The ecosystem of decentralized applications (dApps) on Ergo is constantly evolving. The community now welcomes Bene V2, a major upgrade to the ecosystem's premier 'Proof-of-Funding' fundraising platform.

This release transforms Bene from a simple fundraising tool into a robust, feature-rich platform designed for the next generation of Ergo projects.

Built on a purely P2P architecture, the application runs entirely client-side without central servers, ensuring users maintain full control within their chosen browser environment.

##  How Bene "Proof-of-Funding" Works

For those new to the platform, Bene operates on a specific smart contract architecture designed to protect both the project owner and the contributor:

* Campaign Creation: A project creates a fundraising box with a minimum funding goal and a deadline (block limit).
* Token Acquisition: Contributors send the requested asset (ERG, SigUSD, GAU, etc.) and receive project tokens instantly.
The Safety Valve (Refunds): If the project hits its deadline without selling the minimum required amount of tokens, the contract automatically unlocks a refund mechanism. Contributors can exchange their project tokens back for their original contribution.
* Successful Funding: If the minimum threshold is met, the project owner can withdraw the raised funds to the address specified in the contract.

See [this video](https://www.youtube.com/watch?v=oLJG6r4C7PE) for more information on how Bene works!

## What’s New in Bene V2?

While V1 laid the groundwork, V2 focuses on flexibility, user experience, and trust. Here is a breakdown of the new features now live on the platform:

### 1\. Multi-Asset Fundraising

Campaigns are no longer restricted to just ERG. You can now accept contributions in a variety of tokens to better manage treasury volatility or leverage ecosystem assets.

  * **Supported Assets:** Accept ERG, SigUSD, Gluon Gold ($GAU), or **any custom token**.

### 2. Expanded Wallet Support

Bene V2 ensures broader accessibility for users across the ecosystem.

  * **Connect Your Way:** Full support for both **Nautilus** and **SafeW** wallets.

### 3. External Token Minter

External Token Minter

A separate, low-fee application is now available for creating participation tokens.

- **Optimized Costs: **This standalone tool allows for the minting of Proof-of-Funding tokens while avoiding the high overhead costs of other minters.
- **Ecosystem Modularity:** By keeping the minter separate from Bene, the ecosystem maintains a modular philosophy, ensuring applications remain lightweight and purpose-built.

### 4. Reputation & Trust

To help contributors make informed decisions, V2 introduces social layers to the fundraising process.

  * **Comment Systems:** Engage with the community and verify the reputation of campaign creators through integrated comments.

### 5. Flexible Deadlines

The "block height" calculation is now handled for you, offering a much more user-friendly experience for setting campaign timelines.

  * **Duration Options:** Set your fundraising deadlines via simple duration, exact datetime, timestamps, or traditional block heights.

### 6. Rich Text Editor

Presentation matters. Project creators can now tell their story more effectively.

  * **Markdown Support:** Describe your campaign with a rich text editor that supports markdown and live previews.

### 7. Decentralized Network Settings

Power users and privacy advocates have more control over how they interact with the blockchain.

  * **Custom Connections:** Choose custom explorers and APIs for greater robustness and decentralization of choice.

-----

## Powered by Google Summer of Code

This massive leap from V1 to V2 is a testament to the collaborative strength of the Ergo developer community.

The upgrade was expertly executed by **@AdityaGupta065** during the **Google Summer of Code**. This achievement was made possible through the mentorship and guidance of **Josemi**, **@Zahnentferner**, and **@ldgaetano**.

Congratulations to Aditya and the mentors for delivering a powerful tool that significantly expands what is possible on Ergo\!

-----

## Live Now: Support the Unstoppable Hackathon

You can test the power of the upgraded Bene platform right now by supporting a critical community initiative.

The **Unstoppable Hackathon** already has **nearly 2,000 registered participants**. This event is a massive opportunity to bring visibility to Ergo, attract new talent to our smart contract environment, and foster innovation.

We are running a Bene campaign to make Ergo an official sponsor of the event.

  * **Goal:** Raise funds to secure sponsorship and attract developers.
  * **How to help:** Visit the campaign link below to contribute. Your support directly helps expand the ecosystem.

👉 **[Contribute and Sponsor Ergo Here](https://ergo.bene.stability.nexus/?chain=ergo&project=e5353fbb0f2e8e6ad5d33bfc869b43cdca18f69315a57e9ae09c391ad8f967c6)**

**Explore the updated platform:** [ergo.bene.stability.nexus](https://ergo.bene.stability.nexus)
**View the Code:** [GitHub Repository](https://github.com/StabilityNexus/BenefactionPlatform-Ergo)

Blog 31.png

Bene V2 is Here: Multi-Asset Fundraising, Expanded Wallet Support, and Enhanced UI

The team behind **Duckpools**, a prominent lending and borrowing protocol on the Ergo blockchain, has released a comprehensive development update. With a focus on improved user experience, smarter contract logic, and transparency, the team has successfully deployed a preview of their V2 interface alongside a detailed roadmap for the coming weeks.

## The V2 Site Preview is Live

The biggest news for the community is the launch of the updated test site. Users can now visit [test.duckpools.io](https://test.duckpools.io/) to experience the latest UI changes and dashboard upgrades.

**Key Features of the Update**:
- **Smarter Proxy Contracts**: A major backend improvement removes the need for slippage, which previously caused some transactions to fail on the v1 site.
- **Enhanced Dashboards**: Users can now manage and view upgraded statistics and information on existing v1 pools and positions.
- **Historical Data**: Comprehensive pool dashboards now include history, and a dedicated lender dashboard has been completed.

**Note for Users**: While the test site is live, the team notes that the database is currently undergoing a resync (expected to complete within 24 hours). Additionally, as some calls are currently unoptimized, users may experience slower load times in specific areas like the borrow dashboard. Speed optimizations are scheduled for deployment after the full V2 pool launch.

#### Community Feedback Needed:
_The team encourages the Ergo community to test the new dashboards and report any statistics that appear incorrect. While basic manual testing has been completed, duckpools.io remains the recommended entry point for major transactions until the beta phase concludes._

## Recent Completed Milestones

Leading up to this release, the Duckpools developers have delivered a significant list of technical improvements, including:
- **Continuous Yield Delivery** deployed on token pools.
- **Smart Reserves**: Support for Automated Exit Thresholds for borrowers.
- **Pricing Logic**: Deployed quote contracts with advanced collateral pricing logic.
- **Maintenance**: Reduced interest update fees, resolved v1 rate delay bugs, and completed an internal contract audit.

## The Road Ahead

Duckpools has outlined a transparent roadmap for the remainder of the year and beyond.

**Target: December 8th**

The next sprint focuses on expanding the Smart Reserves functionality and documentation:
- **UI Implementation**: Smart Reserves UI for v2 pools.
- **Documentation & Templates**: Release of templates and docs for Smart Reserves, Quote contracts, and Interest Rate contracts.
- **Testing**: Release of v2 token test pools for public feedback.

## Future Outlook

Following the December updates, the team is looking toward several major ecosystem goals, including:
- Publishing a full **Security Audit**.
- releasing v2 ERG test pools.
- **Open-sourcing** the frontend code.
- Enabling decentralized hosting support.
- Optimizing high-volume off-chain bots (including mnemonic support).

We look forward to seeing the community test the new interface and provide feedback to help shape the future of lending on Ergo!



Blog 30.png

Ecosystem Update: Duckpools Rolls Out V2 Site Preview

With the protocol nearing deployment, the **Community Liquidity Bootstrapping (CLB) event is set to begin on November 25th**, allowing users to contribute liquidity and earn CLB tokens ahead of the full launch.

At a high level, USE focuses on:
- Simple everyday use on Ergo.
- Clear, predictable rules in smart contracts.
- Good pairing with other assets, including bridged stablecoins such as USDT.

USE is built on the same Dexy framework that powers DexyGold, which already runs on Ergo mainnet and tracks the gold price through oracles and smart contracts.

## How the Design Works

USE uses a simple structure that many DeFi users will recognise.

1. **The Bank contract**
- The Bank holds ERG reserves and uses an ERG/USD oracle.
- Users can send ERG to the Bank and mint USE at the oracle price, plus a small fee.
- The Bank can use its ERG reserves to buy USE when the price is weak, or sell USE when the price is high.
- The Bank controls when new USE is created and how reserves move.

2. **The Liquidity Pool (LP)**
- The LP is a trading pool on Ergo DEXs that holds ERG and USE.
- Traders swap ERG and USE, similar to a Uniswap v2 style pool.
- The pool price moves with supply and demand.
- Safety rules can limit some actions if the pool price drifts far from the oracle price, which protects reserves in obvious stress events.

3. **Arbitrage keeps the price close to 1 USD**

Arbitrage traders compare the oracle price, the LP price, and the Bank minting price.
- If USE trades above 1 USD, they can mint at the Bank and sell into the LP.
- If USE trades below 1 USD, they can buy from the LP and benefit when conditions normalise.

This profit loop keeps the price close to the target without a central controller that can freeze balances.

## Key Parameters and Safety (Planned Launch Setup)

The team treats the following as the planned initial configuration for launch. Parameters can still change based on testing and simulations.

- **Token and fees:** USE uses 6 decimals (like USDT/USDC). Fees aim to be low, targeting 0.1% for bridge routes and ~0.05% for core stable-swap markets.
- **Governance:** A 3-of-5 multisig committee will initially adjust parameters, with a plan to burn keys or transition to a DAO structure after roughly 6 months.
- **Free Minting**: Allowed when the peg is healthy and reserves are comfortable. Capped at 1% of LP size every 360 blocks (~12 hours).
- **Arbitrage Minting:** Activates if USE trades above ~$1.01 for ~1 hour.
- Interventions: The Bank can buy/sell USE in the LP (max 2% slippage) to support the peg, with a minimum delay between actions.
- **Payouts**: If reserves become very high (well above 100% collateral), the protocol can pay out a maximum of 0.5% of reserves per week, prioritizing long-term solvency.

“Extract-to-the-Future” (Under Review)

The team is reviewing a last-resort feature where, during extreme stress, the system could pull USE from the LP to lift prices. Users would be able to return that extracted USE once conditions improve. This may or may not be active at launch depending on final testing.

## Launch Details: The CLB Event

The launch quality of USE depends on starting liquidity. To achieve this, the project is hosting a **Community Liquidity Bootstrapping (CLB) event**.

### Event Timeline
- **Phase 1 (Contribution)**: Nov 25 (19:00 UTC) – Nov 28 (19:00 UTC)
- **Phase 2 (Minting)**: Nov 28 – Dec 1
- **Phase 3 (Airdrop**): Starts Dec 1 (19:00 UTC)

## How it Works

Instead of a traditional sale, users contribute liquidity to bootstrap the protocol.

1. **Contribution**: Users can contribute **ERG** (on Ergo) or **rsERG** (bridged ERG on Cardano).
2. **Liquidity Lock**: All contributed funds are paired to create the initial USE/ERG liquidity pool. The LP tokens for this pool are **locked for 2 years** in a smart contract.
3. **The CLB Token**: Contributors receive **CLB tokens**. These are liquid, tradeable tokens that represent your share of the locked liquidity pool plus the accumulated trading fees (0.3% fee tier) generated over the 2-year period.
4. **Incentives**: In addition to the CLB tokens, participants will share a bonus airdrop pool of **200,000 DORT** (Oracle reward token) and **125,000 MEW** (Mew Finance token).

**Important Note**: Do not send funds from an exchange. You must use a non-custodial wallet (like Nautilus or Ergo Wallet App) to receive your CLB and airdrops.

For full participation details, step-by-step guides, and disclaimer, please read the official launch article by Richi TP:

👉 USE — [Launch Event Details](https://medium.com/@manastaking/use-launch-event-details-4957d1db1dac?postPublishedType=repub)

## Community & Resources

**X Spaces Recording**: [Vision, design, and launch event](https://x.com/i/spaces/1djGXWAOaXdKZ)
**Telegram:** [t.me/USE_stablecoin](https://t.me/USE_stablecoin)
**Dexy Protocol Reference**: [Dexy stablecoin framework on Ergo Forum](https://www.google.com/search?q=https://www.ergoforum.org/t/dexy-gold-design/3835)
**Dexy**:[ A Seigniorage-Based Stablecoin](https://docs.ergoplatform.com/eco/dexy/)

_This article is an overview. Final launch docs and on-chain contracts will determine the exact rules of the system._


USE1111.png

USE (Universal Stablecoin for Ergo) is a planned USD-linked stablecoin on Ergo. It aims to give the ecosystem a simple dollar unit for trading, saving, and cross-chain activity, while keeping the rules transparent on-chain and the base protocol safe.

Ecosystem Spotlight: USE, a Universal Stablecoin for Ergo

Rosen Bridge has entered the final phase for its [Bitcoin Runes integration](https://ergoplatform.org/en/blog/Bitcoin-Runes-Rosen-Bridge-A-Practical-Path-for-Multi-Chain-Fungible-Assets/). You can now set up your Bitcoin-Runes watcher. The collateral requirement for the Bitcoin-Runes network has changed. You need to lock 50K RSN and 10 ERG as collateral to run a Bitcoin-Runes watcher. You can find the latest configuration documentation [here](https://github.com/rosen-bridge/operation/blob/dev/docs/watcher/deploy-docker.md#bitcoin-runes-config-just-for-bitcoin-runes-watchers). 

This update matters for anyone trading or building on Ergo. Runes are Bitcoin’s native fungible asset standard. Integrating them into Rosen means that tokens minted on Bitcoin can move across chains through Ergo, Cardano, and others already linked through the bridge. That makes Rosen one of the first working paths between Bitcoin Runes and UTXO-based DeFi.

## Current Status

The Rosen team has successfully moved beyond the testing phase and executed the on-chain creation of the necessary assets. **Rune balance**s destined for the bridge are now minted and live on Bitcoin.

The team has established the ```•ROSEN•TECH```  namespace, creating Runes that represent a wide variety of external assets. This includes major liquidity tokens like **ETH, BNB, ADA**, and **DOGE**, as well as ecosystem-specific assets like **RSN, Paideia**, and the **SigmaUSD** stablecoin (```•SIGMA•ROSEN•TECH```). These newly created balances act as the foundational liquidity layer on Bitcoin, signaling that the infrastructure is now primed to facilitate the actual bridging and swapping of these tokens across networks.

As of November 22nd, the Runes+ bridge is ready to launch and watchers are invited to get set-up.

⚠️ _Please Note:  This release is not limited to Bitcoin-Runes operators – all watcher operators must update their images as soon as possible!_

## Technical Progress
- Several core systems were upgraded for this milestone.
- The legacy P2P layer has been replaced with Rosenet, improving message routing and reducing load.
- A new Ergo Multisig package now handles key coordination and validation logic on the code level.
- All major services moved to Node v22.18 to align with current runtime standards.
- And the obvious step, the Bitcoin Runes chain is now part of the network list.

Alongside these, Rosen is introducing an **On-Chain Token Map**. Until now, supported assets were defined in a JSON file shared among watchers and guards. Every token update required manual synchronisation. The new model stores supported token data directly on-chain, so bridge participants can fetch verified configs straight from Ergo boxes. This change removes manual delays and adds transparency to how assets become bridge-eligible.

The migration is happening in two stages. The first updated TokenMap structures to recognise configs stored on-chain. The second, now in motion, shifts live services to read from blockchain data rather than local files. UI applications are the first to adopt the change, followed by guard and watcher services.

## Meaning in Practice

The Runes integration turns Ergo into a route for Bitcoin-denominated tokens. Instead of waiting for centralised exchanges to list them, you’ll be able to mint, transfer, and trade Runes assets across supported networks. Rosen’s on-chain token mapping simplifies deployment and removes the need to patch configs manually. Also, it opens opportunities to build liquidity scripts and automated swaps directly around Bitcoin-native tokens once liquidity pools form on [ErgoDEX](https://www.ergodex.io/ergo/swap).

When Bitcoin Runes go live through [Rosen](https://rosen.tech/), cross-chain fungible assets will become a day-to-day tool.

Deployment to mainnet and asset minting are now in progress. The team expects the full bridge release before the end of the month.



News_blog_ergo_smartlayer.png

Bringing Multi-Chain Assets Closer to Ergo Users

Rosen Bridge Nears Bitcoin Runes Launch

## The big idea

Bitcoin finally has a clean way to represent fungible tokens. Runes turn ordinary Bitcoin transactions into token movements that sit inside the UTXO model. Rosen Bridge brings a cross-chain control plane that coordinates deposits, mints, burns, and releases through two independent roles: Watchers and Guards. Put those together and you get wrapped assets that live on Bitcoin as Runes and travel to other chains through a predictable, auditable flow.

## Why this matters

Most people want simple outcomes: move value where the apps live, keep supply honest, avoid weird wallet hoops. Runes help because they work with normal Bitcoin transactions. Rosen helps because it gives every hop a rulebook and a referee. The result feels less like a science project and more like a network feature you can rely on.

## What you can do

- **Wrap assets onto Bitcoin.** A token on Chain-A can gain a Rune representation on Bitcoin. Traders can park value in the deepest liquidity venue in crypto and still interact with UTXO DeFi that speaks Runes.
- **Bridge assets through Bitcoin.** A token on Chain-A can move to Chain-B with a Rune step in the middle. That route lets you bridge even when chains don’t connect directly.
- **Build “Bitcoin-native” utilities.** Loyalty points, game currencies, and stable assets can live as Runes and still redeem back to origin chains through the same guardrails.
- **Automate treasury actions.** DAOs can hold cross-chain treasuries and express some of that balance on Bitcoin for settlement or visibility while keeping redemption live at all times.

## How the flow works

1. You lock the origin asset in a Rosen vault on its home chain.
2. Watchers see the lock and publish a proof.
3. Guards check the proof and mint the Rune on Bitcoin with metadata that ties the Rune amount to your lock event.
4. You move the Rune on Bitcoin like any other Rune.
5. You burn the Rune or send it to a redemption output.
6. Watchers see that event and publish a proof.
7. Guards release on the destination chain or send it back to the origin vault, depending on your choice.

Every step points at a piece of verifiable data. The metadata link and the Guard threshold both act as brakes on inflation or replay.

## What changed inside Rosen to support Runes

The team wired Runes into existing Bitcoin modules and then set a few strict rules to keep everything clean:

- **One Rune type per transfer.** Each bridge transaction moves a single asset class.
- **Minimal UTXO values.** Rune UTXOs sit at the native minimum; fee UTXOs stay separate.
- **Strict output order.** Universal change (if present), Rune change, OP_RETURN, user output, BTC change.
- **Universal change box.** Odd or messy inputs return to a safe address rather than breaking parsing.

These rules keep transactions small, predictable, and easy to scan. They also dodge shaky API shortcuts by splitting data reads into clear paths: one for Bitcoin UTXOs, one for Rune balances.

## Where Ergo fits

Rosen runs an Ergo-anchored control plane. Watchers and Guards coordinate through permits, fees, and collateral on Ergo. That design gives the bridge a single place to enforce slashing, track roles, and settle incentives. The asset can bounce between Bitcoin and other chains while the rulebook and penalties stay consistent.

## First public demo: ADA

The first end-to-end run used ADA because Cardano Catalyst funded the research path. The demo locked ADA on Cardano, minted a Rune on Bitcoin with Rosen metadata, and redeemed through the bridge. That test proved the full loop and set the stage for more assets.

## What this unlocks for builders

- **Wallet UX.** Any wallet that lists Runes can show wrapped balances. A “Bridge” button can drive lock → mint and burn → release without custom parsers.
- **Explorers and analytics.** Indexers can read runestones and display supply that maps back to origin locks. Dashboards can show circulating Rune supply beside vault balances.
- **DeFi integrations.** Liquidity pools on Bitcoin can list Rune pairs and settle at UTXO speed. Apps on other chains can accept a bridged supply that redeems through a known path.
- **Programmable policies.** Projects can layer rules such as cool-downs, spend limits, or allowlists around the Watcher/Guard agreement without changing Bitcoin itself.

## Security model in plain terms

- **Supply stays honest.** Circulating Rune supply equals what sits locked elsewhere. Guards mint and release only after proofs clear.
- **Events stay unique.** Metadata inside OP_RETURN ties every mint or redemption to an origin event, so a replay attempt fails checks.
- **Operators face real stakes.** Guards post collateral that can be slashed for faults. The system pays fees through a native incentive token, so the economics line up with good behavior.
- **Transactions stay boring.** Deterministic structure and single-asset transfers cut edge cases and keep audits short.

## Developer notes

- You work with a standard scanner that already knows Bitcoin.
- You plug in Rune extractors that pull transfer details and enforce the transaction shape.
- You sign through Rosen’s threshold scheme and broadcast through ordinary nodes.
- You test in Pandora, then promote the same flow to mainnet when the checks pass.

## What’s next

- A public spec for bridge metadata inside Runes so every wallet and explorer can show the same truth.
- Wider vault coverage so more chains can mint a Rune representation.
- Extra UI polish so the “Bridge” button looks and feels the same across ecosystems.
- Formal audits of the Rune paths inside Watcher and Guard.

## The takeaway

Runes give Bitcoin a tidy, UTXO-native language for fungible tokens. Rosen gives cross-chain movement a rulebook and a scoreboard. Together they turn “wrapped on Bitcoin” into a dependable capability rather than a one-off experiment. If you build apps that touch multiple chains, you now have a route that keeps the UX smooth and the accounting tight.



news blog - auction (1).png

Bitcoin Runes + Rosen Bridge: A Practical Path for Multi-Chain Fungible Assets

ChainCash records reserves and signatures for each note on Ergo. Every note shows its past, and receivers decide whether to accept or reject. This protocol, designed by [Alex Chepurnoy](https://www.ergoforum.org/u/chepurnoy), extends the [Ergo eUTXO model](https://docs.ergoplatform.com/) into new forms of currency that balance collateral and reputation.

## The Essence of ChainCash

Most digital money today sits at two extremes. Stablecoins lean on centralized reserves and institutions. Community tokens rely only on trust, with little proof. ChainCash seeks the middle path.

[Every note in ChainCash is both a contract and a story](https://www.ergoforum.org/t/chaincash-a-spender-signed-currency-on-ergo/4015):
- It can be tied to reserves, locked in Ergo boxes.
- It can record the signatures of past holders, each transfer adding a new link in its trust chain.
- It flows freely, with users free to accept or reject based on the note’s history.

## Core Mechanics

**Reserve Boxes** hold collateral: ERG, tokens, or other assets. Each reserve box is unique, tracked by a token, and can serve as backing for issued notes.

**Notes** are contracts that can be passed on-chain or off-chain. Spending a note means adding your signature. That signature becomes part of its lineage.

**Redemption** allows a note holder to claim against any reserve linked in its history. If a signer tied their reputation or collateral to the note, they stand behind it.

**Choice** stays with the receiver. [They inspect reserves, review history, and decide whether to accept.](https://github.com/BetterMoneyLabs/chaincash)

## Practical Uses and Benefits

People who want low risk can focus on notes backed by reserves. Others may rely on reputation for small, everyday transfers. Anyone can shape their own rules for what counts as valid money. This flexibility makes ChainCash adaptable across different markets and communities.

There are also **two detailed video explainers** [Part #1](https://www.youtube.com/watch?v=NxIlIpO6ZVI) and [Part #2](https://www.youtube.com/watch?v=fk8ZFvNFDYc) that walk through how ChainCash works in practice, from reserves and signatures to real-world use cases.

[Ergo’s architecture makes ChainCash possible due to](https://curiaregiscrypto.medium.com/empowering-communities-from-bitcoins-vision-of-decentralized-money-to-ergos-digital-credit-unions-44912fc798d8):
- **Extended UTXO model** that ensures transparency and precision of reserves and contracts.
- **Smart contracts** enforce redemption rules, signature chains, and reserve logic.
- **Low-cost execution** keeps note transfers and redemptions practical.
- **Openness** lets anyone issue or accept notes without permission.

## Market Position
The stablecoin market is dominated by custodial models. Projects like [MakerDAO’s DAI](https://makerdao.com/) or [Frax Finance](https://frax.com/) combine collateral with governance, but they still depend on centralized touchpoints or complex structures. ChainCash revives elements of “free banking” while securing them with on-chain contracts and transparent reserves.

If adopted, this model could lead to an ecosystem of notes that reflect both collateral and reputation. Communities, merchants, and peer groups would gain new ways to define acceptable money beyond the stablecoin standard.

