d.png)

Unfortunately, the need to trust centralized entities maintains the status quo and handcuffs the crypto industry to the very thing it is trying to evolve away from: traditional finance.

The next two biggest fiat-collateralized stablecoins by market cap are USDC and BUSD. They both have reserves containing mostly US treasury bills and some fiat (<25%), and [they advertise](https://www.thecoinrepublic.com/2022/07/15/circle-releases-usdc-reserves-breakdown-report/) that they wish to be transparent with their collateral. 

## Crypto-collateralized Stablecoins

If a crypto project is committed to DeFi, it stands to reason that the founders of such a project would want to avoid the fiat system and centralization. To have a stablecoin that moves completely away from fiat (but still relies on the concept of reserves), it is possible to use another cryptocurrency as a store of reserve. The problem with this model is that cryptocurrencies have volatile prices, so the value of collateral stored in reserves can be subject to similar fluctuations. The only way to ensure that reserves are sufficient against massive downward price action on the reserve cryptocurrency is to over-collateralize the stablecoin, so it can absorb the significant price fluctuations of the collateral.

An example of a crypto-collateralized stablecoin is DAI, which is issued by the makerDAO project on Ethereum. DAI is pegged to USD and its value is maintained through collateralized debt positions (CDPs).

SigmaUSD is an example of a decentralized stablecoin issuance protocol that uses reserves and is not collateralized by debt positions.

Everyone can mint [SigUSD](https://sigmausd.io/#/) as well as SigRSV (to provide reserve to the platform). This protocol allows people to hold USD backed by Ergo and earn commission fees by locking their ERG as reserve capital. The reserve based model is superior to using collateral debt positions, since it is able to prevent cascading liquidations during extreme volatility of collateral assets.

The protocol uses a reserve ratio between 400% and 800% to create healthy liquidity for buyers, sellers and holders. The reserve ratio is the value of SigUSD in circulation to the value of the ERG stored in the reserve. So, if 1000 SigUSD is in circulation and 1000 Erg valued at 5 USD is stored in the reserves, then the reserve ratio is 500%.

You may be wondering, what does it mean to keep the reserve ratio between 400% and 800%? If the reserve ratio is below 400%, then the contract stops users from redeeming SigRSV for the ERG stored within the reserve. By doing so, the protocol can maintain USD and SigUSD parity. Additionally, while the reserve ratio is under 400%, users will not be able to mint SigUSD. If  the value of ERG goes up and brings the reserve ratio above 400%, then more SigUSD can be issued. Likewise, if the value of ERG goes down and the reserve ratio is under 400%, then minting of SigUSD will be locked.

This means that if someone mints $100 worth of SigUSD, then there will be $400 worth of SigRSV backing it. This makes it equal to a 75% collateralized debt position. The system protects SigUSD’s peg to USD and prevents flash crashes if the reserve ratio falls below 400%. 

![unnamed (1).png](https://storage.googleapis.com/ergo-cms-media/unnamed_1_5a458dad9c/unnamed_1_5a458dad9c.png)

Holders of SigRSV benefit from transactions on the protocol. Users who mint or redeem SigUSD pay a 2.25% fee, which goes to the reserve holders. 

## Non-Collateralized Stablecoins

Non-collateralized stablecoins are also known as algorithmic, seigniorage-style stablecoins or future-growth-backed stablecoins. These stablecoins do not rely on collateral assets to maintain their value, but instead use mathematical algorithms to control the supply of the stablecoin to keep its value stable. Dexy is an example of a seigniorage-style stablecoin. 

The Dexy protocol uses ERG as the reserve and Dexy as the stablecoin. There are two contracts that function together: a bank and a DEX (CP-AMM). The bank holds the reserves for deployment and mints new Dexy into the DEX. The DEX attempts to maintain an oracle price and has buy and sell functions.

The first product being built with the Dexy framework is DexyGold, where the price of the stablecoin is pegged to the USD/XAU v2 [oracle pool](https://docs.ergoplatform.com/uses/oracles/). Dexy uses a one-way tethering mechanism, where the Dexy tokens are minted from an emission contract based on the oracle pool rate, and can be sold on a Liquidity Pool (LP), similar to Uniswap V2. To ensure the stability of the protocol, the redeeming of LP tokens is not allowed when the oracle pool rate is below a certain percent of the LP rate.

If the oracle pool rate is higher than the LP rate, then traders can arbitrage by minting Dexy tokens from the emission box and selling them to the LP. If the oracle pool rate is lower than the LP rate, then the ERG collected in the emission box can be used to bring the rate back up by performing a swap.

## Beyond Stablecoins: Peer-to-Peer Money

ChainCash is a decentralized, peer-to-peer monetary system that aims to create money collectively through trust and blockchain assets. It addresses the issue of inelasticity in blockchain asset supply, which can hinder their real-world usage. Chaincash allows for the elastic creation of money in a decentralized manner, while maintaining the quality of the currency.

Users of ChainCash can create notes of arbitrary values, which may or may not be backed by reserves in various digital tokens or real-world assets. These notes are like digital representations of money that can be used for transactions within the ChainCash system. To maintain the quality of the currency, the acceptance of a note depends on the collateral or trust in the issuer. As notes circulate, their quality generally improves due to the collective collateral and trust backing them.

The implementation of ChainCash will use two contracts: one for notes and one for reserves. The system can track different note and reserve contracts, support various acceptance predicates and redemption mechanisms, and accommodate complementary currency systems, such as Local Exchange Trading Systems (LETS) and local currencies.

While Layer Two implementation is still being considered, ChainCash offers a flexible and decentralized monetary system that has the potential to cater to different economic agents globally, addressing the limitations of traditional blockchain assets.

### Conclusion

Stablecoins are a vital part of the cryptocurrency industry because they act as a bridge, integrating traditional finance with the new blockchain-based crypto systems. Even though the SigUSD protocol has been incredibly successful, developers on Ergo continue to innovate the potential designs of a crypto stablecoin. Currently, two major financial frameworks are being developed: Dexy and ChainCash. With the development of cross-chain bridges (such as Rosenbridge), Ergo’s stablecoins have the potential to offer many other blockchain users a secure and stable store of value - one the industry desperately needs. 



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Stablecoins: What Are They and How Do They Work?


With today’s blog post, we continue to explore how to protect yourself from scams in the crypto industry. The [first article](https://www.ergoplatform.org/en/blog/Crypto-Scams-How-to-Understand-and-Avoid-Them-Part-1/) covered fake wallets, shady exchanges, pump & dump groups, fraudulent initial coin offerings (ICOs), phishing scams and pyramid/Ponzi schemes. With this article, we will go over how to identify and avoid scammers, as well as what to do in the event you are a victim of a scam.

## How to identify cryptocurrency scammers

Identifying scammers can be tricky for crypto novices, but if you spend time researching the space and developing certain axioms on which behaviors can and can not be trusted, then the industry becomes a little easier to navigate.

Let’s start off by identifying the easiest types of scammers to avoid. Strangers on the internet who message you with investment or business opportunities are to be ignored and blocked. It should be immediately recognized that anything they communicate to you is an attempt to get your money into their pockets. Unfortunately, these types of scams are quite prevalent on social media platforms and through junk emails, but they are relatively easy to ignore.

A more insidious way of being scammed is through links to fake apps/wallets/exchanges. On the frontend, these may look very similar to a base service and have a similar URL, but they are attempts to scam users. In order to avoid fake links and websites for wallets and exchanges, be sure to confirm URLs from reliable sources. By taking the time to consult a respective project's community twitter and/or discord, you gain peace of mind that you are accessing trustworthy links. Also, make sure to double-check a URL and ensure that it is spelled correctly with the proper domain.

## How to avoid crypto currency scams

The best way to avoid cryptocurrency scams is to do due diligence and research any and all projects before investing. Try not to invest in fads, hyped-up marketing campaigns, or because you are experiencing FOMO (fear of missing out). Invest in cryptocurrency protocols because you like the underlying product and believe that there is innovation and technology that makes it unique amongst its competitors.

Many cryptocurrency projects have communities built around them, each with their own unique cultures. These communities are a good way to initially assess projects, especially by how much community participation there is and how long they have been active. Older projects with consistent growth frequently develop a healthy and vibrant culture, and they tend to gain a strong sense of trust from their communities. Projects that demonstrate sustainable growth over a longer period of time are often safer than new projects with non-existent communities.

Bitcoin is the oldest cryptocurrency and single-handedly launched the entire industry from within its grassroots community. Over time, the protocol was able to prove its value and security, and that history makes it a trustworthy blockchain. Ergo is a much younger and smaller cryptocurrency project, but it has a similar foundational ideology to that of Bitcoin. Ergo also has a vibrant and keen developer community that is incredibly active at attempting to improve on the technological innovations of Bitcoin. If you are curious to know more about this community, you can join the conversation across several social media platforms, including [Twitter](https://twitter.com/Ergo_Platform?s=20), [Reddit](https://www.reddit.com/r/ergonauts/), [Telegram](https://t.me/ergoplatform) and [Discord](https://discord.gg/ergo-platform-668903786361651200).

It is also important to research the team members of a project before investing in a cryptocurrency. Protocols with anonymous creators are not necessarily scams. After all, Bitcoin’s Satoshi is a pseudonym for the unknown creator of the cryptocurrency, and it has proven to be a legitimate project. That being said, knowing who the creators are of a cryptocurrency can be an easy way to access the legitimacy of a project. If the creators have taken part in scams in the past, it is probably wise not to invest in their current project. For example, the project Terra, with Do Kwon at the forefront, was built on shaky foundations and [lost billions in value in a matter of hours](https://www.forbes.com/sites/qai/2022/09/20/what-really-happened-to-luna-crypto/?sh=27465f384ff1). As a result, it may be wise not to invest in any future projects that Do Kwon is strongly associated with. 

Another important metric to look at when evaluating a cryptocurrency is how the initial supply of a coin is distributed. Far too often, new projects have initial coin supplies that are distributed mostly among insiders and VC (venture capital) firms. Historically, many of these projects have been revealed to be less fair (and unsafe) than projects that have equitable token launches, such as Ergo and Bitcoin. Projects that have VC firm support may seem safe, but they are less decentralized, and VC firms will look at their bottom line first. Try to avoid buying into a protocol where you risk being a VC firm’s exit liquidity.

## How to report cryptocurrency scams

At this moment, there is no official agency or platform for reporting cryptocurrency scams. Depending on the jurisdiction you live in, there may be very few laws in place that offer protections for crypto investors. Even though there are no ‘official’ avenues for reporting scams, there are many things crypto investors can do to help others from falling victim to crypto scams. If you are aware of a scam, take a few moments to share that info with the community via social media channels. Everyone, especially the victims, should strive to educate the community and help build a safer space for everyone. 

DISCLAIMER: _If you do post about a potential scam, be sure to provide detailed proof and probable cause so that you are not accused of spreading FUD (fear, uncertainty, and doubt). Baseless accusations should be avoided._

## How to get money back from crypto scams

Getting money back from scammers can be difficult, but it is not impossible. With most blockchain technologies, transactions can be tracked. For instance, if scammers want to convert stolen assets into fiat, they must go through centralized exchanges. If you have been scammed, you can keep an eye on the wallet that committed the crime and track the future activity of that wallet. If a scammer ever moves the assets to an exchange, you can attempt to contact the exchange and have the exchange lock the scammers funds. Depending on the protocol and the scammer’s skill level, this may not always be possible - especially for privacy-based cryptocurrencies and protocols that have mixers.

## Conclusion

The crypto industry is just over a decade old and is still quite young. There are numerous projects and opportunities available to retail investors, but there is very little institutional infrastructure to protect people from scammers. The best way to protect yourself from scams is by taking part in the community and educating yourself on the fundamentals of the industry. Learn about behavior patterns that are common to scammers and always pay attention to what is being sold. If a technology lacks innovation, and the respective community seems primarily focused on when the coin will pump to the moon, then it’s probably wise to be wary. 

Remember the following:
1. Keep your seed phrase as secret as possible, and never share it with anyone.
2. Be wary of investing in projects where a large fraction of the supply is owned by insiders and venture capitalists. These cryptocurrencies often lack the essence of what this industry was built on: decentralization.  

Stay safe out there, Ergonauts!


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Crypto Scams Part 2: Understanding and Avoiding Them

It has long been debated that privacy is one of the primary use cases of blockchain technology. At its core, one of the defining principles of Ergo is financial privacy for the ordinary citizen. Some may argue that if you have nothing to hide, then one does not need privacy. However, this is a weak argument when considering that the right to privacy does not necessarily mean one is hiding something. In the Ergo Manifesto, Alex Chepurnoy describes why privacy is an essential human right - regardless of whether one’s actions are ethical or not. 

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

>“Financial privacy is especially vital because it can be the difference between survival and systematic suppression of an opposition group in a country with an authoritarian government. Absent privacy, individuals in society have no means of survival when under the threat of oppressive regimes.”

It is a harsh reality that many places in the world deal with extreme systematic financial inequality. Chepurnoy elaborates on this by asking the question:

>“How many times in human history have religious, political, or tribal conflicts led to one group in power forcibly taking the wealth of another less powerful group? How often is seizing financial assets used as an authoritarian control?”

Our geographic borders, and respective economies, can have a significant impact on how we all perceive privacy. For those who live in financially privileged countries (where oppression is not as prevalent, or perceived), discussions around privacy can seem moot. However, government and financial regulation is not static, and stability is a construct that can be easily taken for granted. You may not need privacy until suddenly you do. Other countries in the world are not as fortunate, and their citizens would benefit greatly from some measure of financial privacy. 

Chepurnoy writes in the Ergo Manifesto that:

>“Financial privacy can allow people to protect their life savings when a government tries to confiscate its citizens' wealth, whether for political, ethnic, religious or "merely" economic reasons. Financial privacy is crucial to freedom, and many governments have shown themselves willing to abuse private financial information.”

To ensure citizens are able to protect themselves from financial abuse and oppression, non-custodial, decentralized privacy is essential. Privacy allows the ordinary citizen to maintain control over their personal lives with financial autonomy and freedom. 

Ergo already possesses non-custodial privacy ([ErgoMixer](https://ergoplatform.org/en/blog/2021-05-12-ergomixer/)) and decentralized, optional privacy through [sigma protocols](https://ergoplatform.org/en/blog/2020_03_16_ergo_sigma/) - a form of a zero-knowledge proof. History has demonstrated that human greed and the desire for power can lead to inequitable and unjust societies. Government authorities are either elected, appointed, or self-appointed, depending on the political landscape of a country. Even in countries where officials are elected, there is no guarantee that their intentions are fair and just. Using the trustless systems that blockchain can provide, there is an opportunity to create a financial system where people do not have to trust centralized banks and governments with the security of their assets and investments (while still observing regulatory requirements). A blockchain like Ergo allows for a balance whereby tooling can be constructed for optional privacy applications. In countries where citizens are repressed and offered very few freedoms, blockchain privacy may be the vehicle that greatly improves, or saves, their lives. As was mentioned earlier in this article: You may not need privacy until suddenly you do.

Part of Ergo’s ethos is that privacy is a fundamental human right. Identity and financial privacy can, in severe circumstances, mean life or death for people in certain parts of the world. Blockchain privacy gives people a sense of anonymity, privacy and security with their funds. 

For more information on how to protect your assets, please see the following [video](https://www.youtube.com/watch?v=8FzdkxVD_YM&ab_channel=ErgoPlatform) from the 2022 Ergo Summit on Privacy and Security (3:30-6:03).

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Privacy on Ergo - A Fundamental Human Right 

_**Disclaimer: This article aims to educate participants in the crypto space about potential scams. It is not a comprehensive list of all scams, but meant to be a starting place to promote safety and awareness. This document is not financial advice, and all crypto investors are advised to do their own research. It is also advised that you know your assumptions and risk tolerance before investing in any project.**_

## What are crypto scams?

The cryptocurrency space is a little bit like the wild west - it is still very much a high risk investment. Founded with the creation of Bitcoin over a decade ago, regulators have only recently started to take note of the crypto industry. Currently, it seems efforts are focused on understanding blockchain technology and how to regulate it. In recent years, there has also been a great deal of hype around the evolution of our current money systems with the creation of Central Bank Digital Currencies (CBDCs). The industry is still in its infancy with a lot of different blockchain projects vying for a share of what most consider to be an undervalued sector. There is a lot of research and innovation, but trust in cryptocurrency, and the most stable protocols, will only be proven with time.

One major issue of the cryptocurrency space is highlighted by the lack of customer protections, or insurance, that is more readily available in traditional money systems. Concurrently, the rhetoric for many in the mainstream tends to label the cryptocurrency industry as one that is riddled with scams. Unfortunately, that criticism holds truth.

It is true that there have been many scams, and most often it is the normal everyday consumer that suffers the most. However, this does not mean that the entire industry should be labeled a scam. Scams are nothing new, and throughout history human greed has presented numerous examples where people have been defrauded of their money. With the novelty of crypto however, and the current lack of regulation, the industry is such that new and inexperienced crypto investors are often easy targets for scammers. Educating oneself and being aware of potential scams is an important step in protecting against bad actors.

In this article, we will discuss potential scams, including fake wallets, disreputable exchanges, “pump & dump” groups, fraudulent initial coin offerings (ICOs), phishing scams and pyramid/Ponzi schemes.

## Common Crypto Scams
### Fake Wallets

If you are new to cryptocurrency, it is important to note that your private wallet is an interface for interacting with the blockchain. Your coins are actually on the blockchain and are accessed through your private wallet interface - one for which you hold the private keys. Since wallets are the gateway to your interaction with the blockchain, it makes sense that bad actors try to create false wallets to rob you of your assets.