#### Closing Thoughts

On Ergo, notes link to reserves, show signatures, and allow redemption. ChainCash makes room for different ways of handling risk and trust. Some participants will demand collateral before treating a note as valid. Others will accept transfers that rely on history or reputation, especially in smaller circles where personal trust carries weight.

This flexibility allows ChainCash to serve more than one type of market. It can back stable, collateral-heavy notes for merchants who need security, while also supporting lighter, reputation-based notes for communities that value speed and autonomy. Over time, the ecosystem may form a spectrum of money types, each carrying its own proof and accepted under its own conditions.

By combining reserves, signatures, and transparent contracts, ChainCash shows how digital currency can evolve beyond one-size-fits-all models. Instead of relying on central issuers, the protocol turns money into an open system where credibility grows directly from user behavior and visible history. In that sense, it extends the principles of free banking into the blockchain age, rooted in Ergo’s technical foundation.


chaincash.png

ChainCash: Money That Carries Its Own Story

The question is simple. Can Lunarpunk and Solarpunk both survive when the security story bakes a form of mutually assured destruction into the design. The answer can be yes. The path runs through merged mining and a sidechain architecture that treats energy as the shared rope that binds two different value systems.

Lunarpunk values privacy first. The goal is freedom from surveillance and censorship. Users want real anonymity. They want credible resistance to capture.
Solarpunk values openness with rules. The goal is social scale with safety. Users want privacy from the public and accountability to known stewards inside a clear legal frame.

A Braid sidechain for Ergo can host both modes at once. One set of rails favors Lunarpunk privacy. Another set of rails favors Solarpunk transparency with controls. Merged mining ties both rails to the same proof of work energy. Each mode benefits from the other because both draw security from the same base.

## How the Braid sidechain works at a glance

Ergo uses an extended UTXO model. Each output carries registers that hold data for smart rules. The sidechain keeps that model.
- Boxes hold tokens and data.
- Special tokens mark governance boxes.
- Scripts read registers and enforce rules on spending.
- New boxes appear from consumed boxes and inherit clear instructions.

This model gives precise control over token flows. A rule can allow movement to a set of approved addresses. A rule can freeze a supply after a given height. A rule can check a proof before value moves.

## Merged mining as the braid of energy

Merged mining lets miners commit work to Ergo and to the sidechain in the same step. A single hash search advances both chains. The main chain attracts a broad set of miners. The sidechain borrows that strength. This creates a credible cost for an attacker across both systems. A strike against one faces the same wall of work that secures the other.

The result is a living form of mutual assured destruction in economic terms. Attackers meet a shared defense that draws from one energy pool. The cost of breaking one rail rises because the other rail raises the floor of required work.

## Assumptions that shape user outcomes

### Lunarpunk assumptions

- Anonymity is absolute unless a user shares proof by choice.
- The network resists censorship because miners validate proofs and do not need to read contents.
- The base chain has enough hash power to crush attacks.

### Solarpunk assumptions

- Public privacy remains intact. Stewards with viewing keys can see details as policy requires.
- Rules can stop transfers to barred addresses and can check identity proofs without public leaks.
- Audits run fast and at low cost through zero knowledge checks.

## Benefits to each camp

### Benefits in Lunarpunk mode
- Strong privacy in hostile settings.
- Room for open innovation in finance that does not rely on intermediaries.
- Censorship resistance that inherits the main chain defense.

### Benefits in Solarpunk mode
- Fit with regulated markets and enterprise needs.
- Lower manual overhead through automated proofs.
- Clear paths for stablecoin and cash like tokens that need rule checks.

## Built for Stablecoins and Real-World Assets
[Braid is engineered with a clear focus: stablecoins, real-world assets (RWAs), and Bitcoin-backed DeFi. ](https://twitter.com/ErgoHunter/status/1945928477317665017?utm_source=chatgpt.com) Out of the box, it offers: 
- **Multi-asset fees:** Pay transaction fees in the asset you’re using, USD-pegged tokens, gold tokens, you name it.
- **Trustless bridges:** Two-way pegging with Ergo and Bitcoin from day one, plus connectivity to Ethereum, Binance Smart Chain, and Cardano.
- **Financial primitives:** DEXs, lending pools, bonds, auctions, and proven stablecoin frameworks like SigmaUSD, DexyGold, and GluonGold.

## Global Transfer Policies: Compliance Without Compromise
[Braid introduces Global Transfer Policies (GTPs)](https://curiaregiscrypto.medium.com/braids-global-transfer-policies-vs-evm-a-simpler-more-flexible-approach-to-blockchain-control-50fce2bdff65), a flexible governance layer for token transfers. Issuers can define exactly how a token can be used, enabling whitelists, blacklists, jurisdiction-specific rules, or even Islamic finance compliance structures. 

Policies can be:
- Updated by a single entity, multi-signature setup, DAO vote, or timed schedule.
- Combined with privacy features, like stealth addresses and hidden amounts via Bulletproofs++, to balance compliance with confidentiality.

With GTPs, issuers can adapt to any regulatory climate without locking the whole network into one rulebook.

## Dark Circuits, Private Assets

Braid supports **dark tokens** and **private transaction circuits**, allowing assets to flow between transparent and private states as needed. For example:
- A stablecoin could remain fully transparent in the U.S. market.
- Once transferred to an EU-compliant gateway, it could move into a privacy-preserving circuit.

This flexibility empowers both open-market and privacy-conscious use cases without fragmenting liquidity.

## Programmability Without Limits

[Leveraging Ergo’s extended UTXO model, Braid enables contracts to directly reference both Bitcoin and Ergo blockchains.](https://docs.ergoplatform.com/uses/sidechains/sigma-chains/?utm_source=chatgpt.com) Combined with **RGB-like protocols** for Bitcoin metadata commitments, developers can build advanced DeFi tools: trustless Bitcoin-backed derivatives, algorithmic stablecoins, or tokenized RWA insurance contracts, on top of Bitcoin’s security layer.

## A quiet rebellion inside a cooperative garden

The world moves toward automated control. AI will audit. Rules will grow. A Braid sidechain on Ergo can keep space for privacy that does not bend. The same design can support transparent finance that serves markets and laws. Merged mining holds both with one rope of energy.

The braid can carry both stories. Shadow for those who need it. Sunlight for those who choose it. Strength for both because each draws from the same well. If we hold to narrow powers, strong proofs, and community checks, then Lunarpunk and Solarpunk can both survive. The result reads as quiet defiance inside a working civic garden.

See the full article from Armeanio [Exploring merged mining](https://curiaregiscrypto.medium.com/exploring-merged-mining-af087b566e6d) for more information on design, assumptions and trade-offs, or check out [the whitepaper directly](https://github.com/BetterMoneyLabs/braid/blob/master/whitepaper/whitepaper.pdf)!

news blog - sigmachains.png

Braiding Lunarpunk and Solarpunk through Merged Mining

[Machina Finance](https://github.com/nautls/machina-finance) is an innovative, bot-driven decentralized exchange (DEX) being developed on the Ergo blockchain. Its core innovation lies in a peer-to-peer (P2P) trading model that uses off-chain execution with on-chain verification, providing automated precision without sacrificing decentralized security.

## How It Works: A Hybrid Approach

Instead of relying on shared liquidity pools like a traditional Automated Market Maker (AMM), Machina Finance uses a system of grid order contracts. The execution logic for these trades is handled by off-chain bots, but every critical step is verified and secured by smart contracts on the Ergo blockchain. This hybrid approach delivers both speed and trust in a single package.

For traders, this means you can set up a "grid" of buy and sell orders across a desired price range. Off-chain agents (bots) then monitor the market in real-time. When a trigger price is hit, the bot initiates the trade, and the transaction is processed and validated on-chain via a smart contract. This ensures that every trade is a direct, peer-to-peer interaction, fully transparent and secure.

## Why It Matters: A Shift in DEX Mechanics

Traditional grid trading tools often operate on centralized, opaque platforms. Machina Finance moves this functionality directly onto Ergo's blockchain, anchoring strategies in its powerful smart contracts. This provides significant advantages:

- **P2P Trades:** It enables direct trades between users without the need for shared liquidity pools, reducing counterparty risk.
- **Execution Speed:** The off-chain bot logic allows for rapid, automated trade execution, which is crucial for capturing price movements in volatile markets.
- **Decentralized Security:** The use of Ergo's eUTXO smart contracts ensures that every order is validated on-chain before settlement, providing a built-in layer of trust and transparency.

## Development and Progress

The project has been in active development since at least late 2023. Key milestones have included:

- **Q4 2023:** Initial work on foundational smart contracts, including the ```
execution box``` and ``` SettingsBox``` contracts.

- **Q2 2025:** The team added the ERG <> Token auto-compoundable and partially fillable grid contract and the Token to Token grid contract, followed by final optimizations. Work began on limit order contracts and a real-time order aggregation backend in Rust.
- **July 2025:** AVL Tree serializations were completed, as requested by the ErgoNames project. Grid contracts complete and reviews underway, exploring ways for a quick bootstrap and working on Machina real-time order aggregation backend in rust. 

## Considerations for Traders

While Machina Finance offers a powerful tool for automated trading, its performance depends on a well-designed strategy. Spacing the grid too widely can lead to missed opportunities, while a grid that is too narrow may reduce efficiency. The system is particularly well-suited for range-bound markets, but extreme volatility can cause price jumps that bypass set orders. Since it is native to Ergo, it is most seamless for traders within the Ergo ecosystem. For those interested in tracking market data, external tools can provide additional visibility. 

## How It Works: A Technical Summary

- **Grid Setup:** A trader defines a range and price intervals for their buy and sell orders.
- **Bot Monitoring:** An off-chain bot watches the market for price alignment.
- **Triggered Trades:** When a price trigger is hit, the bot prepares a transaction.
- **On-Chain Verification:** The transaction is sent to the Ergo network, where smart contracts validate the trade conditions before execution.

machina.png

Machina Finance: Off-Chain Execution, On-Chain Trust

Ergo’s mission has always been rooted in decentralization, not just at the consensus layer, but across the entire stack. With the launch of the **Ergo Infrastructure DAO (InfraDAO)**, that vision is expanding into the services and infrastructure that power the ecosystem every day.

The InfraDAO is now officially live on [Paideia](https://app.paideia.im/ergoinfradao), following a successful governance vote. What began as a grassroots proposal from within the **Sigmanauts contributor group**—spearheaded by everyone's favourite Sigmanaut, **qx**, known for his appearances on Ergo AMAs and everywhere else in the ecosystem—has now matured into a community-owned initiative that will reshape how core services are delivered and maintained.

---

## What Is the Ergo Infrastructure DAO?

The InfraDAO is a decentralized, peer-operated network of infrastructure providers responsible for maintaining key services in the Ergo ecosystem. This includes:

* Full nodes and APIs
* Blockchain explorers
* Testnet and mining infrastructure
* Community documentation and mirrors
* Tools like SigmaSpace, ErgoDocs, and Sigmaverse
* Future hosting and management of ergoplatform.org

This DAO will reduce reliance on the Ergo Foundation and ensure that infrastructure is censorship-resistant, fault-tolerant, and transparently governed.

---

## Why It Matters

Until now, much of Ergo’s infrastructure, including public endpoints, block explorers, and hosted documentation, has been maintained by the **Ergo Foundation** and later the **Developer DAO**. While this model provided early stability and reliability, it also created central points of dependency.

InfraDAO changes that by distributing responsibilities across a global, self-managed network of contributors who run and maintain the stack. It ensures:

* More resilient and geographically distributed services
* Long-term sustainability without Foundation dependence
* Community control over governance and deployment
* A truly decentralized operational model to match Ergo’s core principles

---

## What’s Already Live and Migrated

The InfraDAO has already made progress. Three high-performance machines, load balanced across multiple endpoints, are now live and synced using the faster **RocksDB** storage backend:

* [explorer-p2p.ergoplatform.com](https://explorer-p2p.ergoplatform.com)
* [graphql-p2p.ergoplatform.com](https://graphql-p2p.ergoplatform.com)
* [api-p2p.ergoplatform.com](https://api-p2p.ergoplatform.com)
* [node-p2p.ergoplatform.com](https://node-p2p.ergoplatform.com/panel) (HTTPS-compatible for wallets)

These endpoints are **fully compatible with mobile and browser-based wallets** and serve as a foundation for decentralized access to the Ergo network.

You can monitor uptime and peer availability via the public dashboard:
[Ergo Infrastructure DAO – Real-time Status Dashboard](https://infra-p2p.ergoplatform.com/cgi-bin/dashboard.cgi)

---

## P2P, Load Balancing, and Community Operators

While “P2P” here refers loosely to a distributed network, the infrastructure is truly community-run. The initial load balancing will include machines operated by:

* qx (three nodes)
* Jumei
* 2ndTL Mining
* Sheetoshi

These are strategically deployed to support global geolocation-based load balancing. More community machines will be added as the DAO expands, forming a fully decentralized and globally resilient backbone.

The selection process for new participants will involve:

1. A **static IP address**
2. **Sufficient upload bandwidth**
3. A **basic understanding of infrastructure** (or ability to follow command-line setup instructions)
4. A **mailing address** for shipping a preconfigured node or explorer (provided free of charge)

---

## From Idea to Execution: Built by the Community

The InfraDAO began as an internal initiative among the Sigmanauts. Recognizing the need to decentralize infrastructure, **qx** proposed the creation of a DAO and led its deployment.

In July 2025, a proposal requesting **50,000 \$PAIDEIA** passed successfully on Paideia. These funds are covering startup costs such as machine preparation, shipping, and contributor onboarding. The DAO’s token is now live, and governance is active.

---

## Technical Requirements

**Hardware and Network Requirements:**
* Upload bandwidth: 50 Mbps or more
* Latency: \~100ms or lower to your local region
* IPv4: Static or long-term dynamic IP
* Machine specs:
  * Ubuntu OS
  * 16GB RAM (32GB recommended)
  * 1TB SSD
  * Docker, tmux, SSH access, and config editing skills

These systems are optimized for high availability and are currently serving production traffic through load-balanced endpoints.

---

## Not Just Hosting: Future Expansion

While InfraDAO's first phase centers on hosting, it will grow to support:

* Infrastructure maintenance and monitoring
* Dependency and security updates
* Docker orchestration and software deployment
* CMS management for ergoplatform.org
* Publishing and documentation updates
* Hosting services like SigmaSpace, ErgoDocs, and Sigmaverse

This opens participation to sysadmins, backend developers, content maintainers, and other contributors beyond node operators.

---

## Current Status

* DAO live on Paideia
* Initial funding proposal passed
* Token minted and voting live
* First wave of infrastructure live and operational
* Public monitoring dashboard online
* Next: additional contributors and global expansion

---

## How to Get Involved

If you're technically capable and want to run infrastructure, maintain uptime, update sites, or participate in DAO governance, now is the time to step in.

→ Join the DAO or follow proposals here:
[https://app.paideia.im/ergoinfradao](https://app.paideia.im/ergoinfradao)

→ Monitor the infrastructure status:
[https://infra-p2p.ergoplatform.com/cgi-bin/dashboard.cgi](https://infra-p2p.ergoplatform.com/cgi-bin/dashboard.cgi)

---

## Final Thoughts

The launch of the Ergo Infrastructure DAO is a major step toward full-stack decentralization, autonomy, community control, and the sustainability of a mission-driven blockchain ecosystem.

With governance on-chain, infrastructure owned by the community, and global contributors already running critical services, Ergo is showing what real decentralization looks like.

Help build the foundation. Get involved.


dao.png

Ergo Infrastructure DAO: Decentralizing the Backbone of the Ergo Ecosystem

Mew Finance is a decentralized application suite on the Ergo Blockchain. The project launched in October 2024 and it brings DeFi, digital assets, and cross chain features into one cohesive platform. Long time community developers HQΣr and Aco Šmrkas lead the project. The design favors modularity, ease of use, and deep ecosystem integration.

This article is part of an ongoing series that features Ergo ecosystem infrastructure and dApps.

## Core Apps

You can trade tokens, collect NFTs, and join community investments in one place with Mew Finance.

* **Exchange**

  * **[DEX](https://dex.mewfinance.com)**: A decentralized exchange, an Ergodex fork, for trading Ergo native and wrapped assets with low fees. The app supports liquidity provision and yield farming.
  * **[NFT Mart](https://mart.mewfinance.com/)**: A marketplace for individual and bundled NFT listings. Payments work with ERG or supported wrapped assets.
  * **[Mew Store](https://store.mewfinance.com)**: Discover unique NFTs and digital and Phygital assets from verified merchants.
  * **[Bank](https://bank.mewfinance.com/stablecoins/)**: A stablecoin focused financial interface with swaps, deposits, and on chain accounting.
  * **[Bridge](https://bridge.mewfinance.com/)**: A centralized NFT bridge between Ergo and Cardano with two way transfers of verified collections. The bridge locks assets on the source chain, verifies collections, mints or unlocks NFTs on the target chain, and creates on chain Registry NFTs that store proof and history for all bridged assets.
* **Other dApps**
  * **[Fund](https://fund.mewfinance.com/)**: A decentralized fundraising platform that allows projects to raise capital with transparency.
  * **[Fun](https://fun.mewfinance.com/)**: A decentralized lottery in collaboration with ErgOne. The aim is higher engagement and liquidity.
  * [**Mew Lock**](https://lock.mewfinance.com): Lock ERG and tokens with smart contracts on the Ergo blockchain. Set your own unlock conditions and keep full control over your assets.
  * **[Mew Payment](https://payment.mewfinance.com/)**: Crypto native payment requests and fulfillment across supported assets with stablecoin support.
* **Tooling**
  * **[Ergosanta](https://santa.mewfinance.com/)**: A seasonal initiative that uses proof of work to distribute community rewards.
  * **[Trading Dashboard](https://trading.mewfinance.com/)**: A clear interface to track dApps, asset prices, and user positions across the Mew ecosystem.
  * **[Ergo Tools](https://tools.mewfinance.com/)**: Wallet tools for minting, burning, airdropping, and consolidating ERG based tokens.
  * **[Cardano Tools](https://ctools.mewfinance.com/)**: A companion toolkit for Cardano native assets.
  * **[Mew Wallets](https://wallets.mewfinance.com)**: Create offline paper wallets or generate custom vanity addresses. All keys generate locally in the browser and nothing leaves the device.

## Recent Milestones and Updates

* **Mew Bridge** launched in Q2 2025. It adds NFT transfers between Ergo and Cardano through a centralized, bot driven, off chain processing engine. Registry NFTs and full on chain data persistence provide transparency and verifiability.
* **Mart UX Optimizations** improved page load times and listing navigation.
* **Trading Dashboard** went live in Q1 2025 and now consolidates on chain data across dApps.
* **Phygital expansion** with Proof of Merch brought real world utility to Kitty NFT holders.
* **Mew Bank** introduced a SigUSD DeFi interface with stablecoin tools and tier based fee discounts.
* **Mew Tools** added the Multi Minter to streamline bulk NFT creation.

## In Development

* **Mew Lending**: A collateralized lending system for borrowing and earning interest on Ergo native assets.
* **Mew Delegation**: Asset delegation for pooled operations such as governance or distribution.
* **Mew Orderbook:** A streamlined orderbook interface for trading and selling assets at predefined prices.
* **Mew Pump:** Mew’s playful, community-driven token launchpad inspired by snek.fun, designed for fast, fun, and experimental coin launches.
* The team also plans to add a treasure hunt, board games, and more.

## A Simple Step by Step Guide to Begin

**Step 1: Set up your Ergo wallet**

* Download the Ergo wallet from the official site and complete setup.
* Add ERG. Buy ERG on a supported exchange and transfer to your wallet.

**Step 2: Explore the Mew DEX**

* Visit the DEX. Start at the Mew Finance DEX to trade.
* Trade tokens. Choose the pair and the amount. The DEX routes to the best available rate.

**Step 3: Buy and sell NFTs on Mew Mart**

* Browse the marketplace. Visit Mew Mart to explore and purchase Ergo based NFTs.
* List your own NFTs. Mint and list directly in the marketplace.

**Step 4: Join Mew Fund and invest**

* Participate in community investments. Go to Mew Fund to join investment pools and support promising DeFi projects.

**Step 5: Earn rewards and join governance**

* Climb the tiers. Engage with the platform to earn rewards and reach higher membership tiers.
* Vote on proposals. Join governance and help shape the future of Mew Finance.

## Conclusion

Mew Finance pairs an integrated toolset with low transaction fees and a strong community focus. The result is a streamlined experience for traders, investors, and NFT collectors who want a single home for the Ergo ecosystem.

## Learn More

* Website: [mewfinance.com](https://mewfinance.com/)
* Telegram: [@MewFinance](https://t.me/MewFinance)
* Discord: [discord.gg/KQrCH5UE](https://discord.gg/KQrCH5UE)
* Twitter: [x.com/Mew\_finance](https://x.com/Mew_finance)
* GitHub: [github.com/AcoSmrkas](https://github.com/AcoSmrkas)

mew2.png

Mew Finance: A Playful DeFi Toolkit for the Ergo Ecosystem

Lithos is a new protocol designed to overhaul how mining pools work by moving them on-chain, giving miners full control, and eliminating the need for centralized pool operators. Unlike most previous attempts at decentralized mining, Lithos is built to be efficient, scalable, and secure.

---

## What Is Lithos?

Lithos is a decentralized mining pool protocol that connects miners directly to smart contracts on Ergo. These contracts handle everything—work submission, difficulty management, and payments—without relying on centralized servers or custodians.

The protocol uses **Stratum** to connect mining hardware to the Lithos client, but all key logic runs on-chain. Miners submit work to smart contracts and get paid directly based on a new cryptographic proof format.

It is designed to be **blockchain agnostic**, meaning it could support mining pools for any proof-of-work chain in the future. Work computation and storage happens on Ergo using ErgoScript smart contracts, while payment verification for other chains would require lightweight bridges.

Initial research is already underway to extend Lithos support to Bitcoin via an interoperable design.

---

## How It Works

Lithos combines two key ideas: **Non-Interactive Share Proofs (NISPs)** and **collateralized mining pools**, implemented via Layer 2 smart contracts (specifically, an optimistic rollup) on Ergo.

### NISPs: Proof Without Interaction

Non-Interactive Share Proofs allow miners to submit proof of work without needing to interact back and forth with a server. Each miner chooses their own difficulty, which determines how often they get paid and how large those payments are.

Smart contracts validate these proofs and issue payouts, with no need for centralized coordination.

### Collateralized Pools

Mining pools on Lithos are backed by collateral. Miners and non-miners can stake ERG or LITHOS tokens to collateralize a pool. This enables:

* Local block production with full transaction selection
* Censorship resistance
* On-chain enforcement of payment fairness
* A native DeFi lending mechanism between pool creators and stakers

---

## Benefits for Miners

* **Full block control**: Miners select transactions, collect demurrage and MEV.
* **Fair payouts**: Smart contracts handle all rewards transparently.
* **No pool operator risk**: There is no centralized party who can cheat or delay payments.
* **Local client**: The Lithos miner runs locally to avoid latency or stale shares.
* **Adjustable difficulty**: Miners can tune their share difficulty to match their hardware and risk preferences.

---

## Difficulty and Payments

The protocol introduces a unique payment model:

* **Higher difficulty** = fewer but larger payments
* **Lower difficulty** = more frequent but smaller payments

Real-world testing shows that total rewards remain proportional to hashrate, but miners can choose how stable or volatile their earnings are.

---

## LITHOS Token

The protocol will include a native token:

* **Earned** by miners as a reward for using decentralized pools.
* **Required** for pool collateralization, linking miners and lenders.
* **Used** used to prevent spam, fraud, and to help with rollup sequencing.

More information will be released in the upcoming whitepaper.

---

## Latest Development Updates

* Final fraud proof contracts are under review
* Storage rent implementation refined to prevent block-level replacement attacks
* Difficulty contract is being built to prevent post-mining manipulation
* Rollup contract testing and stratum fixes are ongoing
* Codebase will be made public before testnet launch
* Research underway on Bitcoin integration

Testnet launch is approaching, pending final rollup integration and stratum stability.

---

## What’s Next

The Lithos roadmap is closely tied to the release of Sigma 6.0 on Ergo mainnet, which is a prerequisite for Lithos to go live.

Until then, work continues toward the first public testnet. The final stretch includes:

* Completing and testing rollup and fraud-proof contracts
* Finalizing stratum client integration
* Releasing the public codebase for peer review
* Continuing development of the emission, configuration, and collateral contracts
* Planning BTC integration for broader protocol compatibility
* Finalizing the whitepaper outlining the system’s design and token mechanics

Once these milestones are reached and Sigma 6.0 is activated on mainnet, Lithos will be ready to launch.