There are many scam wallets available for download through websites, webpage extensions, and even on the android play store. Do not pick a wallet randomly without doing research because there is a chance that it could be fraudulent. If you restore a wallet with a malicious extension or download, that software may steal your seed phrase (your private key) after it has been entered. After creation of the wallet, and once you have deposited a sizable amount of money into it, the wallet will be emptied using the copied key phrase. It is important to fully research the project you are investing in and make sure you are only using project approved wallets. One tip is to only use links to wallets from trusted sources. There are many ways to access safe information, such as a blockchain project’s official website as well as trusted community forums for the respective cryptocurrency. With Ergo, the first source one should consult is the [Ergo Platform website](https://ergoplatform.org/en/) - this site offers all of the trusted links for Ergo wallets. From there, it is recommended that interested parties also explore the Ergo Platform[ Twitter account](https://twitter.com/Ergo_Platform) and/or [Reddit account](https://www.reddit.com/r/ergonauts/).

_**Disclaimer: NEVER share the private keys to your wallet(s) with anyone. No one from the Ergo Foundation will ever ask you for that information, and no person should ever need you to reveal your secret seed phrases. If someone claims they need you to share your seed phrase, it is almost certain that they are trying to defraud you. Keep your private keys stored securely. It is recommended you write them down and avoid storing them on digital devices.**_

#### Links for available Ergo wallets:
#### Ergo Platform Team Wallets 
- [Ergo Paper Wallet](https://ergopaperwallet.org/)
- [Ergo Wallet App](https://ergoplatform.org/en/ergo-wallet-app/)  

#### Other Trusted Wallets
- [Nautilus Wallet](https://github.com/capt-nemo429/nautilus-wallet) 
- [SAFEW Wallet](https://github.com/ThierryM1212/SAFEW) 
- [Satergo Wallet](https://satergo.com/) 

### Disreputable Exchanges

New exchanges with enticing marketing are alluring and can be very tempting. They may offer incentives for you to deposit your funds with them, such as promising to match some portion of the amount you deposit. As an investor, you must be very careful with these exchanges. You may be depositing your money into a trap with no way of retrieving your funds. Always research the exchanges you are using to make sure they are widely used and trusted within the cryptocurrency community. For a list of approved Ergo exchanges, it is recommended to consult the [Ergo Platform website. ](https://ergoplatform.org/en/get-erg/#Exchanges)

Please note that when you use popular exchanges you may still be at risk of losing your funds. Even these exchanges can not be completely trusted, as was witnessed with the collapse of Terra, Celsius and the FTX disaster. [Customers lost millions of dollars](https://www.theverge.com/2022/11/10/23450169/crypto-winter-ftx-binance-celsius-bitcoin) when these undercollateralized platforms experienced bankruns. It is important to understand that these types of exchanges are centralized entities, and when you use their platforms to hold your assets, you are blindly trusting others to keep your money safe. The industry does not yet enjoy the same consumer protections as traditional banks. In the FTX situation, Sam Bankman-Fried’s trading firm (Alameda Research) [took out loans funded by the deposits from FTX customers](https://www.nytimes.com/2022/11/30/business/dealbook/ftx-almeda-research-sam-bankman-fried.html) without their knowledge. On top of that, it has since been revealed that these [deposits were not collateralized](https://www.forbes.com/sites/mariagraciasantillanalinares/2022/12/02/bankman-frieds-complex-explanation-points-to-comingled-funds-on-ftx/?sh=318b7112b82e) with stable assets.

One of the most important things to remember in the crypto space is that if you do not own the keys to the wallet, then they are not your coins. One should try to use trusted [decentralized exchanges](https://ergoplatform.org/en/blog/Centralized-Exchange-vs-Decentralized-Exchange-What-are-the-Differences/?) whenever possible, which connect directly to your private wallet without requiring the use of any third party entities. Depending on the assets you want to acquire however, this is not always possible. If you need to purchase crypto with fiat you will most likely need a centralized exchange. Once you have acquired your assets via a centralized exchange, it is highly recommended that you move said assets from the exchange to your private crypto wallet.

### Pump and Dump Groups

There are many “pump and dump” groups on Discord, Telegram, and IRC - which have existed for traditional markets and have now moved into the crypto sector as well. These groups can appear to be well populated with 40000 to 100000 members, and the purpose is to quickly buy into a project and sell out for a profit before it starts dumping. The people who get in early and get out quickly will make money, while those that come near the end of the pump lose. There are people who make money like this, but it is very risky and should be avoided.

### Fake ICO

One of the most common types of scams in crypto is the fabrication of an ICO, whereby scammers generate marketing hype and persuade unknowing investors to buy-in. This type of scam is very tempting and works well because many of the legitimate projects in blockchain actually raise capital through ICOs. People who do not fully research new ICOs can easily fall prey to bad actors looking to capitalize on ignorance. 

### Phishing Scams

Phishing scams often occur through email, but it is important to note that they can take place via social media platforms - or any user interface where links can be shared. A scammer may be impersonating a trusted party and will try to get private information (such as logins or your seed phrase) for the purpose of defrauding you. They may also entice you with fake air drops, or execute a Punycode attack whereby fake URLs look legitimate. Once you have accessed the fake URL, you may be taken to a page that appears safe, but is actually a fraudulent website set up to steal a user’s sensitive data.

### Ponzi/Pyramid Schemes

Cryptocurrency scams can be separated into two categories. The first type is related to the types of scams we have discussed thus far, where crypto scammers use deceptive methods to gain access to funds and steal them. The other type is a bit more insidious and can be harder to catch. These scams may seem like legitimate projects with legitimate teams, but their products are built on shaky foundations and questionable assumptions. These projects often offer returns that are too good to be true and require the constant influx of people and investors to build up value. The people who profit the most are the creators of the protocol, who start off with the most amount of coin. They spend the bulk of their budget on marketing and false promises to generate upward price action and general FOMO (fear of missing out). Then they use the new investors as exit liquidity. The protocol itself is a house of cards, and when too many people start removing funds, the liquidity dries up quickly and the pyramid collapses. What remains is a bunch of rich insiders and early investors (such as venture capitalist (VC) firms), while regular investors are left with a bag of useless cryptocurrency.

If a protocol promises regular profits that exceed the average market returns, then it’s a Ponzi. If the focus of a project is solely marketing to recruit new people without creating a product, then it’s a pyramid scheme. These two rules are a good litmus test to see if a project is legitimate.

## Conclusion
Scams are in many industries, but they are especially prevalent when new technologies and/or products are involved. Most people are wise to telephone scams and many forms of internet scams, but still may fall prey to crypto scams if they do not clearly understand the fundamentals of how to safely interact with blockchain protocols. It is important to never share your wallet seed phrase with anyone and to keep it in a safe and secure place.

Participating in the crypto industry opens up many opportunities to invest and take part in this emerging and growing industry. Educating yourself and your peers on common types of scams will build resilience in your crypto community, making it a safer place for all participants.



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Crypto Scams: How to Understand and Avoid Them Part 1


Decentralized peer-to-peer transactions have always been one of the core pieces of utility that crypto was designed to offer. With SigmaBonds, the Ergo Platform takes another important step in providing financial tools and products that have the potential to change the future of finance on the blockchain. 

### What are SigmaBonds?

SigmaBonds are essentially a decentralized borrowing and lending tool offering a variety of utilities that cater to both the borrower and lender. The Sigma Finance team states that “SigmaBonds allows borrowers to create bond requests in which they set the maturity date, APY, principal amount, and collateral. Lenders may then view all the available bond requests on the blockchain in order to decide where they wish to place their money.” Collateralization of assets is unique with this protocol because SigmaBonds can be collateralized by any asset that is on the Ergo blockchain. This also includes NFTs. Examples of native assets that can be used include Comet, NETA, EGIO, Ergopad and any other native asset that can be found on Ergo.

**_Disclaimer: Users should do their own research and know their assumptions when utilizing native assets as a borrower or a lender. _**

### Sigma Finance Use Cases

[SigmaBonds](https://github.com/K-Singh/Sigma-Finance/blob/master/SigmaBonds.MD) can be used for a variety of different uses depending on whether a person is lending or borrowing. Some of these use cases include “the raising of funds, access to quick liquid assets, improvements to mining rigs/farms, arbitrage opportunities, and many other unique DeFi use cases.” For those who choose to lend, this protocol offers an opportunity to earn yield. It is also important to note that the Sigma Finance team will likely never create a token for this protocol. There is a 0.5% developer fee while using Sigma bonds - which is taken from the lender when their order is closed. If a frontend developer chooses to create a UI for SigmaBonds, they will be able to take a 0.4% fee.

### Conclusion

In an industry where we see centralized entities dominating the news with failed money products and the mismanagement of funds, decentralized peer-to-peer transactions are needed more than ever. Sigma Finance has created a protocol where the average user can access lending and borrowing products in a decentralized manner. When built and executed on the Ergo Platform, users are accessing a blockchain that is committed to standing against the weaponization of money, as well as promoting open source development and tooling. To learn more about SigmaBonds, please consult the in-depth [github](https://github.com/K-Singh/Sigma-Finance/blob/master/SigmaBonds.MD) summary. 