---

## Resources

* GitHub: [github.com/Lithos-Protocol](https://github.com/Lithos-Protocol)
* Telegram: [@LITHOS\_Protocol](https://t.me/LITHOS_Protocol)
* YouTube: [ErgoHack Lithos Demo](https://www.youtube.com/watch?v=oCvNSxSff4k&feature=youtu.be)


lithos.png

Lithos: Decentralizing Mining with On-Chain Pools

Bitcoin has officially bridged to the Ergo ecosystem via Rosen Bridge! This newly built, decentralized infrastructure enables trustless transfers between BTC and Ergo, allowing Bitcoin to be deployed within Ergo’s growing DeFi ecosystem as rsnBTC. As a eUTXO blockchain, Ergo’s smart contracts are powered by ErgoScript and Sigma Protocols, enabling the development of powerful dApps that run on an extremely secure base layer – which can now use Bitcoin as collateral.

Let’s take a closer look at the Rosen Bridge, the trustless entities that secure it, and how you can earn income by participating in and driving forward this innovative element of Ergo’s infrastructure.

**Those who wish to move assets through Rosen Bridge can access it at [app.rosen.tech](https://t.co/SBhBAhWvWV). Currently, the bridge supports Ergo, Cardano, and Bitcoin assets, but the bridge will also support other chains in the near future, including EVM.**

## What Is The Rosen Bridge?

The Rosen Bridge is a cross-chain bridge that was custom-developed for the Ergo blockchain. It allows for the secure transfer of assets between different blockchains (initially Cardano and Ergo, and now Bitcoin too), enabling users to enjoy the benefits of multiple networks.

There are many different models for bridges, but in general, bridging technology has historically been a uniquely vulnerable element of the blockchain space. The complexity of bridges has often required numerous smart contracts to be executed in tandem between two or more blockchains. This means that bridges have often presented a particularly large attack surface, and, in the past, hackers have taken advantage of these vulnerabilities to extract and steal locked funds.

Ergo has taken a straightforward approach to minimize the role of smart contracts on the chains that Rosen bridges with. **It accomplishes this by limiting the execution of all smart contract functions to the Ergo blockchain only**, and the security model relies on two key parties: Watchers and Guards. 

Watchers monitor the target blockchains for key events. They then pass these to the Guards by creating a transaction on Ergo, who parse them, check for an accurate event and consensus, and execute transactions on the relevant blockchain. Rosen is designed to maintain security as it scales, with separate modules added for each new chain that are integrated into the ecosystem. 

It is important to note that Ergo was chosen as the hub for Rosen Bridge’s smart contracts because of the platform’s time tested security. As a network that encourages open source development, Ergo’s scripting language and smart contracts have been established as some of the most robust and secure in the entire industry. 

## Rosen Fees And The RSN Token

The fee for using the Rosen Bridge is 0.5% of the total transaction amount, or $10 USD - whichever is greater, plus network fees. Guards can collectively adjust the bridge fees, while network fees vary according to the blockchain platform (fees for Ergo are static).

Additionally, the RSN token plays an important role in ensuring the security of the bridge. Together, the fees and use of the RSN token offer a number of ways to earn by supporting the Rosen infrastructure.

### Watcher Fees

Watchers can be viewed as oracles, monitoring deposit events for their respective blockchains (Watchers are needed for each chain that is part of Rosen Bridge) and passing that information to Guards. Watchers provide a vital service, and together they form a decentralized p2p network of nodes, ensuring there is no single point of failure. 

Each Watcher set has no theoretical limit (currently a 999 soft limit), and 60% + 1 of these must agree on an event taking place before it is considered valid and communicated to the Guards. This parameter can be adjusted by the Guard set. Assuming a full set of Watchers, this requires 601 Watchers to agree, reducing the possibility of collusion. It is possible to have more than one Watcher set, though it is unlikely that more than two would be necessary in the long run.

Watchers receive 70% of transaction fees from the Rosen Bridge.

### Guard Fees

While Watchers collect and communicate information about their target network, Guards execute transactions in response to this information. The model is somewhat similar to the Bitcoin network’s infrastructure of full nodes, which ensure communication of reliable information around the network, and miners, which are tasked with security. In Bitcoin’s case, every mining node is a full node, but not every full node is a mining node.

The Guard set is a federated group of nodes with a collective responsibility for managing the Rosen core. Guards must lock a certain amount of funds as collateral, paid in RSN tokens, to help ensure their honesty. Should a Guard act maliciously, they will immediately have their collateral slashed. The Guard set can operate safely even if a number of Guards prove unreliable. Guards receive 30% of bridge transaction fees overall.

## Two More Ways To Earn

Ergo’s Rosen Bridge relies on accurate pricing of RSN and liquid markets. Including RSN in Ergo’s DeFi ecosystem is therefore vital for the smooth functioning of the service.

Users who own RSN can deposit their tokens to a [liquidity pool](https://app.spectrum.fi/ergo/liquidity) on Spectrum/Splash - Ergo’s main decentralized exchange. In order to do this, you will need ERG as well as RSN. Liquidity can be withdrawn at any time, but liquidity providers (LPs) need to be aware that they may be impacted by impermanent loss (IL). This occurs when the ratio of assets’ prices rises or falls after they have been deposited to the liquidity pool. If an LP withdraws their assets from the pool, they may receive less in dollar-equivalent terms than if they had simply held assets and not provided liquidity. The loss is described as “impermanent” because it is only crystallized upon withdrawal. If the LP waits and the price ratio returns to its starting point, they will be able to withdraw the initial value of the tokens. This occurs because LPs own a percentage of the pool, not an absolute number of tokens. 

To compensate users for the risk of impermanent loss, LPs receive a share of trading fees for the pool. They may also receive additional tokens, known as yield farming rewards. The current rate of return for LPs can be viewed on the [liquidity pool page](https://app.spectrum.fi/ergo/liquidity) for Spectrum/Splash.

Another option for earning with RSN is to loan tokens on [Duck Pools](https://www.duckpools.io/), Ergo’s lending protocol. As with depositing RSN to a liquidity pool, rates of return vary.

Additionally, interested parties can create bonds at [SigmaFi](https://sigmafi.app/#/) to lend or borrow Rosen. SigmaFi is unique in that there is no liquidation action until maturity and borrowers can set their own rates in the bond request. 

## Find Out More

You can learn more about the Rosen Bridge by reading [Ergo’s documentation](https://docs.ergoplatform.com/eco/rosen/), or gain further information about Ergo and its ecosystem from the [Ergo website](https://ergoplatform.org/).

Join the [Ergo Discord](https://discord.gg/ergo-platform-668903786361651200) to connect with the community and discuss the Rosen Bridge and DeFi opportunities with experts. Find out how to set up a Watcher or Guard, and explore how to use Ergo’s decentralized trading and lending applications.


News_blog_Earning_Rosen_Bridge (1).png

Earning With The Rosen Bridge

Ergo’s powerful, flexible, and secure smart contract functionality opens the door to a whole host of new use cases for Bitcoin DeFi on Ergo. Here’s how Sigma Chains can bridge the gap between the two platforms.

## What Is A Sigma Chain?

Sigma Chains are one of Ergo’s key solutions for scaling its blockchain ecosystem. 

Like Bitcoin and other similar blockchains, Ergo makes critical trade-offs between speed, scalability, and security for its base chain. Ergo supports limited throughput on its main blockchain, instead choosing to prioritize security (it nonetheless processes blocks every 2 minutes, supporting significantly greater transaction volumes than Bitcoin).

More significant scaling is achieved through an unlimited number of Sigma Chains, or sidechains, that are secured using the Ergo base layer. These can also have their own rules for consensus as well as be customized in different ways. This offers a best of both worlds approach, where Sigma chains provide a high degree of flexibility, without sacrificing security.

What this means in practice is that a Sigma Chain can be launched and tailored to a specific use case, all while secured on Ergo. This offers an extremely versatile model for scaling and creating a wide range of decentralized finance (DeFi) applications on UTXO-based chains.

## What’s Special About Sigma Chains?

There are a number of reasons why Sigma Chains are such a compelling addition to the Ergo ecosystem.

Firstly, scaling Ergo is a valuable goal in its own right. Moving transactions off the main chain reduces congestion and ensures a system that is future-proof, allowing an influx of users without the high costs and delays that have affected other platforms. 

However, Sigma Chains are not simply a means of scaling the blockchain. The industry desperately needs secure and diversified infrastructure for cross-chain interoperability. This is a significant challenge in the blockchain space, where bridges and communication between chains is a perennial source of security vulnerabilities. Some of the largest and most serious hacks in the Web3 world have targeted bridges, with attackers sometimes stealing hundreds of millions of dollars in tokens.

Sigma Chains use zero-knowledge (ZK) proofs and threshold signatures – functionality enabled by Ergo’s Sigma Protocols, which enable native, efficient support for sophisticated cryptographic operations – to provide seamless, secure, and trustless communication between chains. Data can move around the Ergo ecosystem, and other blockchains linked to Ergo, smoothly and seamlessly.

Unlike some other scaling solutions in the blockchain space, the security model for Sigma Chains is clear, meaning that developers and end users can interact with these platforms with confidence. Moreover, sidechains can be set up with their own security features, depending on the needs of the applications they are designed to support.

Similarly, sidechains can be customized in other ways – for example, their consensus approach or mining model. Again, this allows developers to create a chain that suits their applications’ needs.

## Sidechain Mining Models

Sigma Chains do not need to follow the same approach as the Ergo main chain, which uses a GPU-friendly, memory-hard Autolykos consensus mining algorithm. Instead, they can be configured to use any algorithm and any hardware, whether it be CPU, GPU and/or ASIC.

Merged mining – using work done on the main chain to secure another platform – enables miners to benefit from securing multiple chains. There are different models for merged mining.

Straightforward merged mining enables miners to secure both the Ergo main chain and a Sigma chain. This allows for seamless and trustless interoperability between the two chains. A more sophisticated option is double merged mining, which allows for bridging between Ergo and other proof-of-work chains, including Bitcoin. Double merged mining using Autolykos and SHA256 (used by Bitcoin) allows a Sigma Chain to act as a Bitcoin sidechain. Bitcoin transactions are submitted to the Bitcoin blockchain, and additional data – for instance, information relating to the execution of dApps – is stored on the sidechain. 

## Sigma Chain Opportunities

The combination of security and functionality provided by Sigma Chains allows bridging of other UTXO-based cryptos easily to the Ergo ecosystem, where they can be used as collateral for different dApps. 

For example, a double merge-mined sidechain could be used to bridge bitcoin to Ergo. Wrapped BTC would then exist on the Ergo sidechain. While this would be secured with a commitment on the Bitcoin blockchain, further instructions on the sidechain would allow users to treat it as a native asset and deploy it within Ergo’s DeFi ecosystem.

This means Bitcoin could be swapped on Ergo’s decentralized exchanges and AMMs, deposited to liquidity pools, used as collateral for lending protocols, or locked in a vault to back stablecoins.

Collateral is the lifeblood of DeFi. Platforms stand and fall on the TVL they attract. Without this crucial liquidity, there will be no users and no activity. This is why many platforms go to such extreme lengths to attract new liquidity providers quickly. By targeting bitcoin holders – barring ETH holders, the largest source of liquidity in the crypto world by an order of magnitude – Ergo seeks to attract significant TVL, while providing a valuable service to Bitcoiners. There are relatively few places where BTC can be used as collateral, and there has been little DeFi success on Bitcoin L2s.

## Chain Security

Lastly, Ergo’s smart contracts are highly flexible, and so allow for a number of innovative use cases that link the use of these protocols to the security of the sidechains themselves. For example, a percentage of dApp protocol fees can be deposited to a dedicated smart contract and used to supplement miners’ earnings, increasing the security of the sidechain in proportion to the level of activity within the ecosystem. This means that as TVL and transaction volumes increase, so will hashrate, ensuring that a given chain or dApp does not present an overly easy target for hackers.

Read more about the [opportunities and challenges for DeFi on Ergo](https://ergoplatform.org/en/blog/Three-Opportunities-And-Challenges-For-DeFi-On-Ergo/). To find out more about Sigma Chains, check out the [Ergo docs](https://docs.ergoplatform.com/uses/sidechains/sigma-chains/).

news_blog_sigma_chains.png

How Sigma Chains Will Bring Bitcoin To Ergo

It’s hard to believe it’s been five years since Ergo launched on July 1, 2019. Community members who have been with us since the start will know some of the amazing milestones we’ve achieved. Those who have joined us later will have seen the fruits of that early work, but may not know all of the decisions, developments, and dApps that have shaped the Ergo protocol in its journey to the present day.

[This video](https://www.youtube.com/watch?v=8aCsjk6ziAU) gives a rundown of some of the highlights from the last five years, and some of what we hope to create over the coming half decade. This article unpacks that decade-long roadmap further, giving some more details about Ergo’s origins story and the plans we have for the future.

So here it is: A necessarily incomplete tour of 2019-2029, Ergo-style.

## 2019

### July 1: Ergo Mainnet Launch

Ergo launched at a critical point in the crypto market cycle. Bitcoin had recently undergone a year-long bear market following its 2017 peak at $20,000, finally bottoming out at just over $3,000. There had been speculation that crypto might never recover. A rapid recovery in April 2019 saw BTC peak at almost $14,000 by June, but then this mini-bubble was followed by a mini-bear market – during which time Ergo launched.

It was a tough time for crypto, and the markets finally bottomed out in March the following year, during the COVID crash. It may not have been the ideal time to start a new project, but of course it’s impossible to know these things at the time. Moreover, projects that launch in bear markets are tested early on. Those that survive have a strong chance of making it in the long term.

This was the case for Ergo. Despite the headwinds from crashing crypto markets and renewed uncertainty, the Ergo Foundation was established and the first tools were released for the platform. 

Among the first smart contracts deployed were Crowdfunding contracts, which allowed new initiatives to raise money for development and marketing. Formal verification was also introduced. This uses mathematical methods to prove or disprove the correctness of a blockchain protocol's algorithms and smart contracts. It ensures that the blockchain system functions as intended without bugs, vulnerabilities, or unintended behaviors, enhancing its security and reliability, and giving users greater confidence in the applications with which they are interacting. 

### 2020

Six months later and the Ergo ecosystem was off to a flying start. 2020 would be a golden year for Ergo, with the introduction of the first applications.

The first Oracle Pool was released in August 2020. Oracles are a critical element for DeFi, providing a link between the outside world and the siloed, self-contained world of the blockchain. Ergo takes a different approach to oracles than other platforms, treating them as a kind of public good, rather than a service run by private companies that users need to pay for. This decision was taken to help bootstrap Ergo’s network of DeFi services, many of which need to obtain information from external sources – including other blockchains. 

Another major application that launched in 2020 was the Zero-Knowledge Treasury, a multi-sig treasury solution that uses Sigma protocols to allow organizations to disburse funds, while maintaining a high degree of privacy. 

Finally, as the NFT scene heated up, the [Auction House](https://ergoauctions.org/) was the first of many NFT marketplaces to be released on Ergo. This trustless, decentralized marketplace allows users to buy and sell NFTs with ERG. 

### 2021

The following year was a huge one for crypto. In many ways, this was the year in which crypto and blockchain went mainstream, with major news outlets saturated with stories from the crypto world – both good and bad.

Ergo rode that wave, deploying more DeFi services and building its presence within the crypto sphere to a new high. SigUSD, an ERG-backed stablecoin, was launched, along with other DeFi dApps, including [Spectrum Finance](https://spectrum.fi/) (soon to become Splash) – an AMM that would later integrate cross-chain capabilities. 

Of course, as anyone familiar with the digital asset world knows, crypto tends to lurch from one extreme to another. Following the bubble that peaked at the end of 2021, a lengthy bear market followed. Ergo was not immune to the loss of value and confidence that affected every part of the crypto world, but it was in the position of having built a strong foundation for the future.

### 2022

Despite the punishing conditions that affected the crypto world over the course of 2022, the Ergo ecosystem continued to grow and progress. The number of devs increased, along with the amount of tooling.

The year saw a number of upgrades to the network, with both planned and unplanned forks. One of the key changes introduced a new Difficulty adjustment algorithm.

2022 also saw the creation of the Sigmanauts organization: a collection of developers and other community members dedicated to the goal of building decentralized applications of all kinds on Ergo, using the platform’s unique smart contract language and cryptographic protocols.

### 2023

Hope slowly returned to the crypto sphere in 2023, as the bear market ended and broader interest – beyond the growing core of true believers – once again spread.

The year saw the growth of Ergo’s DeFi ecosystem, which included the launch of two major lending applications. Sigma Finance is a bond protocol that allows borrowers to create custom bond requests. Lenders can view the offers available, which include different maturity dates, APYs, principal amounts, and collateral, and decide whether to deploy their cash. These “Sigma Bonds” include a 0.5% developer fee.

Duck Pools is a more conventional (Compound- or Aave-like) pool-based lending protocol, with algorithmically-determined interest rates. This caters to a broad section of the DeFi community who do not need or want a custom lending solution.

### 2024

The first six months of this year have seen all the pieces come together for Ergo, which now has a full ecosystem of DeFi dApps. 

The final element required was a cross-chain bridge. Bridges are a vital but often problematic technology in DeFi. They are critical for enabling the flow of liquidity between otherwise siloed blockchains, but their complexity poses a number of risks. In particular, bridges have traditionally featured a very large attack surface, making them a target for hackers. Some of the largest exploits in the crypto space have been bridge attacks.

Ergo’s Rosen Bridge addresses previous bridge vulnerabilities with a simple, elegant model that does not rely unduly on complex smart contracts. Instead, an oracle-based system of Watchers and Guards waits for relevant transactions to occur on the target blockchain, then executes corresponding transactions on Ergo. Cardano was the first blockchain to be connected to Ergo by the bridge, followed more recently by Bitcoin. In the coming months, integration of EVM chains is planned, allowing tokens to flow freely between Ergo and other major blockchains. The ultimate aim is that tokens from these chains will be bridged to Ergo, where they can be deployed as collateral within Ergo’s growing ecosystem of DeFi dApps, powered by safe smart contracts and highly flexible cryptographic protocols.

In other news, a new Ergo organization was created alongside the Ergo Foundation and Sigmanauts: the ErgoDevs DAO. Two additional stablecoins, Dexy and Gluon, are also ready for launch. Like SigmaUSD, these are crypto-backed tokens. The Ergoverse is also preparing to bridge popular stablecoins from other ecosystems (e.g. USDC), adding fiat-backed options to the decentralized coins already available.

## State Of The Nation

These are just some of the milestones that Ergo has reached. All are precedents for other dApps and services like them. At the five-year mark, Ergo has achieved a great deal, with a vibrant ecosystem of applications and users.

Here are some of the many dApps that now exist on Ergo, following in the footsteps of those early leaders. (Again, this list is necessarily incomplete.)

## DEXes

Alongside Spectrum/Splash, Ergo now offers at least three other decentralized exchanges, each offering something unique. TradeHouse is a fully on-chain DEX, featuring an orderbook like traditional centralized exchanges (and therefore a familiar TradFi-style UX), instead of the liquidity-pool approach offered by AMMs. CrystalPool is another orderbook-powered DEX, but in this instance, it has centralized matching. While trades are settled trustlessly on-chain, this hybrid approach gives it the benefit of greater speed and potential privacy. 

Finally, there is [Telefragged](https://github.com/Telefragged/off-the-grid). This is an intriguing idea which allows self-sovereign grid trading (a technique ideal for ranging markets), using AMM pools as the other side of the trade.

## NFTs And Games

Alongside Auction House, Ergo now also has the SkyHarbor NFT marketplace. The Ergoverse is populated with games that leverage the capabilities of the platform’s NFTs and smart contracts. This includes the open-world pixel game Cyberverse, and [BlitzTCG](https://blitztcg.com/home), a trading card game that launched on Ergo in April this year.

## DAOs And Crowdfunding

New projects need funding, and they need governance. Ergo provides for both of these. The ErgoRaffle contract was one of the first applications to launch on the platform, offering crowdfunding capabilities. Meanwhile, Paideia enables a community to set up a DAO to make collective decision-making and allocate funds. This is already being used by organizations such as ErgoDevs DAO.

## Other

Finally, Ergo has a number of projects that could be characterized as monetary experiments, exploring the possibility of new forms of cash and digital assets on the blockchain. 

[Hodlcoin](https://docs.ergoplatform.com/eco/hodlcoin/) takes the form of a game in which ERG can be deposited to a contract. Withdrawing ERG is subject to a fee, which is shared among remaining users – meaning the longer you hold compared to other players, the more your share of the pool will be worth. AuctionCoin is a decentralized and trustless token distribution protocol, which manages price discovery for new assets. Then there is SigmaO, an options trading platform, which allows users to buy and sell put and call options, so they can effectively bet on the future price of assets.

As stated, these are just some of the many projects that developers and communities have launched and popularized on Ergo. For a more complete rundown of what’s available, check out the [ErgoDocs Ecosystem](https://docs.ergoplatform.com/uses/) pages.

## The Next Five Years

This is an impressive foundation, and it puts Ergo in a strong position for the future. Considering all the engineering and work thus far, the following projects, upgrades, and strategies aim to make Ergo more useful in the real world going forward.

Maintaining and extending Ergo’s Core Protocol remains a priority. Sigma 6.0 will update the protocol with new features and a new contractual layer. Further research and development is intended to pinpoint the best way to enable fast confirmations and improved block propagation, likely using sub-blocks or microblocks. Storage rent will become more and more important over time, since this is levied on dormant UTXOs after four years – so an increasing number of addresses will fall into this category from now on.

As well as the core layer, sidechains will be a vital means of expanding Ergo’s functionality and reach. Sidechains are under active development and have already been designed, with much of the work being completed over the last two ErgoHacks. It will soon be possible to work with mainchain UTXOs within sidechain contracts, offering a new era of use cases and possibilities. 
 
Alongside these upgrades, Ergo’s mining ecosystem must remain robust, since miners both secure the network and process transactions. At least two significant developments, sidechains and storage rent, will provide extra revenue for miners, making mining Ergo more attractive and increasing hashrate (and therefore security). [Lithos](https://docs.ergoplatform.com/eco/lithos/) (decentralized mining pool infrastructure) is expected to launch at the end of 2024, and will facilitate a greater degree of decentralization in mining. Lastly, we also hope to see the reintroduction of FIMOs, or Fair Initial Mining Offerings, as a means of distributing tokens for new projects. Instead of airdropping tokens, FIMOs ensure that those who receive tokens have done work (proof of work), rather than leaving the ecosystem vulnerable to mercenary airdrop farmers.

Interoperability remains an important priority, and a number of cross-chain developments are planned. A version of Bitcoin Runes will be deployed on Ergo: A layer that allows users to create and manage fungible tokens in a different way than Ergo’s native method. Bitcoin Cash, Nervos, and other UTXO chains will be bridged via Rosen, along with Ethereum and other EVM chains that use the Account model. RGB++, a “colored coins” protocol pioneered by Nervos, will also be deployed.

Additionally, we’re looking at integrating more tooling for development. In addition to ErgoScript, support for a form of Rust and JavaScript will be available, and we’re exploring the possibility of using more high-level languages like Lisp. Error-checking and debugging will be improved, and we’ll be revisiting the use of formal verification. 

These developments will benefit from enhanced governance. Overall, we need to define the rules that govern new releases and frameworks for research-driven development. We would also like to see the launch of new organizations to act as key stakeholders, influencers, and decision-makers within the Ergo ecosystem, acting alongside the three major entities (Ergo Foundation, Sigmanauts, and ErgoDevs).

Finally, we want to see Ergo’s technologies and community leveraged to expand the ecosystem’s money supply, using protocols such as [ChainCash](https://docs.ergoplatform.com/uses/chaincash/) (self-sovereign elastic-supply blockchain money), more stablecoins, and additional derivatives.

## Ergo 2029
In another five years, we might imagine Ergo as:
- A hyper-connected ecosystem of blockchains, with Ergo as the hub.
- A rich ecosystem of Ergo sidechains, alongside those externally-bridged chains.
- A vibrant, safe DeFi space.
- A blockchain with real-world use cases and value, where high-quality digital assets act as units of account and  a store of value.
- Developed and maintained by a decentralized community of enthusiasts.

Thank you for your support over the last five years. We hope you’ll join us on our journey over the next five!


ergoblog_next_5_years.png

Ergoversary: The Last Five Years, And The Next Five

Every blockchain platform encounters unique circumstances and challenges as it seeks to carve out a niche in the competitive DeFi space. As is often the case for Ergo, the benefits and difficulties are two sides of the same coin.

## DeFi: The New Frontier

DeFi has emerged as blockchain’s premiere use case. Bitcoin, as the first cryptocurrency, remains the leading decentralized platform for secure value storage and transfer: Digital gold. No other first-generation platform comes close to rivaling Bitcoin in this regard. Even networks that offer special features such as enhanced privacy (Monero), or higher throughput (Litecoin), cannot compete. As Michael Saylor, founder and CEO of Microstrategy, says, “There is no second best.”

For second-generation blockchains, which offer more far-reaching functionality, the picture is different. Smart contracts enable the creation of decentralized applications (dApps), and many networks have built thriving DeFi ecosystems. While Ethereum mainnet remains the most popular, high gas prices and limited throughput have allowed other networks to gain a foothold. Unlike with Bitcoin, there is no clear front-runner. A number of Ethereum L2s, Solana, Binance Chain, and others, have all attracted significant liquidity.

Almost every new blockchain or L2 quickly establishes a DeFi ecosystem with one or more AMMs, lending protocols, and various other DeFi dApps. There are occasional exceptions. SKALE Network, for example, supports a large number of gaming and AI dApps, which were attracted by its zero-gas model. While these have millions of users, the DeFi scene on SKALE remains limited. In most cases, the total liquidity (Total Value Locked, or TVL) in DeFi dApps is effectively a measure of the success of the blockchain. 

Ergo is not a new blockchain, having launched in 2019. However, it is now expanding as the ecosystem matures and a series of DeFi applications attract users and liquidity. While Ergo faces some of the same challenges of other platforms, there are also some key differences. 

## 1. Starting From Scratch

One of the major challenges for any blockchain platform seeking to establish a DeFi ecosystem is the risk – and opportunity – of starting from scratch.

The blockchain world is built on the principle of network effect. Sustainable security and liquidity both rely on drawing a large enough group of users to reach a kind of escape velocity, where it makes more sense to join the crowd than attack or compete with them. In particular, users are attracted to deep liquidity, and so this becomes a self-reinforcing benefit.

Establishing sufficient liquidity in the first place is the challenge, and with so many smart contract platforms available, any new addition must offer a reason for users to shift their funds to the platform. That incentive may be intrinsic, in the form of low gas fees or a great user experience. Alternatively, it may be extrinsic, and take the form of yield farming rewards or similar ways to earn.

Ergo is exactly in the same position as any other blockchain platform with a relatively new DeFi ecosystem. Once the flywheel effect of growing liquidity takes effect, all is well, but in the early days, it can be difficult to convince users to come to the platform.

However, new ecosystems also have unique attractions.

A “greenfield” site, in which there are few or no existing DeFi services, can be a fantastic opportunity for dApp builders and entrepreneurs. 

The largest DeFi service in its category on any chain enjoys the benefits of network effect and liquidity, becoming a hub for future users. For example, the leading AMM attracts funds from the entire chain ecosystem, and benefits from the TVL and fees that this brings. 

Builders who believe in the future of a chain therefore seek to position early, deploying DeFi services that will allow them to capitalize on future network effects. The sooner they can do this, the better, since gaining an early foothold when there is low competition allows them to position for a time when liquidity is moving into the ecosystem at scale.

## 2. Ergo’s eUTXO Model

Another challenge and benefit, depending on how you look at it, is Ergo’s use of the eUTXO model. 

eUTXOs offer a fundamentally different approach to creating dApps than the prevailing Account-based model used by Ethereum and most other smart contract platforms. By extending the UTXO model used by Bitcoin to track balances, the eUTXO model enables sophisticated scripting without many of the downsides that have created problems and vulnerabilities on EVM platforms. The differences between the Account and eUTXO models have been explored in detail in other articles. 

Read: [What Are eUTXOs?](https://ergoplatform.org/en/blog/What-Are-eUTXOs/)
Read: [How The eUTXO Model Is Revolutionizing Blockchain](https://ergoplatform.org/en/blog/How-The-eUTXO-Model-Is-Revolutionizing-Blockchain/)

For the purposes of this article, we can summarize the benefits as:

- **Certainty**: Transactions using the eUTXO model can be checked off-chain before execution, meaning they will always be confirmed successfully when they are submitted to the network.
- **Known costs**: Because transactions have pre-determined and known complexity, the costs can also be calculated reliably before a transaction is made. This is not the case with EVM platforms, where users have to rely on estimated gas costs, and transactions can fail if they run out of gas.
- **Predictability**: Because an eUTXO is spent once and is used up when it is included in a transaction, Ergo smart contracts are more safe and predictable than Account-based contracts. There is a limited range of possible outcomes, making Ergo dApps simpler and more secure.

These are significant advantages for any developer or end user, but Ergo’s use of eUTXOs also poses a potential barrier. It’s a different model to the more popular EVM approach, so dApps are structured differently. There’s a learning curve that developers need to overcome. This includes getting familiar with ErgoScript, Ergo’s smart contract language. Ethereum-based smart contracts are generally written in Solidity, which is JavaScript-like, though alternatives like Vyper (similar to Python) are gaining popularity. Solana dApps are written in Rust. ErgoScript is based on Scala, which is widely-used but less well known than many alternatives.

As it is with the question of network effect, there are challenges to being the first movers – but also an advantage to being early for those prepared to work for the prize of being a major established DeFi service.

## Bridging Liquidity

One more perennial problem for any blockchain or L2 seeking to build network effect is the need to bridge funds from other platforms. Even now, with so many different chains to choose from, this can be a slow, complicated, and sometimes risky process. 

For various reasons, bridges have historically proven to be a major point of vulnerability in the blockchain world. One reason for this is because they can be so complex. They present a huge attack surface, which hackers often figure out how to exploit in different ways. Lazarus Group, the North Korea-affiliated hacker organization, has attacked cross-chain bridges numerous times. In March 2022, Lazarus Group stole $600 million from the Ronin Bridge, which was used to move funds into and out of the Axie Infinity game ecosystem. Three months later, they stole $100 million in the Harmony Bridge hack.

Bridges between blockchains typically have to make compromises to remain user friendly. It is very difficult to create a truly decentralized and trustless bridge that is also fast and user friendly. Many bridges prioritize speed, at the cost of including a degree of centralization. Others are more decentralized but much slower. 

This is a problem that the Ergo ecosystem intends to solve using the Rosen Bridge. Rosen offers a new model for bridging that avoids some of the most serious drawbacks and vulnerabilities of previously failed bridges. As of today, the bridge is set up to facilitate the bridging of assets between Ergo, Cardano, and Bitcoin.

One of Rosen’s key benefits is that it does not require smart contracts to be deployed on other chains. Consensus around asset transfers is achieved on the Ergo network by Guards: A federated group of entities who manage the Rosen core and maintain security. Each Guard has a certain amount of funds locked as collateral, incentivizing honest behavior. The group of Guards generates a signed transaction on Ergo or another supported chain, which is broadcast to the relevant network. Guards are kept informed by Watchers, who monitor activity on the bridge and relay events to Guards. The Watchers network is widely dispersed amongst hundreds of nodes, achieving a high degree of decentralization. Anyone can set up a node and run a Watcher for any, or all, of the bridged blockchains. 

## Ergo, The Smart Layer For Bitcoin

Ergo’s intention is to leverage these features to offer a new set of capabilities for Bitcoin. Rather than rely on smart contracts on the Bitcoin network itself (which is a [controversial and potentially problematic development](https://ergoplatform.org/en/blog/Ergo-The-Smart-Layer-For-Bitcoin/)), Ergo can act as a smart layer for Bitcoin.

Bitcoin can be securely transferred using the Rosen Bridge. Once it has been moved to Ergo, the BTC can then be used within complex DeFi apps, powered by Ergo’s safe but versatile eUTXO model. This dramatically extends the functionality of Bitcoin, without requiring any changes to the Bitcoin blockchain itself.

The challenges for Ergo – or any DeFi platform – are significant, but these same challenges present vast opportunities. Moreover, Ergo has a credible plan for tackling them, bringing the benefits of a powerful and secure smart contract platform to Bitcoin.


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Three Opportunities And Challenges For DeFi On Ergo

Lending protocols are a cornerstone of decentralized finance (DeFi), enabling users to lend and borrow assets in a trustless environment. However, the underlying blockchain architecture significantly influences the design and functionality of these protocols. In this blog, we will compare lending protocols built on the Unspent Transaction Output (UTXO) model and the Account model, highlighting their respective strengths and challenges.

## Concept of Lending Protocols

In lending protocols, borrowers typically use their crypto assets as collateral. Once a loan is issued, the protocol secures this collateral until repayment. Lenders, on the other hand, can leverage the potential of their crypto assets and collect interest. For instance, if two users deposit ETH and USDC, respectively, the ETH depositor can borrow USDC, while the USDC depositor can borrow ETH.

To mitigate risks, especially if the collateral's value dips below the loan amount, most protocols encourage borrowers to over-collateralize. This means adding about 50% more than the loan value as collateral, resulting in an overcollateralization ratio of 150%. Overcollateralization ratios depend on the quality and volatility of the provided collateral. Some platforms, like Aave, also allow uncollateralized flash loans that must be repaid within a single transaction.

## Key Components of Lending Protocols

Smart Contracts: Automated, self-executing contracts with the terms of the agreement directly written into code. These eliminate the need for intermediaries, reducing costs and increasing trust.

- **Collateralization**: To mitigate the risk of default, borrowers must provide collateral that exceeds the value of the loan. This collateral is held in the smart contract and can be liquidated if the borrower fails to repay.
- **Interest Rates**: Determined algorithmically based on supply and demand dynamics within the protocol. This ensures competitive rates for both lenders and borrowers.
- **Liquidity Pools**: Lenders deposit their assets into liquidity pools, which are then made available for borrowers. This pooling mechanism enhances liquidity and ensures that there are always funds available for borrowing.

## The Account Model

The Account model, exemplified by Ethereum’s EVM, aggregates all funds under a single contract address for processing. This approach offers several advantages:

- **Ease of State Management**: The account model simplifies state management by maintaining balances and state changes within a single account. This centralization facilitates straightforward calculations and updates, making it easier to develop complex financial applications.
- **Intuitive Engineer Implementation**: In terms of engineering implementation, the Account Model is more intuitive as it handles all funds under a single contract address. 
- **Security**: In the Account model, assets are controlled by smart contracts. While this centralization simplifies management, it also presents a risk: if the liquidity pool contract is hacked, users could lose control of their assets. 

Example: Compound, Aave
Protocols like Compound and Aave leverage the account model to provide seamless lending and borrowing experiences. Users deposit assets into smart contracts, earning interest, while borrowers take loans against their collateral. The system’s ability to manage and update states efficiently ensures smooth operation and user experience.

- Compound: Allows users to earn interest or borrow assets against collateral with dynamic interest rates.
- Aave: Offers a wide range of assets for lending and borrowing, along with innovative features like flash loans.

## The UTXO Model

In contrast, the UTXO model, used by blockchains like Bitcoin, Ergo, and Nervos CKB, disperses funds across various users’ UTXOs/cells. This model presents unique advantages and far a different approach from the Accounts model:

Decentralized State Management: UTXO-based systems delegate the work of determining state transitions to the application layer. Each user signs off on the state transition, ensuring that no single entity can alter the transaction. This decentralization greatly enhances security and trustlessness, but also presents unique obstacles for the creation of a liquidity pool.

- **Complex Engineer Implementation**: Contrary to the Account Model, the UTXO model may require the creation of a special lock to help users secure dispersed funds. This lock ensures that the funds comply with specific rules during transactions. In the case of a blockchain like Ergo, the locks are akin to guard script smart contracts.
- **Security**: In the UTXO model, assets are directly controlled by the user rather than by a contract. This decentralized approach enhances asset security. Even if a contract is undeployed or compromised, users retain control over their assets, ensuring a higher level of protection.

## Examples of Smart Contract UTXO Blockhains

Nervos CKB’s lending protocols must navigate the dispersed nature of UTXOs. Developers construct special locks to manage and consolidate users’ funds. These locks enforce specific conditions, such as price relationships, ensuring that funds are used appropriately during lending and borrowing operations.

In the case of Ergo, its eUTXO (extended UTXO) design enables developers to create expressive and definitive smart contracts. With a commitment to open source development, paired with Ergo’s time tested Proof of Work security parameters, the network is capable of handling diverse liquidity pools and complex lending smart contracts. Currently, lenders and borrowers can take full advantage of two protocols on Ergo: [SigmaFi](https://sigmafi.app/#/) and [Duckpools](https://www.duckpools.io/).

With SigmaFi, users can create and/or agree to loan requests for differing native assets. Various amounts of collateral can be offered in the request, and the user interface allows prospective loaners to view which requests are undercollateralized.

Duckpools takes a slightly different approach by allowing users to borrow and lend within liquidity pools (where $ERG is needed for all loan collateral). Through the Duckpools website, users can identify which native asset they want to loan to a liquidity pool, while borrowers can similarly select a liquidity pool from which they want to take a loan. Borrowers can set their own collateral ratio, but the user interface gives recommended options of 130%, 150%, and 170%.

## Key Comparisons

- **State Management**: The account model centralizes state management, simplifying updates and calculations. In contrast, the UTXO model decentralizes state transitions, enhancing security but increasing complexity.
- **Engineer Implementation**: In terms of engineering implementation, the Account Model is more intuitive as it handles all funds under a single contract address. However, Ethereum’s Account model has been found to suffer from blockchain bloat and high gas fees.

In contrast, in the UTXO model, funds are dispersed across various UTXOs belonging to individual users, making it difficult to aggregate funds in one place. The UTXO model may require the creation of a special lock (or smart contract) to help users secure these dispersed funds. This lock ensures that the funds comply with specific rules during operations.
- **Security**: In the Lending protocol of the Account model, assets are controlled by smart contracts. While this centralization simplifies management, it also presents a risk: if the liquidity pool contract is hacked, users could lose control of their assets. In contrast, the UTXO model assigns control of assets directly to the user rather than to a contract. This decentralized approach enhances asset security. Even if a contract is undeployed or compromised, users retain control over their assets, ensuring a higher level of protection.

### Conclusion

Both the UTXO and Account models offer distinct advantages and challenges for lending protocols. By understanding these differences, developers can better design and implement lending protocols that leverage the strengths of their chosen blockchain architecture.

As the DeFi space continues to evolve, we can expect ongoing innovation and improvements in both models, ultimately enhancing the robustness and user experience of decentralized lending platforms.


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Comparing Lending Protocols: UTXO Model vs. Account Model

_Proposals for ErgoHack VIII (May 24 to June 2, 2024) have raised a number of promising applications in which Ergo can extend Bitcoin’s functionality._

A series of recent community proposals for [ErgoHack VIII](https://ergohack.io/) have explored the potential for Ergo to bring new features to Bitcoin. 

ErgoHacks are a regular feature for the Ergo ecosystem. They are opportunities for individuals and teams of developers to work intensively on new dApps and services for the platform, with help from experienced mentors.

## Ergo As Bitcoin’s Smart Layer

This year’s ErgoHack theme is “Ergo as a smart layer”. Both Ergo’s technical approach and ethos make it the ideal partner for the Bitcoin blockchain, holding the potential to extend Bitcoin’s functionality with DeFi capabilities – without the controversial need to build these directly into the Bitcoin network.

The idea is straightforward. DeFi has emerged as one of the major use cases for blockchain technology. A large number of smart contract platforms have been launched over the past nine years, starting with Ethereum, and each offers different features and advantages. Solana, for example, aims to address Ethereum’s lack of capacity, with a high-throughput blockchain network.

DeFi services include decentralized exchanges, stablecoins (something Vitalik Buterin has called DeFi’s “killer application”), borrowing and lending services, derivatives, and much more.

In every case, though, DeFi is dependent on collateral to exist and thrive. First and foremost, this collateral takes the form of a platform’s own tokens, including its native asset (ETH, SOL, etc) as well as stablecoins (USDT, USDC) and project tokens (COMP, AAVE, UNI). Another source of collateral is assets that have been bridged from other platforms, typically existing in the form of wrapped tokens on the target blockchain. 

Bitcoin is a first-generation blockchain network that was launched to do one thing well: secure decentralized value storage. It is the largest cryptocurrency by market cap by a considerable margin. Its current value is around $1.25 trillion: Over three times larger than Ethereum, 15 times larger than Binance Chain, and 20 times larger than Solana. This represents a huge amount of collateral – but this value cannot easily be deployed in DeFi dApps, because Bitcoin does not natively support smart contracts. Moreover, holders are generally reluctant to transfer coins to other platforms and use them in “wrapped” form on DeFi applications.

There are several ongoing efforts to bring smart contracts to Bitcoin itself, though they have proven controversial within the community for several reasons. Ergo’s aim is to become a “smart layer” for Bitcoin, offering powerful, flexible and secure new functionality via the platform’s Sigma Protocols, eUTXO model, and ErgoScript smart contract language.

## Decentralization And Security

While there is nothing to stop people using Bitcoin as collateral on other blockchain platforms, this has not yet happened to any meaningful extent. Assets like Wrapped Bitcoin (WBTC) are used on Ethereum, but not widely. Less than one percent of the available supply of Bitcoin has been wrapped to WBTC. It’s likely that centralization risk deters many users. Additionally, there may be differences in culture and priorities that prevent users from deploying BTC, as well as security concerns.

Ergo is the natural complement to Bitcoin in several ways. Culturally and technologically, there is a broad overlap, which should serve to reassure users that they are in good hands:
- Proof-of-Work consensus model (using Autolykos in Ergo’s case to maintain ASIC-resistance)
- Emphasis on full decentralization, with community developers and diverse ecosystem participants
- No ICO, pre-mine, or VC investors in either case
- UTXO/eUTXO model for enhanced security

Broadly speaking, then, Bitcoin and Ergo have a similar vision for decentralization and security, and a similar ethos of being community-driven.

## The eUTXO Vs The Account Model

One of the key benefits of Ergo is its eUTXO model for smart contracts and advanced scripting, which builds on Bitcoin’s UTXO model.

In Bitcoin, every address’s balance is made up of one or more unspent transaction outputs, or UTXOs. These can be thought of as “bags” of coins, which are registered to an address. When a user wants to send funds, they (or their wallet software) select one or more UTXOs, and cryptographically assign them to a new address. The UTXOs are bundled together and consumed, and a new UTXO is created. There may also be “change”, which is returned to the sender as a new UTXO.

Every Satoshi on Bitcoin therefore belongs to a UTXO, and every UTXO can be traced back through its history of prior UTXOs, to the coinbase transaction in which it was first mined into existence.

The UTXO model contrasts with the Account-based model, used by Ethereum and many other smart contract platforms. In the Account model, addresses are simply credited with a balance, and this is changed when a transaction is made, a lot like a bank balance is updated.

Ergo’s eUTXO model extends the functionality of UTXOs, allowing them to be used to execute smart contracts and contain information beyond address balances. As an overall approach, use of eUTXOs is starkly different from Ethereum’s Account-based approach. 

**Read: [What Are eUTXOs?](https://ergoplatform.org/en/blog/What-Are-eUTXOs/)**

There are various pros and cons to each of these, which are explored in more detail in another article. In summary, though, the benefits of eUTXOs include simplified state tracking (and therefore clearer security benefits), better privacy, better scalability, and reduced blockchain bloat.

Altogether, the overlap of features and ethos makes building on Ergo a great option for Bitcoin DeFi developers.

## Bitcoin DeFi, Powered By Ergo

We think there’s a massive untapped opportunity for Ergo to unleash Bitcoin's DeFi potential. While there are custom platforms seeking to do this directly on Bitcoin, they have proven controversial – and for good reason. There are many unanswered questions about security models, convenience, and community support. The debate around Ordinals should be warning enough that major players in the Bitcoin space are divided about the idea of adding further utility to the Bitcoin network itself. (Some miners even filter out Ordinals transactions, showing just how contentious this additional functionality has become.)

Here are three promising use cases for Bitcoin on Ergo, which are set to be explored in the coming ErgoHack.

### 1. Enhancing Privacy

Improved privacy is a huge use case for Bitcoin on Ergo. The Bitcoin community has always valued financial privacy, and Bitcoin was originally promoted as an anonymous (or pseudonymous) online currency. In reality, this is only the case if it is used very carefully, and steps are taken to avoid leaking any information that links addresses with real-world identities.

The popularity of Samourai Wallet and similar solutions demonstrates that privacy is still an important priority for the community. However, the recent arrest of Samourai’s developers by US authorities is cause for concern – both for those who use the wallet to facilitate illegal activities, and those who risk being criminalized simply for wanting to legitimately preserve their financial privacy. 

Ergo’s Sigma Protocols – highly composable, zero-knowledge proofs – offer solutions whereby funds can be effectively anonymized to protect users, yet information can be selectively revealed to those parties who require it, and to whom users are prepared to provide it.

While this is feasible using other platforms, Sigma Protocols provide an efficient means of creating custom cryptographic conditions that offer the flexibility for users to disclose the information they want while robustly protecting their identities from malicious parties.

### 2. Bitcoin-Collateralized Stablecoins

Stablecoins are arguably the most important use case in DeFi, and one of crypto’s killer applications. The ability to park funds on-chain in a price-stable token is hugely valuable – hence the popularity of USDT, USDC, and other fiat-backed stablecoins. Tether alone has a market cap of $110 billion, and is the third-largest crypto token after BTC and ETH.

More valuable still is the possibility of maintaining full decentralization as well as price stability. To date, there have been only a few successful decentralized stablecoins. MakerDAO’s Dai is the best-known and most widely-used, with a market cap of around $5 billion. The decentralized stablecoin sector has been hit hard by the collapse of Terra/Luna – which, though it used a completely different economic model to Dai, has colored the entire space and undermined trust in decentralized stablecoins across the board.

Decentralized backed stablecoins (as opposed to algorithmic decentralized coins, like UST) require collateral, and there is no bigger pool of potential collateral within the crypto world than Bitcoin. This is a $1 trillion+ asset, and moving even a small fraction of that to Ergo would offer huge potential for DeFi, including decentralized stablecoins.

SigmaUSD offers one model for a decentralized stablecoin on Ergo. [ChainCash](https://docs.ergoplatform.com/uses/chaincash/) provides another. A third possibility is deploying a Dai-like model, as pioneered by MakerDAO. Broadly speaking, synthetic assets of any type can be created in the same way; for example, a synthetic asset backed by Bitcoin that tracks gold or the S&P 500 would not be appreciably different to a dollar-pegged asset, only needing different oracle feeds.

### 3. Yield Farming

The existence of a Bitcoin-backed DeFi ecosystem opens the door to secure yield farming, allowing holders to earn a return on their BTC without the counterparty problems that they have previously had to accept. 

Many Bitcoin holders have made significant gains on paper, but are unwilling to sell their BTC for various reasons. Partly, they may want to hold them in anticipation of further price rises, especially if they are believers in the long-term future of Bitcoin. In other cases, they may be reluctant to incur capital gains, and the tax liabilities that come with selling. Still others may not have reliable off-ramps.

At the same time, they want to put that capital to good use to earn a return. Unfortunately, the market for this has led to the rise of centralized crypto lending platforms, including Celsius and BlockFi, both of which collapsed in the bear market of 2022, resulting in the loss of billions of dollars of users’ assets.

Allowing holders to deploy their BTC within a decentralized financial ecosystem would avoid the biggest risk that affected these platforms. While individual protocols still have varying risk profiles, fostering a true Bitcoin DeFi ecosystem allows users to maximize the value of their bitcoins in as secure a way as possible.

#### Conclusion

These are just three possible use cases and wider benefits of fostering a Bitcoin DeFi ecosystem on Ergo. With the launch of the secure, decentralized Rosen Bridge, moving BTC trustlessly and quickly between the two chains will enable the creation of new applications for Bitcoin – independently of the Bitcoin blockchain, and avoiding the controversies that surround building on it directly. 


news_nblog_Ergo_smart_layer150524.png

Use Cases For Ergo As A Smart Layer For Bitcoin

_Ergo has the capacity to act as a powerful smart scripting layer for the leading crypto – enabling Bitcoin to maintain its focus on being a secure store of value, while allowing Ergo to provide complex dApps. It enables this without requiring controversial and potentially risky layer-2 platforms to be built directly on Bitcoin itself._

Bitcoin is now the undisputed king of peer-to-peer value storage and transfer. The Bitcoin network does one thing exceptionally well. However, it’s not fast, it has limited capacity, and its fees can be high. But as digital gold, its reputation is unsurpassed. It is incredibly secure and reliable – and that’s exactly what you need when storing upwards of a trillion dollars of value.