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Sigma Finance: A Peer-to-Peer Bond Protocol


The past year has been challenging for the crypto community. Investors and idealists alike have had to question their commitments through a grueling bear market. Sadly, many people have come up against hard truths. We have been reminded that power corrupts all of us, that greed can always compromise the individual, and that castles built in the sky can come crashing down. As painful as it has been, this purge was, and will continue to be, necessary. So long as people see crypto primarily as a vehicle for getting rich rather than as a tool for achieving freedom, we will continue to experience painful moments of disillusion. 

The fact is that as crypto has grown in both popularity and complexity, the amount of money lost to scams, hacks, and outright failures has grown right alongside it. All you need is a brief glance at the [Rekt.News Leaderboard](https://rekt.news/leaderboard/) to get the picture: there is blood in the streets. Tens and hundreds of millions at a time, crypto investors have been decimated. Not to mention the institutions that were thought to be untouchable: Terra Luna, Celsius, FTX, and the like, each responsible for billions in losses. 

The crypto community has suffered immensely, both in terms of dollars lost and reputational damage. While the fakes and scammers flee into anonymity with our funds, many individuals will never recover their life savings. Many crypto projects have been - and will continue to be - eaten by this bear market. Those who do recover may take years to do so. While it is easy to blame greedy or wreckless founders, or to point a finger at hackers stealing funds, we have to recognize that the fault is also our own. 

The broader crypto community has strayed from the ethos that created it, and now we are paying the price. We’ve got to get back to our roots. Bitcoin was created to protect people from the greedy and dangerous actions of centralized or adversarial actors. If we had only kept this in mind, perhaps SBF (Sam Bankman-Fried) would not have had [$16 billion to lose](https://www.washingtonpost.com/business/what-did-sbf-and-ftx-lose-in-real-money/2022/12/13/1b693c28-7b02-11ed-bb97-f47d47466b9a_story.html). If we had only thought for a second about the importance of a sound protocol design, perhaps Luna’s death spiral would have been smaller than [$60 billion](https://www.forbes.com/sites/qai/2022/09/20/what-really-happened-to-luna-crypto/?sh=c7d19904ff12). 

However, every challenge also presents an opportunity. As the new year begins, we have time and space to lick our wounds and consider the first principles that gave birth to the crypto movement - guidelines that can help the industry prevent the recent catastrophes from unnecessarily repeating themselves. These principles are simple, really. Committing to them is not always sexy or popular, but over the long term, they will ensure that cryptocurrency is better positioned to achieve its goals. If you choose to remain in the crypto space as a developer, user, or investor, consider the following points below to guide your decision making. Finally, click the links included in each section to discover how Ergo is accomplishing each one specifically:

[Decentralization](https://ergoplatform.org/en/blog/2021-04-26-the-ergo-manifesto/): The distributed nature of a cryptocurrency or blockchain system is its defining feature. Decentralized protocols ensure that no single entity or group holds a dominant position of control. Decentralization is meant to prevent any single point of failure and to ensure that the system remains resistant to censorship or manipulation.

[Trustlessness](https://ergoplatform.org/en/blog/2022-02-01-decentralized-finance-and-optional-privacy-on-ergo/): This principle refers to the idea that a cryptocurrency or blockchain system should not require users to trust any particular party or entity in order to use it securely. Instead, all intermediaries get automated away, requiring users to trust code alone.  

[Self Custody](https://ergoplatform.org/en/blog/Cold-Wallet-Explanation-Everything-You-Need-To-Know/): The common phrase, “not your keys, not your crypto,” emphasizes the importance of individuals being in control of their own assets, rather than relying on third parties to hold and manage them. Self custody allows users to retain full control over their assets and to take responsibility for their own security.

[Security](https://ergoplatform.org/en/blog/Ergo-and-the-Autolykos-Consensus-Mechanism-Part-I/): The robustness and resilience of a blockchain or dApp against attacks defines its usefulness as a financial tool. Ensuring the security of a system is crucial for protecting user funds and maintaining the integrity of the ecosystem. Secure systems have not only been audited, but have withstood the test of time. Developers and users must take care to prioritize security when using a new technology, and not abandon proven strategies before proper testing has been completed. 

[Transparency](https://github.com/ergoplatform): This principle refers to the idea that the workings of a cryptocurrency or blockchain system should be open sourced and transparent, allowing anyone to verify and audit the system. This transparency helps to build trust and confidence in the system, and aids new development by allowing others to use strategies that have been proven. 

[Privacy](https://ergoplatform.org/en/blog/2022-04-26-ergo-and-blockchain-what-is-privacy/): Protecting the personal and financial information of users is a matter of safety and autonomy. Strong privacy protections can help to ensure that users are able to transact and interact with one another without fear of their information being misused or exposed.

[Interoperability](https://ergoplatform.org/en/blog/2021-11-17-bitcoin-taproot-upgrade-and-ergos-sigma-protocols/): This principle refers to the ability of different blockchain systems to work together and exchange information and assets without compromising security. Interoperability helps to [create a more connected and inclusive ecosystem](https://www.youtube.com/watch?v=QcNZYhAa2xU&ab_channel=TheCardanoEffect) and can facilitate greater adoption and use of the technology.

[Inclusion](https://ergoplatform.org/en/blog/2022-02-08-ergo-an-answer-to-modern-monetary-theory-failures/): Cryptocurrency and blockchain technology were designed to level the playing field and provide secure financial tools to the average people of the world. It is critical that this technology remains accessible to a diverse range of individuals and groups in order to fulfill its purpose.

Common wisdom tells us that [Bitcoin has lived up to these principles](https://www.google.com/url?q=https://hackernoon.com/10-shared-beliefs-of-a-bitcoin-maximalist&sa=D&source=docs&ust=1673889475810637&usg=AOvVaw1EkZTapIDSfQ4Pt3N0D4sB) more than other crypto projects thus far. As volatile as the space can be, Bitcoin is actually a conservative choice among the [10,000+ high risk digital assets](https://dailyhodl.com/2023/01/01/analyst-benjamin-cowen-predicts-altcoin-reckoning-as-one-indicator-hints-at-another-leg-down/). However, as valuable as this conservatism has been for the protection of user funds, developers and users alike recognize the value of pushing the limit of what is possible through decentralized finance. After all, the development of crypto technology did not stop in 2009.

![naaa411nfph71.jpeg](https://storage.googleapis.com/ergo-cms-media/naaa411nfph71_44346bbf8f/naaa411nfph71_44346bbf8f.jpeg)

The money lost through crypto scams, hacks, and failures cannot continue to define the space. The principles above serve as guidelines for moving forward responsibly. Users, investors, and developers must prioritize adhering to them, and support projects that demonstrate a willingness to promote said principles. Documents such as [The Ergo Manifesto](https://ergoplatform.org/en/blog/2021-04-26-the-ergo-manifesto/) serve as a benchmark for what it means to define a project’s mission and values, and provide the crypto community with standards by which all projects can be judged. The introduction makes its purpose clear:

>“We hope to build society through horizontal cooperation, through production under the division of labor, trade and exchange, and solidarity and mutual aid. We believe this is achievable while maintaining basic principles that benefit the well-being of all humans. Core principles that have been central to human rights and values must be maintained as our technological capacities evolve. The built tools must enrich human value rather than subjugate humans in surveillance and control systems.”

Alexander ‘Kushti’ Chepurnoy, the creator of Ergo, has underscored here that Ergo exists to uplift and empower the average people of the world. By adhering to the first principles defined above, the Ergo blockchain is able to work as a force for good in the world, fighting against systems of control and the weaponization of money that has contributed to the inequality of the world. Ergo stands up as an open, fair, permissionless, and resilient platform for contractual money. While this mission may not sound as sexy as the marketing of many VC (venture capital) chains in the cryptocurrency sector, it is precisely this mission that keeps Ergo fundamentally sound. Perhaps users living in developed nations will not immediately recognize the immense value of such principles. However, in the words of Kushti... 


>“Because the tools we are building may not benefit you today, make no mistake, they may be the lifeboat of tomorrow... Often those at the bottom suffer in separation from those at the top who initiate the suffering. This cycle of economic abuse needs to be broken... That is the intent and purpose of my life's work in cryptocurrency.”

To learn more, continue reading [The Ergo Manifesto](https://ergoplatform.org/en/blog/2021-04-26-the-ergo-manifesto/) and discover how projects like Ergo are working to change the world for the better. By adhering to these first principles, Ergo is able to offer truly innovative, secure, trustless, and decentralized financial tools to users from around the globe. 



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First Principles: A Harsh Reminder

The Ergo blockchain uses a Proof of Work (PoW) consensus mechanism, known as Autolykos. Although Proof of Stake (PoS) has become very popular lately, deploying the [Ergo network as a PoW blockchain was an intentional decision](https://ergoplatform.org/en/blog/2022-03-29-proof-of-work-energy-and-ergo/). As with any design choice, this involved tradeoffs: PoS prioritizes minimizing energy consumption, while Ergo’s PoW prioritizes security and decentralization. 