In recent months and years, developers have attempted to add further functionality to the Bitcoin blockchain. This includes Ordinals, following the Taproot upgrade and launch of the Ordinals protocol. It also includes various scaling systems. The Lightning Network is one such initiative, focusing solely on fast, low-cost payments.. Other projects are building with the intent to introduce smart contract functionality to Bitcoin.

## Bitcoin Layer-2 Controversies

There are a number of reasons why this approach has proven controversial within the crypto community. While micropayments are an extension (and arguably fulfillment) of the Bitcoin blockchain’s intended functionality, **advanced scripting and smart contracts are something qualitatively different**. The Lightning Network has generally been accepted by the Bitcoin community, but other features have proven to be far more divisive. Stacks, for example, is an L2 that seeks to extend Bitcoin’s financial capabilities, but it has not been universally embraced within the community.

There are concerns that adding more advanced functionality to the Bitcoin blockchain could introduce attack vectors, whether economic or technical. Alongside these security considerations, there is a cultural divide in the community: Should Bitcoin support such functionality? Does doing so detract from its key purpose of secure value storage and settlement?

One of the clearest flash points within the community has been the launch of Ordinals, a form of NFT or “digital artifact” hosted on the Bitcoin blockchain. Ordinals have proven immensely popular, but they are also viewed by many Bitcoiners as a subversion of the Bitcoin protocol’s true purpose. Some even view them as an attack on the network, causing blockchain bloat and driving up fees for those who use Bitcoin to make financial transactions. There is a bitter dispute within the community, and more and more miners are voting with hashrate. One core developer has even created software, called Knots, that explicitly blocks Ordinals transactions. The Jack Dorsey-backed OCEAN mining pool uses Knots, and currently accounts for over 1 Exahash (1 quintillion hashes per second) of mining power.

## The Alternative To Bitcoin L2s

The development of functionality that extends the protocol beyond value storage and transfer may be useful, and it may appeal to certain elements of the Bitcoin world, but it threatens to undermine the chief purpose of Bitcoin. The Bitcoin community is notoriously conservative when it comes to adding new features to the protocol, and for good reason. Bitcoin secures a huge amount of value and changes are risky.  Any flaws resulting from network changes could undermine confidence in the protocol, which has worked near-flawlessly for 15 years.

There is an alternative, and that is to use other blockchain networks to provide that advanced functionality. **Ergo is one such platform, and it already offers features that can never be available on Bitcoin – or on most other blockchains.**

## Ergo: A “Smart Layer” For Bitcoin

Ergo’s functionality and philosophy make it the ideal candidate to serve this purpose.

Ergo offers advanced and efficient native cryptographic features as well as a safe, Turing-complete smart contract language, powering complex DeFi applications. In practice, Ergo can operate as a Bitcoin smart layer by using double merged-mined sidechains. These offer an innovative approach for bridging Ergo with other PoW blockchains, while minimizing trust requirements. In this scenario, an Ergo Sigma Chain would act as a Bitcoin sidechain, and would include commitments to both the Bitcoin and the sidechain UTXO sets written to the blockchain. 

In order to facilitate the transfer of assets between Bitcoin and Ergo, [Rosen Bridge](https://rosen.tech/) presents an ideal and innovative service. Set within a decentralized framework, Rosen Bridge uses oracles and asset staking to achieve a high level of trustlessness and speed for cross-chain transfers, opening the way to a new set of use cases. **It is important to note that transactions on Ergo reach finality within minutes**, while final confirmation and full security using a protocol like Stacks on Bitcoin takes 100 blocks, or almost a whole day.

Through the versatility and security of Rosen Bridge and Ergo, there is the potential to provide a “best of all worlds” outcome, where Bitcoin’s undisputed security credentials and role as the leading decentralized store of value are extended by Ergo’s highly flexible and customizable contracts. In doing so, we avoid the political and technical downsides of implementing additional features directly on top of the Bitcoin blockchain.

This approach enables the execution of complex applications directly on the Bitcoin blockchain, with Bitcoin transactions submitted to the Bitcoin blockchain and auxiliary data submitted to the Ergo sidechain.

## The Perfect Complement

Ergo is the ideal network for extending Bitcoin’s functionality. It is a strong match for Bitcoin, both technologically and culturally.

Ergo’s unique features, such as ErgoScript and Sigma protocols, offer sophisticated DeFi functionality that would be risky, expensive or impossible elsewhere. Ergo is based on the same UTXO model as Bitcoin, but extends this to enable advanced scripting and smart contracts.

Moreover, Ergo shares a very similar ethos to Bitcoin. It comes from the same cypherpunk roots. It is fully decentralized and trustless, and was not funded by an ICO, pre-mine or VC interests. This is in stark contrast to most blockchain platforms launched after it, and Layer 2 protocols (including those built on Bitcoin). Ergo’s proof-of-work consensus is modeled on Bitcoin’s approach, updated to remain memory-hard and support decentralization. 

In terms of technology and philosophy, Ergo perfectly complements Bitcoin in a way that few other platforms can claim to do.

#### Conclusion

Bitcoin needs a smart layer that will support complex dApps, but the Bitcoin blockchain itself is not the ideal host for such functionality. The existence of Ordinals and other platforms that enable more sophisticated scripting has already proven controversial. Additionally, there are various security issues that these raise. Bitcoin stores well over a trillion dollars of value, and it is wise not to jeopardize this key use case by introducing changes at this stage.

**Ergo offers the ideal way to extend Bitcoin’s functionality**. Rosen Bridge allows seamless integration of Bitcoin and Ergo, allowing users to transfer Bitcoin between the two blockchains. It enables access to advanced features on Ergo without compromising on security or decentralization.

Ergo has a number of qualities that make it a natural fit for Bitcoin, both technologically and culturally: PoW consensus, UTXO model, high level of decentralization, and no pre-mine or centralized influences. 

The combination expands the range of possibilities for Bitcoin users and developers, allowing the community to drive innovation and adoption within the Bitcoin ecosystem, but without alienating a core part of the community.

In short, this approach allows Bitcoin to continue doing one thing very well, while utilizing Ergo’s features to expand Bitcoin’s capabilitites into its next era of adoption and functionality. 


002_Ergo_smartlayer_280424.png

Ergo: The Smart Layer For Bitcoin

_The extended Unspent Transaction Output (eUTXO) model used by Ergo and a small number of other smart contract blockchain platforms offers specific advantages over the Account model._

Extended Unspent Transaction Outputs (eUTXOs) offer a different model for smart contracts and dApps than the Account-based model used by Ethereum and many other blockchains. While there are pros and cons to each approach, eUTXOs offer certain benefits that are particularly noteworthy. When there are clear challenges facing the blockchain sector, these benefits are more important than ever.

## eUTXOs: A Short Primer

Bitcoin and Bitcoin-like blockchains (including Ergo) use a UTXO model to track users’ balances. Each UTXO is like a bag of money. These bags can be combined into larger bags or split into smaller bags when a new transaction is created. Every address that contains any coins consists of one or more of these bags.

This is quite different to the Account model used by Ethereum and similar chains, where an address’s balance is just updated (similar to a bank balance) when a transaction is made. While this sounds easier, the UTXO model actually offers a more secure means of accounting - all coins are traced right back to the transaction from which they were first created before they are sent. Specific “inputs” to a transaction must be selected from existing UTXOs, and those inputs are checked before the transaction can be added to the blockchain.

The eUTXO model extends the use of UTXOs beyond simple accounting and enables them to hold further information, including smart contract instructions. What this means in practice is that users gain additional benefits through blockchain scripting and dApps on top of the existing properties of UTXOs. As well as containing normal UTXOs, an address can hold additional transaction logic attached to eUTXOs. When a transaction that uses an eUTXO is submitted to the network, a mining node checks it and executes the script it includes as it adds it to the blockchain. 

[Read more about UTXOs and eUTXOs](https://ergoplatform.org/en/blog/What-Are-eUTXOs/).

## The Revolutionary Benefits of eUTXOs

eUTXOs therefore offer the simplicity and security of the UTXO model, with the flexibility that comes with the ability to include arbitrary logic and spending conditions. 

There are a number of benefits to this approach. Here are three examples for Ergo users:

### 1. Guaranteed transaction success

Smart contract transactions on Ethereum do not always execute reliably. The reason for this is that the complexity of the transaction is not known until it is processed by a validator. 

The cost of Ethereum gas is a little like taking a journey in a car. The route taken by the car and the amount of gas required to get to the destination is like the execution of the transaction on the blockchain, while the price per liter of gas is like the cost of Ethereum gas in gwei (a giga-wei or gwei is 1 billion of the smallest possible division of an ETH - gas is measured in these units).

In practice, the “journey” (execution of transaction instructions) may be more complex than the user realizes. This can mean the gas limit, or maximum amount of gas that can be allocated to the transaction is used up before the transaction is completed. The gas still has to be paid because the miners still do some of the work of processing the transaction, but the transaction fails because there are not enough funds to complete it.

This is something that cannot happen on Ergo or other eUTXO chains. Transactions are validated based on their inputs and attached instructions. It’s a simpler approach, and it means that the transaction can be checked off-chain before it is submitted to the network. At which point, it is guaranteed to be confirmed successfully.

### 2. Known transaction costs

Another benefit of the eUTXO approach is that smart contract transactions have predetermined complexity and therefore known costs at the outset. Indeterministic systems like Ethereum don’t have this property. Transactions can fail. Even if they do not fail, the cost of executing the transaction is unknown in advance. Users are forced to rely on an estimate.

### 3. Predictable and safe execution

Finally, eUTXOs offer a more discrete and predictable model for smart contract transactions. A UTXO can be used only once, and it is completely used up when it is included in a transaction. There is a more limited range of possible outcomes with Ergo than for Account-based systems, so dApps do not tend to have the same kind of vulnerabilities that they do on Ethereum. It’s simple, safe, and secure.

If you’re interested in trying out some Ergo dApps and finding out how the eUTXO model works in practice, check out the [Sigmaverse](https://sigmaverse.io/all-projects/?category=dApps). There, you will find wallets, DeFi dApps, NFT marketplaces, DAO platforms, games, and more.

001_eUTXO_Model220424.png

How The eUTXO Model Is Revolutionizing Blockchain

_Decentralized exchanges (DEXs) offer the ability to swap crypto tokens without trusting a middleman, like the administrators of a conventional centralized exchange. However, not all DEXs are equal. Here’s how you can evaluate them and identify the best DEX for your purposes._

## Introduction

Ever since the launch of the very first crypto exchange, Mt Gox, in 2010, trading platforms have proven to be a weak link in the blockchain ecosystem. Centralized Exchanges (CEXs) are vulnerable to hacks and fraud, including insider exit scams. Even today, 14 years later, CEXs are still causing problems for crypto traders. For example, in March, Coinbase experienced downtime on several occasions, preventing traders from accessing the markets at periods of peak volatility.

Decentralized exchanges (DEXs) are the answer to the inherent flaws in CEXs. They offer a way for users to trade tokens on a peer-to-peer basis and cut out the single points of failure that can make CEXs so risky.

But what exactly are decentralized exchanges, how do they work, and how can you select the best crypto DEX for your needs?

## Understanding Decentralized Exchanges (DEXes) 

Today, Most DEXs are based on automated market makers (AMMs): smart contracts that set the price of crypto tokens based on supply and demand. Anyone can lock tokens in liquidity pools, and users can swap tokens trustlessly against this liquidity. The AMM smart contract sets the exchange rate based on an equation, and liquidity providers earn trading fees. 

AMM-based DEXs have almost completely replaced earlier crypto DEXs that attempted to replicate the user experience of centralized exchanges, with traders’ bids and asks stored on-chain in order books. These generally turned out to be inefficient, expensive, and difficult to use.

AMMs offer a simple, intuitive user experience. The trader simply enters the amount of tokens they wish to trade, the crypto they want to swap them for, and they are given a quote for a single price and amount. If they accept it, the trade is conducted trustlessly, with the tokens being released from the smart contract directly into their wallet.

## Criteria for Evaluating DEXs

There are now dozens or even hundreds of DEXes, hosted on almost every major blockchain. If you’re looking to trade tokens trustlessly, or earn by providing liquidity to a pool, there are several criteria by which you might want to evaluate the best crypto DEX. 

Firstly, there is the chain or chains on which the DEX operates. This will need to be the same chain on which you hold your tokens. Alternatively, you will need a means of bridging funds. Interchain bridges operate on different models with a greater or lesser degree of centralization and security, so this will require careful consideration.

Liquidity is another major criteria, since insufficient liquidity may render your trades inefficient. You could incur slippage or, in simple terms, you will not receive as much money as you should when you swap tokens.

Finally, some DEXs are completely open, while others have a permissioned element. For example, some DEXs will only support certain tokens, and new liquidity pools can only be added by the team. If a given DEX does not support your chosen token, it could be some time (or never) before a pool is added or before it attracts sufficient liquidity to support efficient trading.

## 6 Best Crypto Decentralized Exchanges (DEXes) in 2024

While DEXes all share some properties, they come in different forms, and have different advantages. Here are six different well-known and popular DEXes.

### [Uniswap](https://app.uniswap.org/swap)

Uniswap was the first AMM and remains one of the largest and most popular DEXs in the DeFi space. It was launched by Ethereum developer Hayden Adams in December 2018 and later issued its own UNI token as part of its transition to a DAO. 

Uniswap supports hundreds of tokens and is very well established and well regarded in the crypto space. Its wide user base means it has deep liquidity, especially for the most popular tokens. By these criteria, it is one of the best DEXs in the crypto space. However, as an Ethereum dApp, users must pay gas fees, and this can make trading prohibitively expensive at times of heavy network use. 

### [1inch](https://1inch.io/)

While it’s often fine to use one exchange, there are times when you’ll want to get the best deal on the market. This means checking multiple DEXs to compare liquidity and price. 1inch makes this process easy. It’s an aggregator that scans multiple supported platforms, ensuring that traders can access the very lowest prices. 

While 1inch doesn’t charge its own fees, you’ll have to pay the fees (as well as gas) of the underlying DEXsto which it connects. It’s also slightly more complicated than a regular DEX, though this shouldn’t be a major problem.

### [Curve](https://curve.fi/#/ethereum/swap)

One of the major use cases for DEXs is trading between different stablecoins. Curve allows users to do this with a high degree of efficiency. Its algorithm is optimized for stablecoin swaps, making it a better choice for swapping between, say, USDT and USDC, than a regular DEX like Uniswap would be. However, this also means that Curve is specialized for stablecoins and does not support other assets, so it’s not the best DEX for general trading.

### [PancakeSwap](https://pancakeswap.finance/)

Pancakeswap is Binance Smart Chain’s leading DEX. It operates like Uniswap and other AMMs. Being hosted on BSC means gas fees are extremely low, and therefore trading small sums is more efficient. As a very popular DEX, many of its pools have excellent liquidity. 

Pancakeswap has prioritized its UX, and it is very user-friendly. It is also possible to earn in various different ways.

### [dYdX](https://dydx.exchange/)

While most DEXs today are AMMs, dYdX is an order book-based exchange. It offers a series of features more familiar to CEXs, such as leveraged trading, lending, and short selling. All of this makes it more versatile than simple AMMs and offers users different ways to earn. Although these features make it more complicated than most other DEXs, it’s relatively user friendly (including a mobile app), has low fees, and is known to have deep liquidity. In short, it’s one of the top decentralized exchanges for breadth of functionality.

### [Spectrum Finance](https://app.spectrum.fi/ergo/swap?base=0000000000000000000000000000000000000000000000000000000000000000)
Spectrum.Fi is Ergo’s native DEX. It’s a cross-chain platform that serves Ergo and Cardano. As well as trading ERG and other tokens for projects within the Ergo ecosystem, users can trade the SigmaUSD stablecoin. As an AMM, users can earn by depositing tokens in liquidity pools, and there are numerous yield farming opportunities. 

## Comparing Top DEXs

There are many decentralized exchange platforms, and selecting the best DEX for your needs will depend on the tokens you want to trade, the blockchain on which they are hosted, and other factors (including the size of the trade). In all cases, DEXs should be more secure than their centralized counterparts, although this can come at the expense of the UX. Overall though, the best crypto DEXs are easy and intuitive to use.

#### Conclusion

The best decentralized crypto exchanges offer a viable alternative to the risks and downsides of using centralized exchanges, providing increased security, better privacy, and (for the top DEXs and most popular tokens) better liquidity and more efficient trade execution. Make sure you research the different platforms available, and familiarize yourself with the different features (as well as pros and cons) before using them.


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The Six Best Crypto Decentralized Exchanges (DEXs) In 2024

## Blockchain Programming Languages
 
The world of computer programming highlights an expansive and diverse range of coding languages. There is no one size fits all, and each language offers varying degrees of pros and cons. If you are familiar with coding, you have no doubt heard of JavaScript, Python, Java, C#, C++, Solidity, Rust, and many more.
 
When it comes to blockchain design, several of these languages have been used in constructing prominent cryptocurrency networks.
 
![Снимок экрана 2024-03-27 в 21.36.36.png](https://storage.googleapis.com/ergo-cms-media/Snimok_ekrana_2024_03_27_v_21_36_36_1a3a819277/Snimok_ekrana_2024_03_27_v_21_36_36_1a3a819277.png)

## The Ergo Platform: A New Paradigm in Scripting and Proof of Work Blockchain
 
When Alex Chepurnoy (aka kushti) and Dmitry Meshkov set out to design a new 3rd generation smart contract blockchain, they wanted to create a network that combined Bitcoin’s Proof of Work and UTXO design with expressive smart contracts. Essentially, the goal was to marry Bitcoin’s time-tested model with Ethereum’s ability to produce smart contracts and decentralized applications. At the heart of this endeavor was a desire to build a blockchain for everyone. One that prioritizes products that improve the lives of the average citizen. From this endeavor, they created and launched the Ergo Platform.
 
To build Ergo, they needed to create a programming language that met their unique needs. Together, kushti and Meshkov developed a new scripting language, ErgoScript, so that they could write flexible and secure smart contracts on the Ergo Platform.
 
## What is ErgoScript?
 
ErgoScript is the programming language used for writing smart contracts on the Ergo blockchain. It is particularly noted for its ability to create advanced financial instruments and decentralized applications (dApps) with a focus on security and scalability. Its design is derived from Scala, which is a multi-paradigm programming language designed to express common programming patterns in a concise, elegant, and type-safe way. From the Ergo Whitepaper, ErgoScript is described as:
 
>“…a powerful and protocol-friendly scripting language for cryptocurrencies. Programs in ErgoScript are used to specify the conditions under which currency can be spent. The language supports a type of non-interactive zero-knowledge proofs called Σ(Sigma)-protocols and is flexible enough to allow for ring-signatures, multi signatures, multiple currencies, atomic swaps, self-replicating scripts, and long-term computation.”
 
Key characteristics of ErgoScript include:
 
1. Based on Sigma Protocols: ErgoScript is built on Sigma Protocols (or Σ-protocols), a type of cryptographic protocol. This basis allows for the creation of flexible and highly secure smart contracts.
2. Declarative Approach: Unlike imperative languages where you describe how to do something, in ErgoScript, you describe what conditions must be met. It's a declarative language where the state of the blockchain determines if a script is valid or not.
3. Off-Chain Code: Ergo allows for complex operations to be performed off-chain, reducing the load on the blockchain. ErgoScript is used to ensure that these operations adhere to the agreed-upon rules when they are committed to the blockchain.
4. Flexibility and Security: The language is designed to provide a high degree of flexibility in creating contracts, while also ensuring a strong level of security. This is particularly important in the context of financial contracts and decentralized finance (DeFi) applications on the Ergo Platform.
5. Cost-Effective: Ergo's design, combined with ErgoScript, aims to minimize the computational cost of smart contracts. This is crucial for maintaining a scalable and efficient blockchain system.
6. Integration with Ergo’s Features: ErgoScript takes advantage of Ergo's unique features like box storage model, where data and tokens are stored in "boxes" on the blockchain, and complex conditions can be set regarding how these boxes can be transformed and used.
 
## ErgoScript Code: An Example
 
The following script contains a condition for spending a transaction output:
 
{
  val condition = HEIGHT > 1000 && OUTPUTS(0).propositionBytes == fromBase64("yourBase64EncodedPublicKey")
  sigmaProp(condition)
}
 
1. HEIGHT > 1000: This checks if the current block height of the blockchain is greater than 1000. `HEIGHT` refers to the height of the blockchain at the time of the transaction. This condition ensures that the output can only be spent after the blockchain has reached a certain height, effectively creating a time lock.
 
2. OUTPUTS(0).propositionBytes == fromBase64("yourBase64EncodedPublicKey"): This part of the script checks if the first output (`OUTPUTS(0)`) of the transaction has a specific public key. The public key is encoded in Base64 format in the script. This condition ensures that the output can only be spent by a transaction that sends it to an address (or public key) that you specify.
 
3. sigmaProp(condition): This is the ErgoScript way of stating that the condition defined must evaluate to true for the script to be satisfied. sigmaProp is a function that converts a Boolean expression into a Sigma proposition.
 
When this script is attached to an unspent transaction output (UTXO) on the Ergo blockchain, it imposes the conditions that the blockchain must have progressed beyond block height 1000, and the output must be sent to the specified public key for it to be spent. This kind of script can be used for time-locked contracts or to ensure that funds are only sent to a particular recipient.
 
If you are a developer and are curious about how the Ergo Platform may be viable for a product you want to build, it is recommended that you explore the [Getting Started](https://docs.ergoplatform.com/dev/get-started/) section of the Ergo Documentation.

#### Conclusion
 
While ErgoScript offers several advantages, it's important to note that the "best" language for blockchain construction can vary depending on the specific needs and goals of a project. However, ErgoScript is particularly well-suited for projects that require high security, advanced contract functionality, and efficiency in transaction processing. Over time, it has proven to be a time-tested and essential tool for developers working within the Ergo ecosystem, providing a robust framework for building a wide range of decentralized solutions.

Ergoscript.png

Exploring ErgoScript: Ergo’s Native Scripting Language

Decentralization is _the key_ innovation of blockchain technology. Every advantage offered by cryptocurrency and smart contracts derives from decentralization: transparency, security, trustlessness, openness, reliability, efficiency, irreversibility, and more.

Decentralization is therefore critically important to crypto, but it can so often be compromised in a range of different ways. It’s not always easy, or even possible, to maintain decentralization to the extent that confers the maximum benefits. Sometimes, centralization can creep in, and it takes a concerted effort to deter it.

Before looking at how Ergo maintains its high level of decentralization, it’s important to establish two points:

- Firstly, decentralization is a spectrum, rather than a binary state. A system is not _centralized_ or _decentralized_, but exists somewhere between complete centralization and full decentralization. It is often possible to move it incrementally along the spectrum to become more decentralized, but attaining perfect decentralization is impossible (and trying can sometimes be unhelpful). The goal is to ensure it is decentralized enough to maintain important advantages, such as security.
- Secondly, there are many different spheres of decentralization. We’ll look at a few of them below.

## Network Infrastructure

The first, and arguably most important, sphere of decentralization is network infrastructure: the dispersed group of full nodes and mining nodes that communicate and validate transactions.

Decentralization of network infrastructure is vital, because it helps ensure the security of Ergo. The more nodes there are, the less risk there is of any single node, or subset of nodes, being compromised. Similarly, the more miners there are, and the more distributed the hashrate is, the lower the chance of a 51% attack. 

Ergo has opted for proof-of-work (PoW) consensus in part because it enables greater decentralization. In an open PoW system, anyone can join the network and help to secure it with the right hardware (more on that in a moment). Their mining rigs are typically kept at home or in a dedicated facility. Either way, the physical hardware is distributed around the world.

In a proof-of-stake system, anyone can join the network, as with PoW. However, there is generally more reliance on hosted servers, typically with a concentration of use around certain big companies (like AWS). This unfortunately introduces vulnerabilities, in a way that grassroots PoW mining does not.

The accessibility of Ergo mining is also important for this reason. Bitcoin mining is now highly competitive, requiring specialist hardware. Ergo’s use of Autolykos, a memory-hard hashing algorithm, means it is possible to mine using a GPU, thereby allowing anyone with a gaming computer to participate in securing the network. That means more miners, and better security (though Ergo cannot claim to compete with Bitcoin’s level of security, since the hashrate is less).

Decentralization is about more than network infrastructure, though. There are several other domains in which Ergo strives to be as decentralized as possible.

## Coin Distribution

Another metric that can hinder a blockchain’s degree of decentralization is coin distribution. If the majority of coins are controlled by just a few large holders, these wealthy entities can manipulate the market, or crash the price single-handedly. 

This was the case with Nxt, an early and ground-breaking second-generation crypto platform launched in 2013 (and in which several of the Ergo community were closely involved). Unfortunately, only a few people bought into the ICO, and the result was that most of the one billion NXT tokens were held by just 20 community members. A small number of “whales” drove the price relentlessly downwards for many months, eclipsing the impact of any new features introduced to the network, or the effect of new people joining the community. Solana is another example. Venture capital investors were able to buy large tranches of tokens at a far lower price than regular retail investors. When the bear market hit, they sold en masse, destroying the value of smaller traders’ SOL. In Solana’s case, the community and platform bounced back strongly.

Ergo had no ICO, no premine, and no VC investors. Distribution has always been solely through PoW mining, just like Bitcoin. As such, it’s as fair as it could possibly be, and there is no unnecessary concentration of ownership.

## Exchanges

Exchanges are a vital component of the crypto world, but they have historically also been single points of failure that have occasionally posed a systemic threat to the entire ecosystem.

When MtGox collapsed in 2014, it was responsible for 70% of trading volumes. 850,000 BTC was lost (later revised down to 650,000, after 200,000 BTC were “found”). In 2022, FTX declared bankruptcy. It was the second-largest crypto exchange in the world, and took with it billions of dollars of customers’ money. The effects of both failures are still being felt within the crypto space today.

It’s hugely important that users can convert their coins and tokens into different currencies, both crypto and fiat, but that must not come at the cost of introducing vulnerabilities that can threaten the whole crypto industry.

Ergo can be traded on a number of different popular exchanges, including Gate.io, Coinex, Kucoin, and several others. There are different trade-offs to using each of these, but the range of exchanges on which there is good liquidity means there is no single point of failure.

Of course, holders are encouraged to withdraw their ERG to an external wallet that they control and avoid leaving coins on exchanges. Additionally, decentralized exchanges are being developed as part of Ergo’s DeFi ecosystem. These will ultimately reduce reliance on centralized exchanges.

## Development 

Lastly, the development team is a point of centralization for most crypto projects. In the early days of a platform, when core software is still being built, the dev team is foundational. This was the case even for Bitcoin. Had Satoshi not been around for at least the first few months, it would not have survived. But efforts were made to reduce reliance on him and decentralize development as quickly as possible.

Today, few projects place such a strong emphasis on making the dev team obsolete. As a result, the departure of a key team member can spell the end for a project, even after many years. Ergo has focused on fostering community growth and welcoming contributors from outside of the Ergo Foundation, reducing reliance on a small number of developers.

## Conclusion

Ergo has sought to maximize decentralization and security across a number of different domains: network infrastructure, coin distribution, exchanges, and development. None of these are (or can be) perfectly decentralized, but the Ergo community and ecosystem has a strong ethos of doing the best it can to maintain decentralization and strives to continually improve it whenever it can.


02_Ergo_blog _How_Ergo_Remains_220324.png

How Ergo Remains Decentralized And Secure

_Non-Interactive Proofs of Proof-of-Work (NIPoPoWs) are one of several innovations used by Ergo. Here’s what they are, and why they matter._

NiPoPoWs (non-interactive proofs of proof-of-work) are a type of cryptographic construct that enable secure shortcuts to be taken in verifying the large amount of computational operations performed in a [proof-of-work (PoW)](https://ergoplatform.org/en/blog/Everything-You-Need-to-Know-About-Proof-of-Work/) system. The combination of security and efficiency offered by NiPoPoWs opens the way for a number of powerful use cases.

## Understanding NiPoPoWs

To better understand NiPoPoWs, it is important to first understand the role of PoW in blockchains like Bitcoin and Ergo.

PoW is a consensus mechanism, or a means by which the unrelated nodes of a blockchain network reach agreement on the content of the decentralized ledger without a single authority controlling the process.

PoW involves miners solving computationally difficult puzzles (hash functions). This is the mathematical equivalent of finding a needle in a haystack. The computer that solves the puzzle first wins the right to add a new block of transactions to the blockchain and to collect block rewards and transaction fees in return.

Proof of PoW is a way of cryptographically verifying the state of the blockchain without needing to check the entire chain of mathematical operations from the Genesis block to the present day. While PoPoWs (proofs of proof-of-work) are lightweight and efficient, they are also provably accurate. This makes it possible to access a reliable representation of the blockchain that is abstracted from the blockchain itself. 

The last element of NiPoPoWs is their non-interactive nature. This simply means they can be used by anyone without needing to interact with other users (like miners, or verifiers). NiPoPoWs, and the applications that use them, are self-contained.

These succinct, non-interactive proofs open a myriad of possibilities for a number of powerful applications, since they facilitate fast and secure blockchain communication and transactions.

## NiPoPoW Applications

One of the clearest and most powerful applications for NiPoPoWs is reducing the size of a blockchain. Because blockchains store every transaction, they become steadily larger as time goes on. Bitcoin’s blockchain is 550 GB at the time of writing. Even though it is younger, Ethereum’s is larger, due to the additional data associated with smart contracts. This means that anyone who wants to run a node needs to invest in the necessary storage infrastructure. They will also need to potentially wait days for their copy of the blockchain to sync.

NiPoPoWs enable the use of ultra-light clients that can sync to the blockchain with less than 1 MB of data, meaning even a low-end smartphone with limited data service can have the same security as a full node. This offers the possibility of a high level of decentralization, democratizing the activity of running nodes.

NiPoPoWs also have benefits for miners (who need to run full nodes). Every new block consumes only a tiny amount of additional data, once again helping network decentralization by enabling more users to mine without investing in terabyte hard drives.

The same technology powers the efficient operation of side chains, and underpins Ergo’s Layer-2 strategy. NiPoPoWs also facilitate cross-chain interoperability, since light clients can verify proofs quickly and reliably.

Overall, NiPoPoWs are an incredibly important element of the Ergo blockchain ecosystem, increasing security, scalability, and interoperability.



NIPOPOWS.png

Implementing NiPoPoWs

Gluon is a new and innovative stablecoin protocol built to harden existing stablecoins on Ergo such as SigmaUSD. Designed by Dr. Bruno Woltzenlogel Paleo, this brand new protocol represents a great leap forward for stablecoin tech on the Ergo blockchain. In this article, we will uncover the technical details and mechanisms that make this a hardy and fool-proof protocol.

## Innovating new models

The genesis of Gluon came about through Bruno, who after researching the lessons learned from Djed and SigmaUSD, explored liquidity pools and took inspiration from nuclear physics to design a stablecoin protocol that is more robust against oracle imperfections. 

Bruno, Alexander Chepurnoy (Ergo Founder), Kii, Sangeet, together with the Djed Alliance started working on the implementation of the new stablecoin protocol on Ergo back in 2023, during the [Ergoversary Summit](https://www.youtube.com/watch?v=tnvm1we6xts&list=PL8-KVrs6vXLRxmOmprVdXkHDcO4IaQZOY&index=23&t=803s).

Having understood how current liquidity pools protect liquidity providers from large transactions, Gluon uses a similar (but dual mechanism) to protect users against large transactions that may be exploiting oracle imperfections. The “duality” of liquidity pools originates from the use of one base asset in the reserve, while issuing two new assets (the stablecoin and a volatile coin) which can be swapped for each other.

Whereas former stablecoin protocols would focus on the interplay between ERG and the stablecoin, Gluon's novel way of thinking creates a new focal point, which is the relationship between the stablecoin and the volatile coin. The two newly created assets exist outside of the reserve. 

## A physics-inspired approach

Inspired by a suite of actions and reactions, including fission, fusion, beta decay plus, and beta decay minus, Gluon empowers users with unprecedented flexibility to manage stablecoin and reservecoin assets.

Fission is the mechanism underpinning the duality, allowing ERG tokens to be split into stablecoins and reservecoins. Fusion, on the other hand, combines these two to reverse the process and get back ERG tokens. Lastly, beta decay plus and beta decay minus resemble traditional liquidity pool swaps, allowing one to swap volatile coins for stablecoins, and vice-versa. 

The main takeaway from this approach is that, ultimately, the Gluon protocol makes use of the above to benefit from:

- **Reversibility**: The ability to fuse neutrons and protons back into the original asset (ERG).
- **Autonomy**: The protocol, once deployed on the blockchain, runs and maintains itself. No third party is required to oversee Gluon, which also implies that this protocol is:
- **Zero-governance**: The protocol does not need a central authority.
- Immutable: The protocol remains unchanged, which guarantees that bad actors cannot alter the smart contract’s logic to monetarily benefit from it.
- **Rent-seeking free**: Because the protocol is autonomous and permissionless, no third party can extract fees from its deployment. The protocol thus becomes free, and acts as public infrastructure on the blockchain.

## A user-friendly and transparent approach

At the heart of Gluon lies a transparent pricing framework driven by rigorous reaction equations and price equations. By leveraging the Q function and incorporating beta decay fee formulas, Gluon ensures equitable and transparent pricing for its stablecoin and reservecoin assets, meaning users can verify how fees were reached, and therefore create a sense of trust and security with this model.

Furthermore, Gluon prioritizes user experience through intuitive interfaces that simplify the buying and selling of stablecoins and reservecoins. By streamlining complex transactions into user-friendly operations, Gluon empowers users of all technical know-how levels to participate seamlessly in the stablecoin ecosystem.

## Gluon’s first appearance

After the introduction of this innovative protocol at the Ergoversary Summit, active development began, and a rigorous software development process is underway. With Kii leading backend contract development and Sangeet focusing on the frontend, Gluon awaits its formal debut. Through ongoing collaboration and engagement within the [Djed Alliance](https://docs.djed.one/about-us/the-djed-alliance), [The Stable Order](https://docs.djed.one/about-us/the-stable-order) and the Ergo community, Gluon is set to define the future of stablecoins on Ergo, offering newfound stability and innovation. 

As of right now, an open contest to choose a logo for Gluon is underway and a public testnet launch is imminent, both of which you can find out more about in [the Djed Alliance Discord](https://discord.com/invite/xYuTecYRhn).


Gluon.png

Introducing Gluon, the future of stablecoin protocols on Ergo

Smart contracts are the backbone of decentralized finance (DeFi) and have been one of the primary pieces of utility for blockchain technology. Before we go over several facets of smart contracts on Ergo, let’s talk about what a smart contract is.

## What is a Smart Contract?

A smart contract is a self-executing piece of code that generally is found on a blockchain. A smart contract automatically enforces predefined contract terms when specific conditions are met. It operates without intermediaries and uses code to transparently and trustlessly execute specific actions. Some of these actions could include buying NFTs, transferring coins and tokens, or the borrowing or lending of assets. 

Ergo’s smart contracts are one of the many features that set it apart from other cryptocurrencies. Let’s take a look at why Ergo’s smart contracts are so special.

## Understanding ErgoScript

Ergo uses the programming language, ErgoScript, which is based off of Scala. [Ergo documentation](https://docs.ergoplatform.com/dev/scs/ergoscript/#simple-example) states that ErgoScript is a simplified form of Scala which serves as a high-level language translated into ErgoTree which in turn is a low-level language further translated into a cryptographic protocol during execution. This design enables Ergo to support various cryptographic protocols which include ring and threshold signatures. Unlike Bitcoin, ErgoScript accommodates complex financial contracts by incorporating self-replication which allows the creation of Turing-Complete processes on the blockchain while maintaining Bitcoin's security and privacy principles. In essence, ErgoScript makes it easier to build secure, complex dApps while maintaining privacy capabilities. 

## Prerequisites for Creating Smart Contracts

Due to Ergo being an eUTXO blockchain and having its own programming language, new developers need to familiarize themselves with a few of Ergo’s features first before creating smart contracts. One of these features is the concept of [‘boxes.’](https://docs.ergoplatform.com/dev/data-model/box/) In Ergoscript a 'box' is an adaptable version of a UTXO. It serves not only as a holder for a cryptocurrency linked to an address but also incorporates 'registers' for extra data. This data can vary from basic values to intricate structures which are usable in transactions and smart contract execution. This distinction sets Ergo's box apart from a typical UTXO which merely signifies an unspent cryptocurrency amount linked to a specific address. In UTXO-based cryptocurrencies, transactions use existing UTXOs as inputs and generate new ones as outputs, and the unspent outputs represent the coins available for spending in future transactions. 

Another important facet of coding new developers will need to know is a general understanding of the [ErgoScript Language Description](https://github.com/ScorexFoundation/sigmastate-interpreter/blob/develop/docs/LangSpec.md). This link will help new developers get started. Below is a picture of some of the facets of Ergoscript the user can familiarize themselves with.

![introduction (1).png](https://storage.googleapis.com/ergo-cms-media/introduction_1_e18c1050f5/introduction_1_e18c1050f5.png)

## How Can I Create a Smart Contract Using ErgoScript?

The first step to learning how to code smart contracts on Ergo is becoming familiar with ErgoScript. It is important to note once again that Ergo uses the UTXO model which is quite different from the traditional account model. A great example of how the eUTXO model fits in with smart contracts is in the Ergo documentation [here](https://deco-education.github.io/deco-docs/docs/into-the-woods/trail1-eutxo-n-nfts/eutxo-boxes-addresses). For example, with eUTXO specifically, creating a smart contract involves designating a transaction output as the contract. For instance, you might want to pay 10 digital coins to your friend if the temperature reaches 90 degrees Fahrenheit. This is represented as a pile in the digital piggy bank, attached to a script specifying the spending condition. If the condition is met, your friend can spend the money with proof of the fulfilled condition. Otherwise, the funds remain in the pile which would be visible to all participants. 

Smart contracts can be complicated and overwhelming for beginners and advanced developers alike. Fortunately, the Ergo ecosystem boasts a plethora of resources showing both how to learn Ergoscript and how to code smart contracts. [This resource](https://github.com/ergoplatform/ergoscript-by-example?tab=readme-ov-file) in particular takes the user to the [“Ergo Playground”](https://docs.ergoplatform.com/dev/scs/ergoscript/#simple-example) in which they can experiment with several difficulties of smart contracts. This [video](https://www.youtube.com/watch?v=8l2v1asHgyA&ab_channel=ErgoPlatform) by Robert Kornacki takes you through the beginning stages of creating a smart contract with a pin lock contract. 

![ergoscript_examples (1).png](https://storage.googleapis.com/ergo-cms-media/ergoscript_examples_1_5c17b61f9b/ergoscript_examples_1_5c17b61f9b.png)

Kornacki [states](https://github.com/ergoplatform/ergoscript-by-example/blob/main/pinLockContract.md) that “This is a simple smart contract which locks deposited funds under a pin number. When the pin number is initially provided by the user, it is hashed off-chain, and the hash itself is stored on-chain.

When the user wishes to withdraw his/her funds (spend the UTXO locked under this contract) he/she submits a withdrawTransaction with the actual pin number in a register of the output UTXO. The contract then executes and checks that when the newly provided pin number gets hashed, it is equal to the original hash held in the register of the box locked by the contract. If they are equal then the contract validates, and the transaction is accepted as being valid and added to the blockchain history.

Do note, this contract is purely intended to be used as an educational example. It is completely insecure and should never be used on-chain. Bad actors can scan the mempool to find the pin number when the withdrawTransaction is posted, and then front-run by posting a tx with a higher tx fee + the same pin number, thereby stealing your locked funds. That said, this is a great simple contract to wet your feet with.” 

This is a great smart contract to play around with in the beginning stages of Ergo development. This can aid new developers in getting used to working with Ergoscript. New developers can use this [link](https://scastie.scala-lang.org/KdWtOMjrTx2zb7wr2shPAA) to go directly to the Ergo Playground with the code already imported for them. **Once again, this code is insecure and should be used for educational purposes only. **

## The Future of Smart Contracts

The future of smart contracts represent endless possibilities of disrupting the traditional finance system and replacing it with trustless and transparent assumptions. Smart contracts reduce the need for legal paperwork, lawyers and trusted transactions. Smart contracts are also instant and much more efficient, which will allow companies, businesses and entrepreneurs to get more done in much less time. A couple of potential drawbacks of smart contracts is that they are generally irreversible and can possess potential code exploits which could result in the loss of user funds. This is why secure code is so vital when creating smart contracts. This is also one of the reasons why ErgoScript is so powerful. It is an extremely secure coding language when executed correctly.

#### Conclusion

ErgoScript is ultimately a coding language that sets itself apart due to the fact that it allows for the creation of dynamic and secure smart contracts on Ergo. It allows for developers to create complex and sophisticated dApps while seamlessly being much easier to build with than many other coding languages. The open source nature of Ergo also streamlines the process for developers to build their vision and create something special. 

For developers who either want to wet their feet in ErgoScript and smart contracts or desire more advanced smart contract knowledge, please consult the documentation below. The Ergo Discord also has a #development section in which like minded developers can interact and learn about ErgoScript on a deeper level.

#### Useful Links 

- [Learn ErgoScript via the Ergo Playground tutorial video](https://www.youtube.com/watch?v=8l2v1asHgyA&ab_channel=ErgoPlatform)
- [Pin-Lock Contract](https://github.com/ergoplatform/ergoscript-by-example/blob/main/pinLockContract.md)
- [Ergo Playground](https://scastie.scala-lang.org/KdWtOMjrTx2zb7wr2shPAA)
- [ErgoScript](https://docs.ergoplatform.com/dev/scs/ergoscript/#simple-example)
- [Boxes](https://docs.ergoplatform.com/dev/data-model/box/)
- [ErgoScript Language Description](https://github.com/ScorexFoundation/sigmastate-interpreter/blob/develop/docs/LangSpec.md)
- [eUTXO, Boxes, Addresses](https://deco-education.github.io/deco-docs/docs/into-the-woods/trail1-eutxo-n-nfts/eutxo-boxes-addresses/)
- [Various levels of Smart Contracts](https://github.com/ergoplatform/ergoscript-by-example?tab=readme-ov-file)
- [How do UTXO contracts work?](https://github.com/Emurgo/Emurgo-Research/blob/master/smart-contracts/Unlocking%20The%20Potential%20Of%20The%20UTXO%20Model.md)
- [ErgoScript Whitepaper](https://storage.googleapis.com/ergo-cms-media/docs/ErgoScript.pdf)
- [Multi-stage transactions and smart contracts](https://deco-education.github.io/deco-docs/docs/category/trail-3-multi-stage-txs--smart-contracts)



004_how_create_smart_contracts.png

How To Create Smart Contracts With Ergoscript | Ergo Platform

One of the goals of DeFi (decentralized finance) is to provide a new way of lending and borrowing, one that removes TradFi (traditional finance) gatekeepers and/or 3rd party intermediaries. With blockchain technology, people can lend and borrow directly from one another, trustless and through the application of smart contracts. As lenders, individuals can leverage smart contracts to essentially operate as a bank, and borrowers can use their digital assets as collateral for loan liquidity.
 
With the [recent approval](https://www.sec.gov/news/statement/gensler-statement-spot-bitcoin-011023) of the first Bitcoin spot ETFs, it is no longer a question of whether traditional investors will participate in DeFi, but rather when. Now that crypto ETFs are tradable within investment bank portfolios, the doors have been swung open on the crypto industry. Where the future takes us is unknown, but with institutional money entering the blockchain industry, there is a great deal of potential for how TradFi and DeFi will interact and operate going forward. What kind of impact will this have on lending and borrowing protocols? Will increasing institutional investment spark a fresh wave of new blockchain customers?
 
With that in mind, let’s look at lending platforms on several prominent blockchains to get a sense of how DeFi lending has fared up to this moment.
 
## DeFi Lending Protocols
 
### AAVE (Ethereum)

·  	Locked liquidity: Just under $11 Billion
·  	Aave Market Capitalization: $1.34 Billion
 
Known for its wide range of Ethereum-based cryptocurrencies available for borrowing and lending, Aave has pioneered several innovations in the DeFi crypto loan space. It is an open-source service, accessible worldwide, and does not require approval times for transactions. However, it is primarily limited to Ethereum-based (ERC-20) coins and tokens and does not support Bitcoin or fiat currencies.
 
Lenders deposit their cryptocurrency into Aave's liquidity pools, and these pools are smart contracts that contain the collective funds from multiple lenders. From these pools, lenders earn interest on the assets they deposited, which is determined by the supply and demand for each asset within the pool. After depositing assets into these liquidity pools, lenders receive aTokens in return, which represent their stake in the pool. These aTokens accrue interest in real-time, directly into the lender's wallet.
 
To borrow from Aave, users must provide collateral, and the platform supports a wide range of cryptocurrencies as collateral. Once collateral is provided, users can borrow different cryptocurrencies. The amount that can be borrowed depends on the collateral's value and Aave's Loan-to-Value (LTV) ratio for that particular asset.
 
When it comes to interest rates, Aave offers both stable and variable interest rates to borrowers. The stable rate remains consistent over the loan period, while the variable rate can fluctuate based on market conditions.
 
Borrowers can repay their loans at any time. If the value of the collateral falls below a certain threshold, it may be liquidated to repay the loan.
 
### Compound (Ethereum)

·  	Locked Liquidity: ~$1.62 Billion
·  	COMP Market Cap: $440 Million
 
Compound is another significant player in the Ethereum DeFi space, especially after the launch of its governance token, COMP, which contributed to a surge in the protocol’s total value locked. Token support is primarily limited to ETH and ERC-20 tokens, but it also offers its users access to USDC.
 
Similar to Aave, Compound users deposit cryptocurrencies into Compound's liquidity pools, where these pools (managed by smart contracts) serve as collections of funds from multiple lenders. Lenders earn interest on their deposits, and the interest rates are algorithmically determined based on the supply and demand of each specific asset in the pool. Also similar to Aave, lenders receive cTokens, which represent their stake in the pool. cTokens accrue interest over time and can be redeemed for the underlying asset plus earned interest.
 
To borrow, users must first supply collateral. The amount a user can borrow depends on the value of their collateral and the platform's collateral factor (different assets have different collateral factors). Users can borrow different cryptocurrencies and are charged interest on their loans. Compound offers variable interest rates that fluctuate based on market dynamics.
 
Borrowers can repay their loans at any time. If the value of the collateral falls below a certain threshold (due to market volatility), the collateral may be liquidated to repay the loan.
 
### MakerDAO (Ethereum)

·  	Locked Liquidity: $2.94 Billion
·  	DAI Market Cap (DAI and MKR combined): $7.17 Billion
 
MakerDAO’s platform centers around the DAI stablecoin and allows users to deposit Ethereum and other assets as collateral to generate DAI. MakerDAO's significance lies in its role in maintaining the stability of DAI and providing a decentralized, collateral-backed cryptocurrency pegged to the US dollar.
 
Users lock up collateral assets, such as Ethereum (ETH), in a smart contract known as a Vault (previously called a Collateralized Debt Position or CDP). In exchange for their deposited collateral, users can generate DAI, a stablecoin whose value is soft-pegged to the US dollar - the amount of DAI that can be minted is determined by the collateral ratio and the type of collateral asset.
 
When users decide to retrieve their collateral, they must pay back the DAI they generated along with a stability fee, which is effectively the interest rate. This fee can be paid in DAI or in the platform's governance token, MKR. Holders of MKR have voting rights in the system's governance decisions, such as adjusting stability fees, collateral types, and other system parameters. MKR tokens are also used for system stability and risk management. In the event of a system deficit, additional MKR tokens can be minted and sold in the open market to raise funds.

### Duckpools: Ergo’s Newest Lending Protocol

·  	Locked Liquidity: $341,532
·  	QUACKS Market Cap: $328,294
 
Designed as a blockchain for contractual money, the Ergo Platform prioritizes decentralization and open-source development. The blockchain is positioning itself as one of the most technologically innovative networks in the crypto sector and has recently launched the Rosen Bridge cross-chain hub.
 
Still a relatively young blockchain, the Ergo Platform has witnessed extensive dApp development during the bear market these last couple of years. One of the ecosystem's signature dApps is the Duckpools lending protocol.
 
Duckpools allows users to lend and borrow Ergo native assets through several liquidity pools. Depending on the native asset liquidity pool, lenders will earn varying degrees of interest. Borrowers are required to provide $ERG as collateral, and they can choose their level of risk by setting the collateral loan ratio as either 135%, 150%, 170%, or a custom amount.
 