Within community forums, many newcomers who are familiar with PoS projects, like Cardano or Ethereum, often ask if they can stake their ERG to earn yield. While the Proof of Work model does not rely on staking to secure the network, the purpose of Decentralized Finance is to offer individual’s the ability to access financial tools that may help them earn yield, diversify their investments, or manage risk. Ergo’s goal is to provide organic and sustainable financial tools that do not introduce unnecessary fragility and risk into the economy, which is far too common in today’s crypto ecosystem. The following is a collection of current and future applications that allow users in the Ergo ecosystem to earn ERG: 

### Mining
The most conservative investment in all of crypto is mining. You can choose to sell the coins you earn, and your GPU’s will maintain their value over time. For example, an investment in mining equipment during 2021 would likely be worth more today than an investment in actual crypto because the price of GPU’s has not fallen by the same 75%+. Although mining has become unprofitable for many in this bear market, it may still be beneficial depending on the cost of electricity and GPU’s in your area. Learn more about mining on Ergo [here](https://ergoplatform.org/en/get-erg/#Mining). 

### Liquidity Provision
The most common way to earn yield is by providing liquidity. This is done by supplying pairs of assets to an exchange for users to trade between, which results in the supplier earning trading fees. Liquidity provision (LP) is possible on centralized exchanges such as [Coinex](https://www.coinex.com/) or [Kucoin](https://www.kucoin.com/), and decentralized exchanges (DEX) such as [Spectrum](https://spectrum.fi/) or Swop.fi. Centralized exchanges offer ERG trading pairs with BTC, USDC, and USDT, and currently provide an APY in the range of 4-7%. Spectrum DEX offers users the ability to create their own trading pairs, which has led to nearly every major native asset on Ergo being represented on the DEX. The APY on the DEX changes dramatically with trading volume, but the current rate for the most popular assets (Ergopad & [Paideia](https://www.paideia.im/)) is between 4-8%.  If engaging in LP positions, it is recommended that you research the process as much as possible. In particular, it is important to be aware of the risk of impermanent loss. 

### Grid Bots
A grid bot is an advanced trading tool that trades assets for you. The advantage of this method is that you can select price ranges that you wish to trade between, or even an overall long or short position that allows you to take advantage of volatility to earn money no matter the price. This is available on [Kucoin](https://www.kucoin.com/trading-bot), but Ergo will soon offer a [decentralized version](https://www.ergoforum.org/t/decentralized-grid-trading-on-ergo/3750) of this tool that can be run through Nautilus wallet. 

### Off-Chain Dex Bots
For the more technically inclined, it is possible to [operate an off-chain bot](https://github.com/spectrum-finance/ergo-dex-backend) that processes transactions on [Spectrum.fi](https://spectrum.fi/) and earn fees. These bots are responsible for handling and verifying the transactions people make on the DEX.

### Staking 
_**“Wait, I thought there was no staking in PoW!?”**_

Herein lies the genius of Ergo’s eUTXO model and smart contracts. [ErgoPad](https://www.ergopad.io/staking) has led the way in the Ergo ecosystem by providing staking opportunities for those interested in investing in new projects in the ecosystem. [AnetaBTC](https://anetabtc.io/) has also recently launched their staking portal, and holders will soon earn fees produced by AnetaBTC’s BTC wrapping protocol and [community owned liquidity](https://datastudio.google.com/u/0/reporting/4cb333f9-39bf-448b-8d2d-f7ac3f44ad5d/page/p_0h6vsjfnsc) fund. In the near future, Ergo’s [NightOwl Casino](https://nightowlcasino.io/) will allow users to provide liquidity as well as the opportunity to be part of the “house” of the casino.

### Arbitrage
With the abundance of options for buying and selling ERG, there will inevitably emerge some differences in price between the various platforms and pools. Any time there is a difference, there is an opportunity for users to take advantage of that difference and turn a profit. Advanced users may build bots to execute these trades, while others might simply remain vigilant. An example of this is on the [Bisq network](https://docs.bisq.network/getting-started.html), where the average price of ERG has been 5-10% higher than other markets. True to form, there are developers looking to build a [Bisq-like p2p fiat onramp](https://www.ergoforum.org/t/a-bisq-like-dex-to-trade-erg-for-fiat-or-btc-and-other-cryptcurrencies/4078) on Ergo in the coming year.

A second opportunity for arbitrage will come with the release of [DexyGold](https://www.youtube.com/watch?v=Jg5IzoqhChI&ab_channel=ErgoPlatform). Dexy is a stable coin framework that relies on users to take advantage of trading opportunities to maintain the coin’s peg ([whitepaper](https://github.com/kushti/dexy-stable/blob/main/spec/paper/dexy.pdf)). In this case, the token will be pegged to the price of gold. More to come on this product in the next year!

### Lending & Borrowing
Lending and borrowing protocols like [Aave](https://aave.com/) and [Curve](https://curve.fi/#/ethereum/swap) are staples of the broader DeFi ecosystem, and they are knocking on Ergo’s door. [DuckPools](https://www.duckpools.io/#lend) is a lending and borrowing protocol, similar to Aave, that has recently released a beta version of their lending and borrowing protocol. Although this version is limited to transactions of 1 ERG, the dApp has shown that proper DeFi is ready to blossom on Ergo, and the full version will be available soon. [EXLE](https://exle.io/) is a radically new DeFi tool providing [uncollateralized loans to businesses in Kenya](https://ergoplatform.org/en/news/EXLE-and-WEQNT-Cardano-Stakepool-Launch-First-Micro-Finance-Cooperative/). Similar to [Kiva](https://www.kiva.org/pgtmp/home), borrowers define the terms and submit requests for a loan, and lenders choose which loans for which they wish to provide funding. The first loans through EXLE have already been successfully repaid, and the protocol looks to expand for public use in 2023. 

### dApp Tokenization
Coming to a dApp near you, [Ergo Profit Sharing](https://github.com/mhssamadani/ErgoProfitSharingDapp) and [ErgoWell](https://github.com/mhssamadani/ErgoWell) enable developers to tokenize and fractionalize their dApp, making it possible for users to own “shares” of the project while earning a portion of its fees. An exciting application of this will be the ErgoMixer, which will incentivize users to leave their ERG in the mixer, thereby increasing ErgoMixer’s ability to obfuscate transactions. 

### Sigma Finance
Bonds and options have been used in traditional finance for many years, offering individuals the opportunity to diversify their investment portfolio, manage risk, and potentially earn returns through the buying and selling of these financial instruments. [Sigma Finance](https://github.com/K-Singh/Sigma-Finance) brings these features to the blockchain, which will allow a complex market to emerge for users and miners wishing to access liquidity or hedge against volatility in new ways. 

#### Conclusion

These financial tools provide users the ability to earn yield and take advantage of trading opportunities, while also supporting the stability and decentralization of Ergo’s ecosystem. Given the unfortunately high number of scams, hacks, and collapses in the past year, Ergo’s focus on first principles will offer users a haven of sanity through the bear market and beyond. With over 400 days of negative price action, users also need to consider the possibility that market sentiment can change in 2023, and recognize the opportunities that lie ahead for Ergo. Not only has development increased throughout 2022, but average daily [transactions](https://ergo.watch/metrics/transactions) and the [number of wallets](https://ergo.watch/metrics/addresses) have also increased, while the supply of ERG distributed from the [emission contract](https://ergo.watch/emission) has been reduced from 67.5 ERG per block in January 2022 to 42 ERG per block in January of 2023. In the coming year, be on the lookout for new products and services which will provide additional opportunities for users to earn ERG. As always, reach out to members of the Ergonaut community if you have questions or need help with any of the above information. 

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Earning ERG in 2023 and Beyond


The innovations of the blockchain industry have the potential to affect numerous aspects of society. Imagine being able to vote in a government election via blockchain, or using the blockchain to help secure data records and identity solutions. The cryptocurrency sector has come a long way from just offering platforms for the transfer of money. Since the advent of smart contracts, developers and coders have enjoyed a renaissance, exploring the potential of what blockchain can create for the world. With open source smart contracts, blockchain has the capacity to all but remove greed and predatory interests from socio-economic constructs. Imagine a trustless system where numerous entities can work together to achieve like-minded goals without ever needing to rely on a single leader - a feature that often creates a centralized point of failure.

### What are Decentralized Autonomous Organizations (DAOs)?

We are living that future now. Since the creation of smart contracts on Ethereum, numerous collectives have used smart contract functionality and [multi-signature wallets](https://ergoplatform.org/en/blog/Ergo-Multisig-Wallet-What-is-it-and-How-to-Create-One/) to carry out shared goals and/or group activities.

Think of a DAO like a cooperative. Groups of varying sizes can agree to form a DAO - the size can start at several people and go up to hundreds, or even thousands of individuals. As a DAO, people can pool their time and resources in order to establish consensus for decisions and complete the goals of the DAO. A DAO allows a group to own their association, or community, without the need for a centralized leader(s).

### Why Would People Use DAOs?

One of the biggest issues in the way the world transacts is that hierarchical structures and centralized entities control the largest share of money and data flow. In democratic elections alone, the voter is afforded the opportunity to elect their representatives. However, the average person does not have the power, or ability, to vote and comment on every bill that will be presented to their elected official during their term in office.