**Duckpools Lending/Borrowing Pools**
 
**ERG Pool**
·  	Total Value Locked: 12094.03 ERG
·  	APY 2.41%
·  	Pool Utilization: 39.4%
 
**SigUSD Pool**
·  	Total Value Locked: 75785.26 SigUSD
·  	APY 93.64%
·  	Pool Utilization 95.47%
 
**SigRSV Pool**
·  	Total Value Locked: 3.25 Million SigRSV
·  	APY: 0.11%
·  	Pool Utilization: 6.55%
 
**RSN Pool**
·  	Total Value Locked: 1.217 Million RSN
·  	APY 0.1%
·  	Pool Utilization: 5.49%
 
As one will note, there is liquidity in some of these pools, but there is also opportunity for investors. The SigUSD Pool is currently offering an APY of 93.64%. That’s right, almost 94%!

### Solend (Solana)

·  	Locked Liquidity: $211 Million
·  	SLND Market Cap: $78 Million
 
Solend is a prominent money market on Solana. Users can engage in activities like borrowing, earning interest on loans, and using leverage for both short and long positions. The platform supports various assets including SOL, USDC, USDT, ETH, BTC, SRM, FTT, and RAY.
 
Similar to the previously mentioned lending protocols, users pool their assets in liquidity pools and earn interest for those respective pools. After depositing their assets in Solend liquidity pools, users receive SLND tokens (representing their share of the pool) and accrue interest from these tokens over time. As with the other lending protocols that have been reviewed in this article, borrowers need to provide collateral to qualify for a loan.
 
### Mango Markets (Solana)

·  	Locked Liquidity: $175 Million (need confirmation)
·  	MNGO Market Cap: $14.4 Million
 
Mango Markets, a decentralized derivatives exchange on the Solana blockchain, offers a platform for users to lend, borrow, swap, and leverage trade crypto assets. It allows assets deposited on the platform to be cross-collateralized, meaning the same assets can be used as collateral for both borrowing/lending and leverage trading. The assets automatically earn interest and can be used as available collateral. Mango Markets leverages the Serum DEX for spot margin trading while running its own order book for perpetual futures. It also features its governance token, MNGO, which enables holders to participate in governance decisions within the Mango DAO. Mango Markets focuses on combining the liquidity and usability of centralized finance (CeFi) with DeFi at lower costs to the user.
 
### Liqwid Finance (Cardano)

·  	Total Value Locked: $35 Million
·  	LQ Market Cap: $907K
 
This protocol is an open-source, algorithmic, and non-custodial interest rate platform designed for lenders and borrowers. It employs an algorithmic approach to determine interest rates based on supply and demand. Liqwid Finance offers pooled lending and lenders are given qTokens for the liquidity deposits.
 
### Levvy Finance (Cardano)

·  	Total Loan Volume: 54.05 Million $ADA ($26 Million)
·  	SOC Market Cap: 37 Million $ADA ($18.01 Million)
 
In the last 6 months, Levvy Finance has created a lending and borrowing protocol for Cardano NFTs and native assets. Borrowers can access instant liquidity by borrowing against their NFTs or native assets, while lenders can deposit liquidity into the pools for various NFTs and native assets. Interest rates are set when funds are lent, and loans are typically paid back within 2 weeks.
 
### Lenfi (Cardano)

·  	Total Value Locked: 18.876 Million $ADA ($9.19 Million)
·  	LENFI Market Cap: 103.46 Million $ADA ($50.39 Million)
 
Lenfi is a decentralized, non-custodial lending and borrowing protocol on the Cardano blockchain. It enables users to participate either as depositors or borrowers. Deposit options include providing liquidity directly to the protocol's liquidity pools or setting pre-determined terms. Depositors can earn passive income through their contributions. Borrowers, on the other hand, can engage in peer-to-peer borrowing with over-collateralized requests or borrow from the liquidity pools under an over-collateralized agreement.
 
#### Conclusion

When looking at the amount of liquidity and TVL within the various lending platforms highlighted, it’s clear that Decentralized Finance is thriving thanks to the substantial demand generated in and around the crypto industry.

Ethereum (as the blockchain with the most active developers right now) is the more senior network, and it is dominating the DeFi landscape when looking at sheer numbers, such as TVL. However, as more people adopt blockchain technology, it stands to reason that they will research and look for different platforms to meet their needs. For instance, gas fees on Ethereum, even after the switch to Proof-of-Stake, still present a long-term obstacle for mainstream adoption and can be a deterrent for those who are looking for an economical blockchain protocol.

Ergo is a game-changing Layer 1 blockchain, and it’s just a matter of time before the platform attracts an even larger user base. Rosen Bridge is already on-boarding new users, and with Ethereum set to be added to the bridge infrastructure, Ethereum users will have a direct line of access to the unique tools and products that Ergo offers. The blockchain features unique and innovative technological features, including robust PoW security coupled with a truly decentralized network and commitment to open source development. Gas fees are not an issue on Ergo as each transaction costs a meager 0.0011 ERG. If the value of ERG ever reaches a point where transaction fees start to become expensive, the blockchain is designed so that miners have the power to vote on and change network parameters (including transaction fees).

With time, we will start to see how these lending platforms grow and serve their clientele, but with the increasing investment by traditional finance, it seems likely that the TVL of blockchain lending platforms may reach heights we have not yet seen. 



005_duckpools.png

DeFi Lending and Borrowing: Duckpools

## Introduction

In the fast-paced world of blockchain technology, efficiency and speed are a must. As businesses and individuals increasingly rely on blockchain for various applications, from financial transactions to supply chain management, the need for faster and more efficient blockchain platforms has never been greater. 

In this blog post, we will delve into the importance of efficiency and speed in blockchain, explore the key factors influencing these aspects, and identify the fastest and most efficient blockchain platforms available today.

## Understanding Blockchain Efficiency and Speed

Blockchain, the decentralized ledger technology that underpins cryptocurrencies and various other applications, operates on a peer-to-peer network. Transactions are verified and added to the blockchain through a consensus mechanism, which can vary between different blockchain platforms. 

The efficiency and speed of a blockchain are crucial factors that determine its usability and scalability. Efficiency in blockchain refers to how well the network utilizes its resources to process transactions, validate blocks, and maintain the overall integrity of the ledger. 

Speed, on the other hand, is measured by the time it takes for a transaction to be confirmed and added to the blockchain. Both efficiency and speed are interlinked and play a crucial role in the user experience and the broader adoption of blockchain technology.

## Key Factors Affecting Blockchain Efficiency and Speed

### Consensus Mechanism

The consensus mechanism employed by a blockchain platform is a fundamental factor influencing its efficiency and speed. Traditional blockchains, like Bitcoin, use Proof of Work (PoW), which involves solving complex mathematical puzzles to validate transactions. While PoW is secure, it can be relatively slow and energy-intensive.

On the other hand, newer consensus mechanisms like Proof of Stake (PoS) and Delegated Proof of Stake (DPoS) prioritize efficiency by allowing validators to be chosen based on the number of coins they hold or are willing to "stake." These mechanisms reduce the computational resources required, leading to faster transaction processing and increased energy efficiency.

[The debate](https://ergoplatform.org/en/blog/Everything-You-Need-to-Know-About-Proof-of-Work/) between Proof of Work and Proof of Stake is one that has been ongoing ever since the early days, as both mechanisms serve different purposes and employ different technologies.

### Scalability

Scalability refers to a blockchain's ability to handle an increasing number of transactions without compromising its efficiency. Some blockchains face scalability challenges as they grow, resulting in slower transaction speeds and higher fees. Solutions like sharding, layer 2 scaling solutions, and improved consensus algorithms are implemented to enhance scalability and maintain optimal performance.

### Network Architecture

The architecture of a blockchain network, whether it's a public or private blockchain, also impacts efficiency and speed. Public blockchains, like Ethereum, involve multiple participants globally, which can lead to slower transaction speeds due to the decentralized nature of the network. In contrast, private or permissioned blockchains may offer faster transaction speeds as they involve a predefined set of participants with known identities.

## The Fastest & Most Efficient Blockchain

In the quest for the fastest and most efficient blockchain, several platforms stand out, each with its unique features and strengths.

One notable contender is Solana, a high-performance blockchain known for its impressive transaction speeds and low fees. Solana utilizes a unique consensus mechanism called Proof of History (PoH) in combination with Proof of Stake (PoS), allowing it to achieve a throughput of [over 65,000 transactions per second](https://coincodex.com/article/24666/solana-tps/) (TPS). This makes Solana one of the fastest blockchains globally, making it an attractive option for decentralized applications (DApps) and financial institutions.

Next up, when talking about speed combined with efficiency, one cannot ignore [Binance Smart Chain](https://www.binance.com/en/feed/post/394446) (BSC), a blockchain created by Binance. BSC employs a modified version of the Proof of Stake (PoS) consensus mechanism and achieves high throughput, enabling fast and cost-effective transactions. Binance Smart Chain has gained popularity for its compatibility with the Ethereum Virtual Machine (EVM), making it easy for developers to port their Ethereum-based DApps to the BSC platform.

Lastly, a noteworthy mention goes to Ergo Platform, which also stands out for its advanced features, smart contract capabilities, and heightened security in DApps and financial protocols. It achieves this through innovative technologies such as Autolykos Proof-of-Work, which promotes decentralization and fairness in mining operations by requiring significant memory usage, and Sigma protocols, which enhance transaction privacy and security.

Ergo's technology stack includes [ErgoScript](https://ergoplatform.org/en/blog/2021-06-09-building-ergo-ergoscript/), a secure scripting language for crafting sophisticated smart contracts, and an Extended Unspent Transaction Output (eUTXO) model for scalability without compromising security. While not emphasizing sheer speed, Ergo compensates with its robust security measures and efficient transaction processing, making it suitable for various applications in the decentralized ecosystem, from DeFi to privacy-focused solutions and digital asset issuance.

With Ergo’s eUTXO model, multiple outputs can be combined into one transaction. As a result, Ergo’s TPS is not directly comparable with either BSC or Solana, since neither of these blockchains process transactions in this manner. The Accounts model of Solana and Ethereum handle transactions in sequence, but Ergo’s unique design allows for parallel processing. Essentially, thousands of outputs containing differing tokens can be performed in one transaction on Ergo.

Additionally, recent developer updates offer new levels of processing speed for the Ergo network. [Sub blocks](https://ergoplatform.org/en/blog/Ergo’s-Newest-Advancement-Sub-Blocks/) were recently introduced to the protocol, and they are basically block candidates with a much lower difficulty threshold than regular blocks. In simple terms, sub blocks can be mined much faster than normal blocks. The Ergo docs state directly that “[if a subblock has 1/128th of a regular block's difficulty, we could expect one subblock to be generated per second on average](https://docs.ergoplatform.com/uses/sidechains/subblocks/).”

#### Conclusion

In conclusion, efficiency and speed are pivotal elements in the world of blockchain technology. As the demand for faster and more energy-efficient blockchain solutions continues to grow, developers and innovators are exploring new consensus mechanisms and scalability solutions to address these challenges. The emergence of platforms like Solana and Binance Smart Chain showcases the industry's commitment to providing high-performance blockchain solutions. 

On the flipside, platforms such as Ergo continue to innovate and redefine how blockchain technology operates, perhaps even making a case as to why TPS is not the perfect measuring tool when it comes to blockchain speed & efficiency. All the while, Ergo is pushing to remain decentralized and true to the core values shared across the board within the web3 industry as a whole.

The quest for the fastest blockchain is an ongoing journey, and advancements in technology will likely lead to even more efficient and speedy blockchain platforms in the future. As projects and users increasingly prioritize efficiency and speed, blockchain technology will evolve to meet these demands, unlocking new possibilities and applications across various industries.

Interested in learning more about Ergo and our community? Join the other 10,000 Discord members by clicking the button below.

[Join us on Discord](https://discord.gg/ergo-platform-668903786361651200)


002_fastchain.png

What is The Fastest and Most Efficient Blockchain?

eUTXOs, or extended Unspent Transaction Outputs, offer a distinct way of creating smart contracts and building dApps on Bitcoin-like blockchains. The eUTXO model is fundamentally different from Ethereum’s Account-based model as well as many other smart contract chains, and it has various advantages and trade-offs.

## What Is A UTXO?

A UTXO is an Unspent Transaction Output, or a block of coins that are the result of a transaction and that have not subsequently been spent by the receiving address. UTXOs are an important concept for Bitcoin and similar blockchains, including Ergo. 

In such systems, the balance of an address is not stored on the blockchain as a single value. Instead, it is the sum of a collection of individual, spendable “outputs” from transactions into the address, with each representing a certain amount of coins. These individual outputs are the UTXOs. 

## How Do UTXOs Work?

UTXOs are a means of tracking balances on the blockchain. When a user initiates a transaction, they are essentially spending one or more UTXOs that they control in their wallet. The outputs of a transaction create new UTXOs for the recipients, and potentially a “change” balance of UTXO coins for the sender if there is anything left over.

For example, Alice wants to send Bob 20 ERG. Her address contains UTXOs of 15, 10, 7, 6, and 3 ERG. She selects the UTXOs of 15 and 6 ERG (it is important to note that this step is typically handled automatically by the crypto wallet, but can be done manually) and sends 20 ERG to Bob. Bob now has a UTXO of 20 ERG in his wallet, and Alice receives “change” in the form of a 1 ERG UTXO.

Alice could have combined any number of UTXOs totaling at least 20 ERG to send to Bob, but the more UTXOs that are used, the larger the amount of data that needs to be stored on the blockchain, and the higher the transaction fee.

The UTXOs sent in transactions are considered unspent until they are used in a future transaction. At this point, they become part of a new UTXO.

UTXOs are therefore a little like envelopes of money. A user may hold many such envelopes and can combine them in transactions. Any new change (funds in excess of the transaction amount) resulting from transactions go in a new envelope and are retained by the sender.

Users also pay a small transaction fee to miners, which is simply the difference between the total input and the total outputs, including change. (On Ergo, this is typically 0.0011 ERG for a simple transaction.)

Every coin on the blockchain therefore belongs to a UTXO. Any coin can be traced back through previous UTXO coin blocks, right back to the transaction in which it first came into existence (i.e. when it was mined).

This is how Bitcoin-like blockchains track balances and ensure the reliability of transactions. Each transaction must reference valid and unspent UTXOs to be considered legitimate. The UTXO model provides transparency and allows anyone to independently verify the ownership and validity of bitcoins by inspecting the blockchain.

UTXOs therefore represent the building blocks of ownership and transactions in Bitcoin-like systems. 

## What Is The Account-Based Model?

The main alternative to the UTXO model is the Account-based approach. This is used by many blockchains, including Ethereum. An account-based model works in a completely different way from UTXO chains for tracking blockchain state.

##How Does The Account-Based Model Work?

In an account-based blockchain, transactions are managed through accounts associated with addresses. Each user has an account with a balance, much like a bank account has a balance, and transactions involve debiting and crediting these balances. 

The state of the ledger is updated to reflect changes in account balances after transactions are executed. This model gives more granular control over user balances (since there is no need for change outputs) but has different properties, and various pros and cons.

## UTXOs Vs Accounts: Advantages And Disadvantages

Like any system, there are advantages and disadvantages to using either the UTXO model or account-based approach.

### Advantages of the UTXO model:

- Simplified state tracking: Each UTXO represents a specific amount of cryptocurrency and its ownership, making tracking blockchain state straightforward.
- Privacy: The UTXO model can enhance privacy if used properly, since individual transactions are not directly linked to user identities.
- Parallel processing: UTXOs can be processed in parallel, enabling faster verification and validation of transactions, potentially contributing to scalability.
- Clear ownership tracking: It is straightforward to trace the origin and current holder of a specific amount of coins.
- Reduced blockchain bloat: Since spent UTXOs are removed from the UTXO set, using the UTXO model can help in reducing blockchain bloat, leading to more efficient storage.

### Disadvantages of the UTXO model:

- Scripting challenges: Due to the nature of the UTXO model, scripting operates differently than Account-based platforms, so it can be harder to build dApps if developers are used to a more conventional approach.
- Less expressive smart contracts: The simplicity of the UTXO model may limit smart contract complexity, though there are ways to address this.
- Scalability: As the number of UTXOs held on the blockchain grows, scalability challenges may arise.
- Resource use: The UTXO model may lead to less efficient resource use, since spending coins involves consuming entire UTXOs, even if the transaction amount is low.

## What Are eUTXOs?

As explored above, in the standard UTXO model (such as Bitcoin uses), every transaction requires existing UTXOs as an input and creates new UTXOs as outputs. 

The extended UTXO or “eUTXO” model expands this concept by allowing UTXOs to contain additional information, such as complex scripting or smart contract logic. 

The benefit of this approach is that users can still enjoy the benefits of the UTXO model, including security and simplicity, but the platform can also provide smart contract capabilities. Cardano is one well-known blockchain that leverages the eUTXO model to enable smart contracts on its network. Ergo is another.

## How Do eUTXOs Work?

The eUTXO model extends the standard UTXO coin model in two ways:
- Addresses can contain additional logic in scripts that provide further conditions and information. When the transaction is mined by a node, the node checks and executes the script if the conditions are met.
- Outputs can include additional data, allowing for more powerful and flexible scripts.

All of this allows for complex logic that can contain many different conditions and information. This arbitrary logic is applied to a transaction by the validator and processed if the transaction is allowed to use a given input.

## eUTXO Advantages And Disadvantages

As can be seen from the overview above, using UTXOs as the basis for smart contracts has various implications. Some of these offer significant advantages over Account-based smart contracts, but as in any system, there are trade-offs.

One feature of the eUTXO model is that a transaction is validated based only on the transaction itself and its inputs, without requiring anything else on the blockchain. An interesting and useful implication of this is that a transaction can be checked for validity off-chain before the transaction is sent for validation. After it is checked, the transaction will be guaranteed to succeed (so long as another transaction has not consumed its inputs in the meantime). eUTXOs are therefore more predictable and reliable than Account-based smart contract transactions, which can fail while they are being processed. On Ethereum, for example, it is possible for a transaction to consume significant gas and still fail, costing the user without any benefit.

Another implication of this reliability is that all of the fees required for the transaction can also be calculated before the transaction is submitted. Ethereum and other Account-based systems are indeterministic, meaning not only can the transaction fail, but that even if it does succeed, the exact cost is not known. With the eUTXO model, fees are predetermined and predictable. 

Privacy tends to be better with the eUTXO model and transaction logic tends to be simpler because a UTXO can only be consumed once (and in its entirety). It also raises the possibility of parallel processing, since multiple UTXOs can be processed alongside each other (so long as they do not attempt to use the same input UTXO). The range of possible outcomes is far more limited than with an Account-based system, making execution more predictable and safe.

Against all this, the eUTXO model is quite different from an Account-based model, which is what most developers are familiar with (since Ethereum takes that approach). dApps that were created for Ethereum and similar blockchains cannot easily be adapted for use on eUTXO platforms.

## Key Differences Between eUTXO Vs UTXO Vs Account-Based Model

UTXOs represent simple unspent outputs that can be used in new transactions. This is a simple, secure accounting model used by the first-generation blockchain: Bitcoin. 

eUTXOs extend this approach and generalize it, so that validators can make a decision on whether a UTXO is spent based on a wide range of conditions – enabling far-reaching and expressive smart contracts to be built, while retaining the simplicity and security of the UTXO foundation.

Executing smart contracts on an Account-based system can be more complicated and potentially less secure, due to the way that data is stored and changes made.

In an eUTXO system, UTXO coins are either spent or not in their entirety. In an Account-based system, each account is mutable and smart contracts can modify their state during execution. This can lead to complex and occasionally hard-to-predict interactions between different contracts. Changes to the state of one smart contract can impact others, so there may be potential conflicts that need to be considered. This is not possible with the eUTXO model. Since UTXOs are independent, they are isolated and execution of smart contracts is more deterministic and safe - the changes to one part of the ledger do not directly affect others. Spending conditions are clear and easy to verify. Similarly, gas calculation is known and predictable.

Against all this, account-based blockchains generally offer greater flexibility for complex smart contracts and decentralized applications, since development is typically simpler and contracts can access and interact with other contracts easily – though this comes with greater risk and the possibility that vulnerabilities may inadvertently be introduced. An eUTXO-based approach is often preferable, all things being equal, for certain types of dApp.

#### Conclusion

eUTXOs offer a fundamentally different way of approaching smart contracts and decentralized applications than the prevailing Account-based model. While in some respects it may appear more limited, the eUTXO model is generally safer and more predictable, removing some of the most serious vulnerabilities associated with smart contracts. 



001_eUTXOs.png

What Are eUTXOs?

Decentralized blockchain infrastructure has received a significant boost with the launch of Rosen Bridge. As of this moment, participants of the Ergo and Cardano ecosystems can swap native assets between both blockchains, and the bridge will soon expand to include native asset swaps for Bitcoin, Ethereum, Binance Smart Chain, and Dogecoin. 

With the emergence of Rosen Bridge, there is new opportunity for token holders of both the Ergo and Cardano blockchains. Now that Ergo native tokens are on Cardano, and vice versa for Cardano tokens on Ergo, there are new liquidity pools (LP) available.

Liquidity pools are a store of funds (held in a smart contract), holding two assets that comprise a trading pair. For example, if someone held ADA in their wallet and wanted to acquire rsERG (the ERG ticker symbol on Cardano), they would access an ADA/rsERG liquidity pool on a Cardano DEX (decentralized exchange). Through that pool, they would then be able to swap their ADA for rsERG (similarly, they could swap rsERG for ADA in the same pool).

One of the goals of decentralized finance is to allow anyone to serve as a banking entity without any intermediary. This can be as a lender or liquidity provider. As such, users who hold tokens for a trading pair on a DEX can use those assets to provide liquidity and earn rewards (a return on their investment in the pool). Trading activity between two assets is only as healthy as the amount of liquidity available for that pool. Larger liquidity pools ensure that there is enough liquidity to support high volume trading between respective assets. 

With new native tokens from Cardano and Ergo flowing between the two respective blockchains, let’s take a look at some of the new liquidity pools that are available to investors.

## Cardano Liquidity Pools

#### Spectrum DEX Liquidity Pools

[rsERG/ADA](https://app.spectrum.fi/cardano/liquidity/db73d7b28075e8869bb862857ded32d9b6fe9420d95aa94f5d34f80a.72734552475f4144415f4e4654) - At present, there is a TVL (total value locked) of 287.12k ADA in this liquidity pool, and it offers liquidity providers an APR of 8.64%.

[rsRSN/ADA](https://app.spectrum.fi/cardano/liquidity/51c340dad60dc5f570e54e9ac2b4eef0eb016b864543d9b81f75ba55.727352534e5f4144415f4e4654) - At present, there is a TVL of 56.49k ADA in this liquidity pool, and it offers liquidity providers an APR of 25.83%.

#### Minswap DEX Liquidity Pools

[rsERG/ADA](https://app.minswap.org/liquidity?currencySymbolA=&tokenNameA=&currencySymbolB=04b95368393c821f180deee8229fbd941baaf9bd748ebcdbf7adbb14&tokenNameB=7273455247) - At present, there is a TVL of 44.23k ADA in this liquidity pool, and it offers liquidity providers an APR of 9.47%.

[rsRSN/ADA](https://app.minswap.org/liquidity?currencySymbolA=&tokenNameA=&currencySymbolB=04b95368393c821f180deee8229fbd941baaf9bd748ebcdbf7adbb14&tokenNameB=727352534e) - At present, there is a TVL (total value locked) of 17.63k ADA in this liquidity pool, and it offers liquidity providers an APR of 41.84%.

[HOSKY/rsCOMET](https://app.minswap.org/liquidity?currencySymbolA=a0028f350aaabe0545fdcb56b039bfb08e4bb4d8c4d7c3c7d481c235&tokenNameA=484f534b59&currencySymbolB=d85d4588d4625b370121597ff88f3c1fa66f2a0cb7e4a7a9573a3c3e&tokenNameB=7273434f4d4554) - At present, there is a TVL (total value locked) of 7.69k ADA in this liquidity pool, and it offers liquidity providers an APR of 3.98%.

## Ergo Liquidity Pools

#### Spectrum DEX Liquidity Pools

[ERG/rsADA](https://app.spectrum.fi/ergo/liquidity/ae97c5eccd59a065cd973a8d6afb8bb79f9cc70368a7dcdf73aaeab1cedf6f6b) - At present, there is a TVL of $26.47k in this liquidity pool, and it offers liquidity providers an APR of 2.5%.