A DAO has the potential to democratize every decision and/or expenditure of a collective. It removes any question about the validity of a vote since the votes can be cast on the blockchain and no centralized entity is needed for a vote count. Blockchain technology and the emergence of DAOs presents a unique opportunity to rethink how we make decisions and acquire items.

### How Do DAOs Work?

It goes without saying that no collective structure can ever truly be perfect. There will be disagreements and differing points of view. That being said, depending on how a DAO is structured, it can guarantee transparency and a truly democratic process. Imagine a group of investors (hypothetical scenario) are interested in forming a collective so that they may use their pooled financial resources to acquire assets that they may not have been able to acquire as individuals. Let’s also imagine that this group of investors wants to allow up to 500 additional investors to participate in this venture. It is safe to say that these people will need a structure for how they communicate, decide, and execute the purchase and sale of assets.

With a DAO, there will be no need to trust one person (or a few people) to make a decision or commit transactions. Each member of the DAO will have the ability to submit proposals to the membership for consideration and voting. This means that each member of the DAO has the potential to enact change within the DAO community. Members could propose changes to the rules that govern the DAO, or they could submit a proposal to increase the number of signers required for a multi-signature wallet. DAO membership could also propose what assets to buy, what to sell, and when to sell. The possibilities are almost endless and allow for the creativity of each individual to better the collective. When executed on the blockchain, a DAO offers anonymity to each individual since they can interact using their personal blockchain wallet.

Most DAOs that are currently active still function with some degree of hierarchy. If you are active on Discord, you may have come across several groups that operate their DAO on that platform. 

### Types of DAOs

There are many types of DAOs and each one serves a specific purpose. A few common DAOs that are seen in the cryptocurrency industry include:
1. Protocol DAOs
2. Investment DAOs
3. Grant DAOs
4. Social DAOs

Protocol DAOs serve as a voting mechanism when changes to a protocol are proposed. [Investment DAOs](https://cointelegraph.com/daos-for-beginners/types-of-daos), “also called Venture DAOs, allow capital pooling to democratize investing for various DeFi operations.” Grant DAOs are particularly common in the industry, and they are often what comes to mind when the concept of a DAO is discussed. They are most commonly used by communities that contribute money into a pool and then vote on how the funding is to be used. Social DAOs are also quite common and function as a social networking utility - people are able to voice their opinions and vote in these types of DAOs.

For more information about the various types of DAOs, please consult the following [article](https://cointelegraph.com/daos-for-beginners/types-of-daos) by Cointelegraph.

### Restrictions of DAOs

Although DAOs present a unique opportunity for like-minded individuals to collectively build something, they are not without some potential drawbacks. One such weakness could be in the coding and smart contracts of a DAO. Within blockchain technology, there is always the potential risk of an exploit due to flaws in coding. An additional DAO restriction could be a scenario where one’s power decreases, or becomes irrelevant within a DAO, thus possibly deterring a founder from implementing the vision they originally put forth for the project.

### Paideia and the Potential of Ergo

On the Ergo blockchain, the developers of ErgoPad are designing and building a DAO software suite called Paideia. A previous [Ergo blog post offers an introduction to this new product](https://ergoplatform.org/en/blog/2022-03-15-what-is-a-dao-decentralized-autonomous-organization/):


>“In [their whitepaper](https://docs.google.com/document/d/1G8iN_9sFJ3k5UuSAIbRHdkUIhqVGhpmeA_XQXVyZW94/), they discuss the reasons for implementing DAOs on Ergo. They also discuss different governance models, voting procedures, issuing of tokens, proposal management and other features that they plan to implement. It includes an optimistic voting mechanism, quorum voting with tokens, direct sale of tokens, airdrops and other features. For an accessible introduction to Paideia, the [following episode](https://www.youtube.com/watch?v=RuSb4tyXS68) of Ergo Pulse provides a concise overview.”

Recently, the Paideia team has released the interface for the [financials page](https://app.paideia.im/). From here, users can access token statistics for all of the DAOs on Paideia. Participants are able to connect their Ergo wallet and interact with the features of this website. 

### Looking Towards the Future of DAOs

The true potential of this technology is just starting to be unlocked. DAOs offer a new medium for discussion, discourse and consensus without the need to worry about centralized influence or bias. It is fitting that one of the leading tools (Paideia) for DAO development and deployment is being built on a blockchain that is designed to be the future of blockchain for all citizens. Although the Ergo Platform is overseen and guided by the non-profit Ergo Foundation, the goal is to one day have the Ergo community serve and operate as the custodians of the blockchain. The graduates of the Sigmanauts program already have an eye towards formally establishing themselves as a DAO on Ergo. Maybe one day in the not too distant future, the blockchain for the people will be overseen by the people. 


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What is a Decentralized Autonomous Organization (DAO) and How can it benefit you?

## What is a cold wallet?

Cold wallets allow for the offline storage of cryptocurrency, providing the strongest form of security and self-custody. Cold storage wallets can receive crypto without an internet connection, and some types of cold storage, such as hardware wallets, can sign outgoing transactions without directly connecting to the internet. Cold wallets are resilient against hackers, who require network access to hack devices.

Hot wallets are more versatile wallets that are used to quickly transact and interact with decentralized applications. These wallets are stored and connected online, often as web browser extensions, allowing users to interact with the blockchain by signing transactions with a typed password. Examples include browser wallets such as Nautilus (Ergo) or Metamask (Ethereum), as well as centralized exchange (CEX) wallets. It is important to note that not all types of hot wallets are equal in their security assumptions. For instance, you do not own the keys of the exchange wallets you use, whereas you do own the keys to your private browser wallets. Having said that, all hot wallets are still open to vulnerabilities due to the fact that they are connected online.

Hot wallets can be more versatile and convenient to use, but they are also more vulnerable to hacks. Users are encouraged to use cold wallets in order to maximize security and mitigate risk.

## How does a cold storage wallet work?

There are two main types of cold storage wallets. “Paper wallets” are read-only and can only receive funds. Cold storage devices, such as offline cellphones and hardware wallets (Ledger, Trezor, etc), can be used to sign and authorize transactions. Crypto wallets in general do not hold funds, but act as portals to view or access funds stored on the blockchain protocol.

All cold storage wallets come with a seed phrase, private key, public key and addresses that can receive crypto (the addresses are on the blockchain that you are interacting with). The seed phrase can be used to recover the wallet if you lose access to, or destroy, the cold wallet storage device. By inputting a seed phrase, a user can regain access to a wallet’s respective public and private key. You can think of the seed phrase as the seed from which the public and private keys are grown. The private key is used to sign transactions when using hardware cold wallet devices. The public key and addresses serve the same purpose as your bank account number and are used as the receiving addresses of your wallet. On Ergo, the public key is used to securely view the balance of the entire wallet and to derive all addresses for receiving crypto.

### Examples of cold wallets

#### Ergo Paper Wallet
The paper wallet is arguably the best [cold crypto wallet](https://ergopaperwallet.org/) because it is the easiest to set up (while offering the same security as other more complicated options). Simply put, the paper wallet is a document on a physical piece of paper that contains a public and private key on it. The keys will typically be in the form of a QR code that can be easily scanned to receive transactions. One downside of using a paper wallet is that it is read-only and cannot be used to authorize outgoing transactions. However, the seed (mnemonic) phrase can be used to restore your wallet (via hardware wallet or hot wallet) in order to enable the ability to send funds from the respective wallet. On Ergo, users can use their seed phase to restore access to their funds with several wallets, such as Nautilus browser wallet, Terminus iPhone wallet, or the Android hot wallet. 

#### Ergo Android wallet “Cold Wallet”
An offline android device with the Ergo Wallet app can be used as a cold wallet to securely hold and sign transactions. The Ergo cold wallet can send transactions offline by using a second device. By using an old android device as a cold storage wallet in tandem with your daily android device (or any hot wallet), you can safely sign transactions. The cold wallet functions off-chain and does not require an internet connection. The cold wallet will produce single-use QR codes to verify your transaction via the use of your gateway/hot wallet. With the gateway wallet and the single-time QR code, you will be able to safely interact with the Ergo blockchain without connecting the Android cold wallet to the internet.

#### Hardware wallet
A hardware wallet is a type of cold storage crypto wallet that stores private keys - the critical information needed to authorize outgoing transactions on the blockchain network. These devices can be used to create secure private/public keys for a variety of crypto protocols, and many readers may already be familiar with some of these devices (Ledger, Trezor, etc). Currently, Ledger support for the Ergo Platform is in its final stages, and it is expected to be available to the community in the near future. 

## How to use a cold wallet?

### Ergo Paper Wallet
The Ergo paper wallet can only be used to receive assets and view the contents of the wallet. To retrieve funds the seed phrase or mnemonic must be used with a hot wallet.

This wallet is fairly easy to set up and is available via the [Ergo Paper Wallet website](https://ergopaperwallet.org/). The paper wallet contains:
1. A public key that is used to securely check your balance and/or get additional addresses for this read-only wallet.
2. Three addresses that can be used to receive any assets on the Ergo protocol, including coins, tokens and NFTs.
3. A seed phrase (or mnemonic) that can be used in a hot wallet to gain full access to the funds stored in the paper wallet.

### Ergo Android Wallet “Cold Wallet"

Setting up the Cold Wallet:

1. Prepare a cold offline android device without internet access (no WiFi set up, airplane mode)
2. It is recommended that you sideload the wallet app on the offline android device. You can download the Ergo Wallet App apk [here](https://apkcombo.com/ergo-wallet-app/org.ergoplatform.android/).
3. Create a new wallet in the Ergo Wallet App.
4. On your daily online android device: Add the wallet you've created in read-only mode.
5. Start sending funds from your online device. 

Steps to send funds:

1. Create a transaction in your daily online android wallet application and then select the "Sign With Cold Wallet" button.
2. The online android wallet application shows a QR code with serialized transaction bytes on the screen
3. You scan the QR code from step 2 with the offline android device, which signs the transaction and then displays the QR code of the signed transaction.
4. To send the transaction to the blockchain, you scan the QR code of the signed transaction produced by the offline android device with your online device.

For a more in-depth guide please consult the [tutorial video](https://www.youtube.com/watch?v=maau3TDC19k&ab_channel=ErgoPlatform) by MrStahlfelge. 

## Is it worth getting a cold wallet?

If you are acquiring cryptocurrency to hold as a long-term investment, then a cold storage wallet might be your best solution. Cold storage wallets offer a secure and offline option that will protect your investment as long as you keep the physical storage device safe and secure. Storing large sums of assets in hot wallets, especially within exchanges, can leave your investments vulnerable to potential risks. 

It might be slightly easier to avoid risks of hacks and scams with a private hot wallet, but there are also risks associated with holding money in a CEX (centralized exchange). Traditional banks are regulated by government institutions and have insurance on deposits. A CEX is a weakly regulated corporation, and it is ultimately under the control of its owners and shareholders. Without proper regulation, users holding their funds within a CEX are at risk of falling prey to withdrawal limitations. Macroeconomic circumstances and fraudulent behavior can lead to bank runs when CEX holdings are undercollateralized, which can be catastrophic and cause permanent loss for retail users holding funds in these platforms.

Insolvency amongst big exchanges and protocols may seem improbable, but it has happened. People have lost their investments on CEXs, as happened with the FTX collapse of November 2022. The best thing to do to avoid these risks is to assume the responsibility of your assets with the security solutions that cold storage wallets provide. As they say: not your keys, not your coins.

### Can a cold wallet be hacked?

Cold storage wallets hold funds offline, so they are practically impervious to online hacks, but there are still some risks. Cold wallets are physical storage devices, such as hardware wallets, offline android wallets or paper wallets, that can be damaged or even stolen. Make sure that you keep your cold storage wallet in a secure location, ideally a durable and secret location, such as a home safe. Paper wallets should be treated the same as money. If the paper is lost, then you lose the value it holds. To ensure that the paper is secure, keep it in a safe location with low humidity to protect it from water damage. Hardware wallets and offline phones are more resilient to damage and are password protected. They should still be kept in a secure and private location, with the respective seed phrase stored like a paper wallet (ideally in a different location from the cold storage wallet device).

## Is a cold wallet better than a hot wallet?

Cold wallets and hot wallets both have their trade-offs. Hot wallets are more versatile and have more functionality with decentralized applications, such as decentralized finance (exchanges) and NFT platforms. Cold wallets are more secure if you ensure that the storage of your private key is physically safe and secure.

It is safest to keep most of your crypto in a cold storage wallet, only transferring small amounts to your hot wallets (browser/desktop) when transacting and using decentralized applications.

## How to choose a cold wallet?

Each type of cold wallet has its advantages and disadvantages. Paper wallets are easy to set up and are best suited for long term storage. All that is needed is an internet connection, a printer, and a sheet of paper. You can also choose to encrypt a paper wallet pdf and store it on an offline device. One disadvantage of paper wallets is that they are read-only and can only receive funds as long as the physical paper document is available. In order to have complete access to the funds, you would have to input the respective seed phrase with a hot wallet.

Hardware wallets have higher upfront costs but are also versatile. These cold storage wallets are able to sign transactions, thereby offering you stronger security and complete access over your funds.

#### Conclusion

Cold storage wallets are vital to holding assets safely and securely over long periods of time. Storing your crypto in cold storage is like holding gold in secure vaults. The funds may not be as accessible when compared to hot wallets, but they are protected with a greater degree of security.

When it comes to Ergo, users currently have two cold storage options available: the Ergo paper wallet and the offline Ergo Android wallet. With Ledger integration in the near future, those who use the Ergo blockchain will soon enjoy another option for keeping their private keys offline. 


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Cold Wallet Explanation: Everything You Need To Know


## Building Blocks of DeFi

With new decentralized finance platforms across different blockchains, crypto holders may be wondering what are the differences between a DEX and a CEX? Which one should you choose, and why? DeFi is still in its infancy, and these questions are important in order to understand the innovations of this new industry.
A Centralized Exchange (CEX) is probably familiar to readers who have used platforms such as Binance, Coinbase, Kraken, FTX, Kucoin, etc. In contrast to these major CEXs, a Decentralized Exchange (DEX) is a platform where smart contract applications operate in a decentralized and immutable manner with minimal trust in centralized authorities.

## Centralized Exchanges Explained

A centralized exchange is essentially a platform that allows a user to buy and sell assets through a private entity. They are the most widely used platforms for purchasing cryptocurrency and are often initially more user-friendly than decentralized exchanges (DEXs). The centralized exchange, [Gemini](https://www.gemini.com/cryptopedia/centralized-exchanges-crypto), describes CEXs as “platforms which facilitate the buying and selling of cryptocurrency, either for fiat currencies, like the US dollar or between digital assets, like BTC and ETH. 

## How does a CEX work?

CEXs function as trusted intermediaries in trades and often act as custodians by storing and protecting your funds. Leading exchanges facilitate every aspect of the digital asset trading experience: from security to fair market pricing to regulatory compliance, consumer protection, and access to various digital assets. As of September 2020, 95% of digital asset trades are executed through centralized exchanges, which represents approximately $228 billion USD a month.” 
Depending on the centralized exchange, a customer can be offered a wide variety of cryptocurrencies to choose from. This allows consumers to gain easier access to a diverse set of investments. Centralized exchanges are also user-friendly in that the purchasing and selling of cryptocurrencies is usually much more intuitive. Centralized exchanges often offer off-ramping to fiat currency, while many decentralized exchanges do not offer this feature.
Many centralized exchanges require consumers to provide documentation, identification and sensitive financial and personal information in order to use their platform. This is known as KYC (know your customer) and is often necessary for regulatory compliance within respective jurisdictions. 
 
## Decentralized Exchanges Explained

Decentralized exchanges offer an important alternative to centralized exchanges in that they do not require KYC in order to interact with the exchange. A [decentralized exchange](https://blog.chain.link/dex-decentralized-exchange/#:~:text=A%20DEX%20(decentralized%20exchange)%20is,transfer%20and%20custody%20of%20funds), or a DEX, can be described as “**a peer-to-peer marketplace where users can trade cryptocurrencies in a non-custodial manner without the need for an intermediary to facilitate the transfer and custody of funds**.”
 
## How does a DEX work?

Many DEXs will offer a way to connect your private crypto wallet to their platform, and that will allow you to swap a specific cryptocurrency for another. DEXs also offer much more privacy than CEXs and often provide the user with an opportunity to purchase specific cryptocurrencies that might be much newer. DEXs are commonly associated with specific blockchains, and because of this, they allow the consumer to purchase that particular blockchain’s native assets. [Smart contracts](https://www.spglobal.com/en/research-insights/featured/special-editorial/smart-contracts-could-improve-efficiency-and-transparency-in-financial-transactions#:~:text=Smart%20contracts%20in%20decentralized%20exchanges,parties%20in%20a%20single%20transaction.) also aid the exchange in reducing the counterparty risk by transferring the assets between the two parties in a single transaction.

## Pros and Cons of CEX and DEX
### Pros of CEX
#### Liquidity
(+) Centralized Exchanges generally administer market-making services. This means they provide both buying and selling liquidity for users to exchange their tokens and coins. In DeFi, not every liquidity pool is substantial, so users can face high slippages due to a lack of liquidity. [Slippage](https://www.investopedia.com/terms/s/slippage.asp) is a term that can be defined as “the difference between the expected price of a trade and the price at which the trade is executed.”

#### Power of Centralized Structure
(+) Centralized exchanges are faster by design because funds do not need to be moved across a blockchain. Transactions are fulfilled by simply exchanging the funds' information internally on the CEX. Therefore, as a centralized entity, it can provide faster transactions. With CEXs, one does not need to worry about losing access to their assets if they lose their login password. In this instance, a user can easily request a password reset from the CEX. However, if an individual loses the private keys to their private crypto wallet, the assets can not be recovered.

#### Fees
(+) Fees can be cheaper on a CEX. As mentioned earlier, a user's funds stay in a CEX wallet where they can execute all kinds of exchange activities without the need to incur basic blockchain costs. Therefore, a CEX can provide fixed and relatively cheaper fees in contrast to current DeFi platforms such as Uniswap, where swapping fees for small volumes can take up to hundreds of dollars. It is important to note, however, that this is changing on certain blockchains. On Ergo and Cardano, for example, fees are very low and can even be lower than certain CEXs. Certain CEXs also have high fees if one is attempting to off-ramp and cash out to a fiat currency. However, it does depend heavily on which CEX one uses, as fees vary depending on the platform. 

### Pros of DEX
#### Non-Custodial Interaction
(+) At the heart of Cypherpunk, the ideal is that cryptocurrency economies should provide access to a peer-to-peer economic structure that gives back financial freedom to people. Since a DEX functions in a non-custodial manner, a user can keep their funds in their private wallet and swap tokens through the DEX in any desired amount. 

#### Custom Trading Pairs
(+) One of the most unique characteristics of a DEX is that it is an ideal place for initial coin offerings and custom trading pairs. Anyone can set up a liquidity pool in a DEX and provide liquidity for a new exchange pair. This type of platform democratizes individual participation in market-making.

#### Transparent Data
(+) All DEX interactions happen on-chain, therefore anyone can check if the volume is executed on the blockchain. This is why it is impossible to create Wash Trading without encountering transaction fees. The transparency of a blockchain acts as a protection layer against malicious actors.

### Cons of CEX
#### Liquidity
(-) When it comes to lower market cap coins, big holders are needed to create buy/sell liquidity in a CEX. Automated Market Making (AMM) algorithms on DEXs can be much more beneficial in providing a healthy market for early-stage projects.

#### Wash Trade
(-) Wash trading occurs when exchanges manipulate transactions for the purpose of appearing to have high trade volume numbers. This false display of transactional volume is an attempt to appear attractive to prospective cryptocurrencies looking for new listings and new investors who are seeking an active trading platform. Trades on a CEX happen internally, so there is no way of tracking the transaction by an impartial party. This gives a lot of power to centralized exchanges. This highlights the benefit of using a DEX due to the transparency of blockchain explorers and the utilization of smart contracts. On Ergo, for example, every transaction can be seen on the Ergo explorer. 

#### Power of Centralized Structure
(-) "Not Your Keys, Not Your Coins." Readers may be familiar with this phrase, and it is a reference to the intrinsic downside of storing assets on a CEX. The actions of a user happen under the auspices of a custodial service provider.  Centralized exchanges implement data-keeping services of your funds but also hold your keys, which is contradictory to the principles of a P2P (peer-to-peer) financial system. To clarify, the CEX is singularly responsible for the security of the wallet that holds your assets.

### Cons of DEX
#### Non-Custodial Interaction
(-) The non-custodial nature of a DEX means that a user can lose their funds permanently if they do not keep their private keys secure. There is no way to recover the seed phrase for a unique wallet, so in the event, a user loses or forgets their private keys, there is no way to retrieve them.

#### Custom Trading Pairs
(-) It should be noted that there can be adverse consequences from some custom pairs on a DEX. Since anyone can set up a liquidity pool, one common type of fraud by malevolent entities is called a "rug pull." Investors can fall victim to unexpected losses when trading and/or swapping with a new "false" token on a DEX. Malicious actors defraud investors by creating new tokens for the purposes of trading and swapping the "false" token on a DEX.

#### Fees
(-) Since DEX interactions happen on-chain, there are different transaction fees that need to be included for each trade. DEX platforms generally have governance and liquidity providers’ fees that can vary between 0.2-1% per transaction. On top of that, however, an additional fee must be paid to the blockchain platform since the transactions occur on-chain. However, these blockchain fee requirements can evolve through the implementation of sidechains that address scalability issues. With this being said, the fees depend on which blockchain one uses. For example, the gas fees on Ethereum can be extremely expensive, whereas on Ergo they are quite low in comparison. 

#### Transparent Data
(-) Since data is transparent, though, transactions can be tracked, and wallets can be easily detected. This scenario is not ideal, but a dApp like [ErgoMixer](https://ergoplatform.org/en/blog/2021-05-12-ergomixer/) provides users with a new layer of security by hiding some of the transactions on-chain.

## DEX vs CEX- Key Differences

There are several vital differences between what a CEX and DEX offer. Primarily, a CEX requires KYC information, whereas a DEX is non-custodial. CEXs often allow a user to sell their cryptocurrency for fiat currency and then off-ramp that money to their bank account. DEXs seldom allow for the off-ramping of fiat currency and usually deal strictly with cryptocurrencies. CEXs can provide a user with a large, diverse set of cryptocurrencies to purchase, whereas DEXs usually offer a few cryptocurrencies and their native tokens for swapping. 

Specifically within the Ergo ecosystem, [Spectrum](https://spectrum.fi/) (formerly known as ErgoDEX), is a widely utilized DEX on the Ergo blockchain. This DEX is known for being reliable, seamless and possesses an easy to use UI. Spectrum has long been operational on the Ergo blockchain and is seeing rapid development. They have recently released an important update that will enable the dApp to be a cross-chain DEX on both the Ergo and Cardano networks. Spectrum has launched on the [Cardano testnet](https://twitter.com/SpectrumLabs_/status/1590354210616659972) and is scheduled to deploy on the mainnet shortly. On the Ergo network, Spectrum provides ERG swaps with a variety of native tokens on the Ergo blockchain. It is also important to note that Spectrum [does not have keys](https://twitter.com/chepurnoy/status/1594099245073649664) which aids in its security and decentralization. For more information about this DEX, please visit the [Spectrum website](https://spectrum.fi/). Interested parties can also stay up to date on details about launching on the Cardano mainnet via the [Spectrum Twitter account](https://twitter.com/SpectrumLabs_?s=20&t=NDifHzBWmsyvxiM3SJdaZw).

#### Conclusion

Overall, there are advantages to using a CEX and a DEX, and many users use both depending on their specific needs. DEXs become much more useful when a user is participating in a specific cryptocurrency ecosystem and wants to purchase native assets. It is vital that both CEXs and DEXs are available to the public if mainstream cryptocurrency adoption is to take place because they serve as the main avenues for participation in cryptocurrency markets. It is imperative that one does ample research about the CEX platform they are using to ensure that their funds are in a safe place. It is also important to note that sufficient research into any native assets on a respective blockchain should be carried out before swapping a coin for a native asset.


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Centralized Exchange (CEX) vs Decentralized Exchange (DEX): What are the Differences?

### Introduction

A decentralized autonomous organization (DAO) is a new type of cooperative. DAOs enable groups of any size and individuals to coordinate, pool resources, and create tokens that represent shares of ownership which can be used to vote and make decisions. With new types of organization, new ways of working together become possible.

### DAO Features

* Internet-enabled - memberships are not limited by geography or social connections
* On a blockchain - leveraging cryptocurrencies and open, distributed ledgers
* Smart contracts - facilitate trust between members and can automate some actions 

### The Need for DAOs

Imagine a group of four friends who are potters with an interest in buying an expensive piece of equipment, such as a raku kiln. Individually, they might not be able to justify buying this piece of equipment. However, it may make sense to buy it if they share the expense and ownership of the kiln. 

This is a common situation. There are many aspects of life where cooperative ownership could enable easier access to resources and services. 

Collective action also opens new opportunities. Together we can effect change that is impossible for individuals working alone or in smaller groups.

But even for collectives, it is often easier to work in small groups. As the size of a cooperative grows, we do not have the necessary mechanisms for organizing beyond [Dunbar’s number](https://en.wikipedia.org/wiki/Dunbar%27s_number) (one hundred and fifty people). In the past, we have relied on governments, corporations and non-profits to manage projects of a larger scale. DAOs give us another option that can potentially include millions of people.

### What Can DAOs Do?

DAOs are still an emerging technology. A simple example of a DAO could outline smart contract rules for a shared wallet, such as [ErgoTeam](https://github.com/anon-real/ErgoTeam) on the Ergo blockchain. This is analogous to the four potters buying the kiln through a shared bank account. A bank account is subject to the bank’s rules. In a DAO, it is subject to the rules of a smart contract.

As group size increases, from a few people to even millions, there will be more sophisticated requirements. On the Ergo blockchain, [Paideia](https://ergopad.io/projects/paideia) is currently working on a complete software suite for DAOs. In [their whitepaper](https://docs.google.com/document/d/1G8iN_9sFJ3k5UuSAIbRHdkUIhqVGhpmeA_XQXVyZW94/), they discuss the reasons for implementing DAOs on Ergo. They also discuss different governance models, voting procedures, issuing of tokens, proposal management and other features that they plan to implement. It includes an optimistic voting mechanism, quorum voting with tokens, direct sale of tokens, airdrops and other features. For an accessible introduction to Paideia, [the following episode](https://www.youtube.com/watch?v=RuSb4tyXS68) of Ergo Pulse provides a concise overview. 

### Conclusion

DAOs offer a new approach to collective ownership and action at scale. As the technology  develops and is implemented on the Ergo blockchain, it will open up new opportunities for collaboration and action. This will help fuel adoption and help set the foundation for new tools that will empower ordinary people, organizations and business to work together and change the world as we know it for the better.

What is a DAO (Decentralized Autonomous Organization)?