[RSN/rsADA](https://app.spectrum.fi/ergo/liquidity/29f45df2736a7c7dd790b682fb15429961d7c1ae92e05c72a4f65d53fc0c47d7) - At present, there is a TVL of $7.44k in this liquidity pool, and it offers liquidity providers an APR of 1.32%.

## Opportunity for Cryptocurrency Investors

In the early stages of Rosen Bridge’s launch, not only is there investment potential through these pools on Spectrum Finance and Minswap, but there is also opportunity for providers to create new pools for other native assets, such as SigUSD, SigRSV, HOSKY, and COMET. For example, new investors might invest their tokens to create SigUSD/rsADA (on Ergo) or ADA/rsSigUSD (on Cardano) trading pairs.

Ergo’s innovative crypto-backed algorithmic stablecoin ([SigUSD](https://sigmausd.io/#/)) would be a very interesting addition to the Cardano blockchain. Many within the crypto industry argue that blockchain’s success depends on the usage of a successfully deployed stablecoin protocol. With SigUSD, investors gain access to a stablecoin that is not only decentralized, but has also maintained its peg to USD during extreme ERG price fluctuations. 

Rosen Bridge developers are currently working to add more native assets to the bridge, and it appears that [Ethereum will be the next blockchain to be added](https://x.com/RosenBridge_erg/status/1747861451375833286?s=20) to Rosen Bridge’s watcher and guard system. It is just a matter of time before native assets from all three ecosystems will be tradable on their respective blockchain DEXs.

## Bridging Blockchains: Providing Decentralized Infrastructure

In much the same way that the Proof of Work consensus on Bitcoin or Ergo secures the network and approves transactions,[ Rosen Bridge is designed such that anyone can be a Watcher and help secure the bridge](https://ergoplatform.org/en/news/Rosen-Bridge-Officially-Launches-on-Ergo-Mainnet/). In exchange for providing this vital infrastructure, watchers are rewarded in bridge transaction fees (paid in RSN tokens). Each blockchain that is part of the Rosen Bridge network requires watchers to observe transactions. As the bridge expands to more blockchains, there will be a need for people to run Watcher software and help secure bridge transactions. This may seem like a complicated task if you are not a coder, but it is actually quite easy to deploy a Watcher using the [Rosen Bridge Github](https://github.com/rosen-bridge).

### Setting Up a Watcher

If you are interested in operating a watcher and earning passive RSN income, you will need to access the following links:

- [Ergo Rosen Watcher Setup (Windows) Youtube Video](https://www.youtube.com/watch?v=bQ2sviHtOQA)
- [Git for Windows (64-bit Git for Windows Setup)](https://git-scm.com/download/win)
- [Docker Desktop for Windows](https://docs.docker.com/desktop/install/windows-install/)
- [Rosen Bridge Watcher Instructions from Github](https://github.com/rosen-bridge/operation/blob/dev/docs/watcher/deploy-docker.md)

Before you can set up the Watcher, you will need to install 64-bit Git and Docker Desktop. Once those are installed, you can use the Ergo Rosen Watcher Setup Youtube Video and Github instructions to deploy your own watcher. The setup video is quite helpful and guides the viewer through the entire process from start to finish. This writer is not a coder and was able to successfully set up a Cardano watcher while following the step-by-step process in the video. 

Please note, that in order to operate a Watcher, you will need an initial investment of 30k RSN and 800 ERG. These funds will be locked in the bridge as collateral. Additionally, you will need another 3000 RSN for each permit that operates on your Watcher. The more permits you have for your Watcher, the more bridge events you can witness to earn a portion of the transaction fees.

## The Future of Blockchain Interoperability

As a decentralized tool, Rosen Bridge has the potential to jump start an era of blockchain interoperability. As more and more blockchains are added to the bridge infrastructure, developers will be able to look at dApp design in a new and revolutionary way. Rosen Bridge’s pre-existing cross-chain infrastructure opens doors for their dApps to take full advantage of the various strengths of differing blockchains. 

If you are an investor, developer, or ecosystem participant, there are various ways you can interact with Rosen Bridge. New liquidity pools are now available on Cardano and Ergo through Minswap and Spectrum Finance. Developers can explore and research ways to power their dApps with both Ergo’s Proof of Work and Cardano’s Proof of Stake consensus models. Additionally, anyone with a computer can help to secure the bridge as a Watcher and earn passive income.

To learn more and access the bridge, please visit the [Rosen Bridge website](https://rosen.tech/). If you have any other questions or need help setting up a Watcher, interested parties can access the Rosen Bridge [Telegram](https://t.me/rosenbridge_erg) and/or [Discord](https://discord.com/invite/AHgsxhDKrQ). There you can access a knowledgeable community that is ready to help with any questions.


news_blog_Intersection.png

The Intersection of Blockchain: Rosen Bridge and New Liquidity Pools

The launch of Ethereum brought the rise of decentralized applications (dApps): programs powered by smart contracts that run trustlessly, transparently, and unstoppably on the blockchain.

The software that maintains the blockchain network itself (nodes and clients) is one set of applications, but the scripts and dApps that run on smart contract platforms are separate, and are generally written in a different language. Building these dApps is not the same as creating the underlying blockchain platform (which requires a different set of skills).

## Overview Of Popular Blockchain Programming Languages

Today, there are many smart contract blockchains that offer similar functionality – but not all smart contract platforms are equal. Among other factors, the language in which smart contracts are coded makes a big difference to developer accessibility, functionality, and the security of dApps launched on the blockchain. Here are five of the most popular blockchain programming languages and what they offer.

### Solidity (Ethereum and EVM-compatible platforms)

Solidity is the most popular crypto coding language in the world. It’s the default option for smart contract programming on Ethereum and all EVM (Ethereum Virtual Machine) chains, including Polygon, Arbitrum, Optimism, Binance Smart Chain, Avalanche, and others. Together, these blockchains account for many millions of daily active users (DAU).

Solidity was designed specifically for writing smart contracts on Ethereum and shares some notable similarities with the popular JavaScript language – though there are also significant differences. As the foremost smart contract language for Ethereum and EVM-compatible chains, Solidity has lots of advantages, but there are several issues that newer crypto programming languages have sought to address.

#### Benefits of Solidity

While Solidity was designed for Ethereum, its broad similarities with JavaScript means it is relatively accessible to developers familiar with that language. 

The key benefits of Solidity come down to its first-mover advantage, huge network effect, and consequently, good support from a large and active developer community. There are extensive resources dedicated to teaching Solidity and creating decentralized applications. Additionally, there are many forums and platforms where new developers can get help from more experienced Solidity coders.

The open source ethos and transparent nature of blockchains means that this community is well placed to audit smart contracts and provide feedback on any security issues (though this also means that malicious parties can exploit vulnerabilities.)

Solidity includes various security features to help developers write secure contracts, such as function modifiers, which allow checks to be easily added to functions. It also supports inheritance, enabling the creation of modular and reusable smart contracts, and libraries that can be deployed independently and linked to other contracts. Integration with popular development tools and frameworks makes it easier for developers to work on Ethereum-based projects.

#### Downsides

For all Solidity’s popularity and network effect, it does have some significant disadvantages. For developers who are not used to object-oriented programming, it can be confusing, even aside from the need to understand blockchain-specific concepts like gas, state variables, and decentralized execution.

Security can be a problem. While Solidity includes security features, mistakes in coding can introduce vulnerabilities that can lead to loss of user funds from decentralized protocols. Due to the constantly moving nature of Web3, it’s important for developers to stay up-to-date with the latest standards and best practices to reduce these risks. Developers need to be mindful of optimizing their code to minimize gas costs, since inefficient code can result in higher transaction fees. For proficient Web3 developers, using Solidity can result in higher gas costs than other languages. 

Solidity lacks some features that are available in more general purpose programming languages. However, this “limitation” is intentional, since it enhances security and helps prevent certain types of attacks.

### Vyper (Ethereum)

Vyper is another Ethereum coding language, though it’s not as popular as Solidity. It’s a “Pythonic” language, and its similarity to one of the world’s best-known programming languages means it is possible for millions of developers to write concise, human-readable code without the kind of learning curve they might have to work through with other blockchain programming languages.

Vyper was created in 2017 by Vitalik Buterin, one of Ethereum’s co-founders and still arguably the most influential person in the Ethereum ecosystem. While Solidity remains the favorite, Vyper places an emphasis on security and simplicity that make it an increasingly popular choice for EVM developers. 

#### Benefits of Vyper

Because Vyper is a lot like Python, it’s extremely accessible to millions of developers who already know that language – and even those who do not, since Python is easy to learn. As a result, Vyper is the second most popular blockchain coding language for Ethereum and EVM systems.

Just like Python, Vyper is a highly readable language (which has various benefits). Its straightforward syntax and avoidance of some of the complexities found in other languages reduce the risk of introducing errors, and make the code easier to audit – something that contributes to overall safety.

Vyper has a strong emphasis on security in its own right. It restricts various features that might pose security risks, making Vyper code less prone to certain vulnerabilities (including reentrancy attacks). The language is designed to reduce the number of possible ways in which hackers might be able to exploit smart contracts.

One of the more obvious benefits of Vyper for end users is its relative gas efficiency. The language’s design choices mean that code is often cheaper to run. Congestion on Ethereum mainnet, and even some L2s, means that gas prices can rise to uneconomical levels, thus preventing dApps from being used. Therefore, developing dApps in Vyper can have an immediate financial advantage.

#### Downsides

Like any other smart contract language, Vyper has its drawbacks. On the one hand, its relative simplicity is a strength, since Solidity’s complexity can introduce serious vulnerabilities. Vyper reduces the risk of these by removing certain features. However, as a result, it is less powerful and more limiting. Some of Solidity’s advanced features are missing, which can be a drawback for developers who require specific functionalities. It does not have modifiers, class inheritance, and recursive calls, and the programming language is not Turing-complete. Developers who choose to use Vyper will need to figure out how to work around these restrictions.

The widespread use and network effect of Solidity means that Vyper is comparatively less prominent as a blockchain language. Vyper, while gaining attention, has a smaller community and ecosystem. There is less support and fewer developers who are proficient in it (because it’s a simpler language though, this may not be a major problem). There are also Solidity-native tools that are currently unavailable in Vyper. For all of Vyper’s apparent benefits, developers need to decide whether its downsides necessitate a pivot to Solidity’s more comprehensive set of tools.

### Rust (Solana)

Solidity remains the default crypto programming language for EVM chains. For non-EVM chains, Rust has emerged as a popular choice, including for Solana and Polkadot (although it’s also possible to use other languages with Solana, including C, C++, and Solidity). Solana alone has half a million DAU.

One of the great benefits of Rust is that it is used outside the blockchain sphere. It was created in 2006 and has been widely adopted by developers and major software platforms (including Amazon, Discord, Meta, Google, and others).

#### Benefits of Rust

Rust is an efficient and compact language that reduces unnecessary bloat. It is good for producing optimized code, which is ideal for blockchain and crypto programming, where space is at a premium. It’s also known for its focus on security and includes measures that reduce the risk of common programming errors (particularly memory safety – protection from various bugs and vulnerabilities that can arise when dealing with memory access) that may lead to smart contract exploits.

Rust also supports safe concurrency (the ability for different parts of a program to be executed out of order), which is important for Solana since it emphasizes parallel processing. Developers can write concurrent code without needing to worry about race conditions: problems that arise if operations are conducted in the wrong sequence. 

Rust has a growing and active community as well as a wide variety of libraries and tools. The language was created to promote clean and expressive code, making life easier for developers and contributing to code that is easy to read and maintain.

#### Downsides

Rust’s main downside is its learning curve and relative difficulty for developers who are unfamiliar with its lesser known paradigms. Transitioning from other popular languages can therefore require significant time and effort.

Finally, even if Rust is a superior choice to Solidity (a debate for smart contract developers), relatively few blockchains have tooling or support for Rust.

### Haskell (Cardano)

Cardano was built in Haskell, a programming language that was created in the 1980s for teaching, research, and industrial applications. Cardano’s smart contracts are written in Plutus, which is essentially a subset of Haskell.

#### Benefits of Haskell

Haskell is a so-called [“functional” language](https://fluxtech.me/blog/object-oriented-programming-vs-functional-programming/#:~:text=OOP%20uses%20classes%20and%20objects,state%20changes%20and%20side%2Deffects.) that encourages a high level of abstraction and mathematical rigor. This aligns well with Cardono’s research-driven ethos, and it can contribute to code that is reliable and secure. It also lends it to formal verification, a process in which the correctness of code is mathematically proven (again, potentially enhancing security). Haskell’s expressive and concise syntax offers the possibility of cleaner and more maintainable code.

Like Rust, Haskell supports concurrent programming. This allows developers to write scalable and efficient code, making it useful for smart contracts that may need to handle multiple transactions simultaneously.

#### Downsides

Haskell has a reputation for being a difficult language to learn, particularly for developers who come from more popular languages and who might be unfamiliar with functional programming concepts. 

Cardano has a large and active community, but Haskell is only used as a smart contract language within this sole ecosystem (however, this includes tens of thousands of daily active users). As such, usage is limited and the smart contract ecosystem is less mature when compared to other platforms with larger developer communities. Additionally, there is less tooling, documentation, and support for developers.

Lastly, Haskell applications can have higher resource consumption compared to blockchain programming languages designed for more resource-constrained environments. This sometimes makes it less efficient than it needs to be.

### ErgoScript (Ergo)

Created in 2014, ErgoScript is a simplified subset of Scala. Scala is widely employed in the software industry for large-scale applications (including Twitter and Netflix), and it is now being used as a programming language for blockchain. 

#### Benefits of ErgoScript

ErgoScript was designed to create smart contracts using Ergo’s eUTXO model. This extends the functionality of Bitcoin while maintaining a high degree of security and privacy. Unlike Bitcoin’s native script (which does not support loops or complex smart contracts), ErgoScript allows for Turing-Complete applications.

Where ErgoScript shines is with its native support for Sigma Protocols. These enable easy and secure deployment of highly composable cryptographic statements that can be used to build powerful, custom applications, including ring and threshold signatures.

#### Downsides

Scala is a popular language, but it’s not as easy to learn as some others. Use of ErgoScript is also confined to Ergo – for now. [Find out more about the benefits of ErgoScript](https://docs.ergoplatform.com/dev/scs/ergoscript/) for crypto programming, and learn how to build your first dApp on Ergo!

## Comparing Blockchain Languages

It can be hard to compare smart contract programming languages because there are various trade-offs and key differences. However, there are certain criteria that developers may look at:

- **Relevant ecosystems** and breadth of use. Some languages are far more widely used than others (Solidity being the most popular), meaning there is more support, more tools, and they have a longer track record.
- **Complexity of functionality** offered. Some languages offer features that others do not. As was previously mentioned in this article, Vyper is less feature-rich than Solidity and is not Turing complete. 
- **Accessibility.** Some blockchain languages are easier to learn than others – Vyper being one of the easiest, thanks to its similarities with Python. On the other hand, languages like Haskell are more complex and their principles are not as easy to grasp for many programmers coming from other languages. Rust is widely used outside the blockchain sector but can only be used on a few smart contract platforms.

## Select The Right Language For Your Blockchain Project

These five crypto coding languages are just some of the possibilities developers can choose from when creating dApps. In practice though, the number of choices does not mean developers can have their pick of any of them. Building smart contract applications is not like creating regular Web2 applications (where many different programming languages might do the job) and the choice may have more to do with the personal preferences of developers.

The first factor for deciding which language to use is dependent on which blockchain platform the dApp is being built. Different blockchains support different coding languages, so there is no “one size fits all” option. If you have already decided on a blockchain ecosystem, this will restrict the number of coding languages you can use. For example, if using Cardano, you are basically restricted to Plutus. If using Ethereum or an EVM-compatible platform, then you have the option of Solidity or Vyper (as well as some lesser-known languages).

If you have not yet decided on a blockchain platform then there is a wider choice. In this case, the decision may have more to do with which languages have the best support, or which ones are similar to programming languages you already know. All things being equal, Solidity and Vyper probably have the best support in terms of a developer community and tooling, and the EVM ecosystem offers by far the largest arena in the blockchain space.

Alternatively, if you are already familiar with a programming language then it might make sense to select a crypto coding language that is somewhat similar. If you know JavaScript, then Solidity probably makes the most sense. If you are proficient in Python but not so sure about JavaScript, then Vyper might make more sense. Rust is similar to C or C++. ErgoScript is based on Scala, so if you know that language and are simply looking to dip your toes in the water and play around with Web3 dApps, it may be the most viable option. 

#### Conclusion

Developing dApps for Web3 can be very different from Web2. Aside from needing to understand blockchain-specific concepts (including gas/transaction fees), there are different languages that can be used. Each blockchain platform has a limited number of crypto coding languages that are supported (sometimes only one), meaning that developers are often restricted in their options.

Moreover, there are significant trade-offs to consider when selecting a blockchain platform and language to work with. Smart contract languages differ widely in terms of their network effect, tooling, and levels of support. They have varying levels of complexity and functionality (and consequently different security requirements). Some are more accessible than others, taking differing amounts of time to learn, and they may be more or less similar to other popular programming languages. Finally, the size of the ecosystems within which they can be used differs considerably.

All these factors and more make selecting a crypto coding language something that developers should carefully consider. The success of their dApp and the services it links to may hinge on the strengths of one particular coding language.



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The Best Blockchain Languages For Blockchain Development

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Everything You Need to Know About Proof of Work

What a year it has been for Ergo! Grassroots initiatives and open source tooling continue to drive community growth, development, and new ecosystem dApps. The blockchain is demonstrating an all-time high for viable products, and Ergo as a hub for cross-chain interoperability is just around the corner. As markets start to show signs of growth again, Ergo has been steadily building to this moment, and it is poised to reach new milestones in the years to come. Let’s take a look back at some of the new tools and products 2023 yielded for the Ergo Platform.

## Rosen Bridge - The Future of Blockchain Swaps

Of all the projects on Ergo, few have garnered the hype and excitement that [Rosen Bridge](https://rosen.tech/) has recently brought to the ecosystem. It is one the most anticipated releases, and after more than a year in development, it has finally been deployed on the mainnet. The Rosen Bridge is a decentralized, secure bridge that allows for the bridging of tokens between different blockchains. It is open source and functions on a system of guards on watchers that watch for and approve transactions. Currently, it is being deployed to enable native token swaps between Ergo and Cardano, but the roadmap includes plans to facilitate bridges to Ethereum, Bitcoin, Dogecoin, and Binance Smart Chain. 

## ErgoHacks

The year featured two of Ergo’s flagship hackathons. These two ErgoHacks were inspired by the themes of privacy and future adoption of the blockchain, and they took place in February and November, respectively. Several notable projects came out of these Ergohacks, including metamask wallet integration, analog atomic swap market, hodlbox, Ergo tizen, SigmaO and Lithos protocol, to name a few.

ErgoHacks are a pinnacle of the ecosystem, and they offer an opportunity for developers and entrepreneurs to compete for prizes from the Ergo Foundation and other community projects. They are an important catalyst for development on the blockchain, and many of Ergo’s most popular dApps and tools were born from previous ErgoHacks.

## Oracle Pools V2

[Oracle pools V2](https://ergoplatform.org/en/blog/Ergo%E2%80%99s-Oracle-Pools-V2-An-Innovative-Design/) offer enhanced data reliability by utilizing decentralized oracle pools. These pools consist of oracles which aim to reach a consensus on data sources and then post the data to the blockchain. This collaborative approach improves data reliability. More specifically, after an epoch, the data points are averaged (excluding outliers) to produce a finalized datapoint.

Oracles play a crucial role in crypto ecosystems because they help dApps to interact with real-world events and execute smart contracts using real-time data. They also boost dApp security by verifying and authenticating external information.

## NiPoPoWs

NiPoPoW stands for Non-Interactive Proof of Proof of Work. [NiPoPoWs](https://docs.ergoplatform.com/dev/protocol/nipopows/) are a blockchain compression technique that allow super light clients to sync to the blockchain with less than 1MB of data. This immense reduction of data also essentially produces a reduced technological requirement, enabling more users to access Ergo and crypto technology. NiPoPoWs will allow devices with limited technology, such as flip phones, to operate with limited data service, and achieve the same security level as a full node. Users have deployed NiPoPoWs this year to sync nodes with lightning speed. However, speed is not the only thing that NiPoPoWs have improved with syncing nodes. Users are able to use lite clients to effectively run nodes, reducing the necessary infrastructure to make running nodes more accessible. This lowers the barrier to entry so that the ordinary citizen can run their own node to support decentralization. 

## DexyGold - Algorithmic Gold Stablecoin

DexyGold is a gold-pegged, algorithmic stablecoin that utilizes oracles on Ergo. [DexyGold](https://twitter.com/Dexy_Ergo/status/1651835830057721856) uses one token and two protocols. An on-chain AMM is used for trading $DexyGold against $ERG, and an algorithmic bank intervenes when the market price differs from the target price set by an oracle. The bank mints Dexy tokens by selling them for $ERG while using $ERG reserves for intervention. To learn more, please see the DexyGold [documentation](https://docs.ergoplatform.com/eco/dexy/). 

## Yield Farming on Spectrum DEX

Yield farming on a decentralized exchange (DEX) involves users providing liquidity for specific trading pairs by depositing their cryptocurrencies into liquidity pools. In return for contributing to the liquidity, users receive rewards in the form of additional tokens. These rewards often include the exchange's native governance or utility tokens and are distributed automatically through smart contracts. Yield farming on DEXs allow participants to earn passive income while actively participating in the decentralized finance ecosystem. Instructions on how to participate in yield farming on Spectrum can be found [here](https://docs.spectrum.fi/docs/user-guides/yield-farming/).

## Duckpools - Pooled Lending

The future of decentralized finance requires the ability to lend and borrow on the blockchain. [Duckpools](https://www.duckpools.io/) is a collateralized pool lending protocol on Ergo that allows users to deposit their $ERG (or native tokens) into a pool to earn passive rewards. Users can both borrow and/or lend on this platform. Throughout the last year, in addition to launching their platform, Duckpools has been developing tutorials and guides for prospective customers.

If you are interested in accessing this unique lending protocol on Ergo, the following links may be of assistance:
- [Duckpools lending](https://www.youtube.com/watch?v=xnzZEpcdCuA)
- [Risk Assumptions](https://medium.com/@hello_68287/a-comprehensive-risk-analysis-lending-with-duckpools-03b646c14291)
- [Duckpools Github](https://github.com/duckpools)

## SigmaFi - Peer-to-Peer Lending

Similar to Duckpools, [SigmaFi](https://sigmafi.app/#/) is another borrowing and lending dApp on Ergo. However, SigmaFi is designed for peer-to-peer (P2P) lending rather than pool lending. There are no middlemen and the code is open source. Interacting with this dApp is as simple as requesting a loan and/or agreeing to fund a loan. Interest rates and term lengths can be easily set and agreed upon by participating parties. 

## Paideia - DAO Software Suite

[Paideia](https://www.paideia.im/) is a decentralized autonomous organization (DAO) software suite. It recently launched its public beta and is now undergoing stringent testing of its governance proposals. Paideia brings fully decentralized governance to Ergo projects through smart contract enforcement. This powerful DAO suite has the potential to put an end to manipulated voting, groupthink, and discord voting systems. 

## Fleet SDK - An Ergo Software Development Kit

Nautilus wallet creator, Captain Nemo, provided a vital tool for onboarding new developers to Ergo. Developers now have the opportunity to leverage two of the world's most widely used programming languages, JavaScript and TypeScript, when building dApps on Ergo. This coding flexibility combined with Ergo's open-source nature, significantly reduces the entry barrier for development on Ergo. This inclusive approach holds the potential to encourage widespread adoption of Ergo by offering developers familiar tools and fostering a more accessible and diverse development ecosystem. [Fleet SDK](https://ergoplatform.org/en/blog/Build-on-Ergo-with-Ease-Fleet-SDK0-v0.1.3)

## Lilium - NFT Minter

Lilium is a mass NFT minter and sales distributor protocol. This tool allows artists and project leads on Ergo to produce and sell big collections without the need to hire additional developers. With Lilium, users simply input their collection’s metadata, selling price point, date, and royalty fees. As blockchain technology grows, the barrier to entry needs to continue to lower for those without coding and/or technical skills. Lilium is another excellent example of a user-friendly tool on the Ergo platform, and it is ready now to assist future artists and NFT creators with their projects.  

## Chaincash - Becoming the Bank

Chaincash has long been a project of Ergo’s founder, Alex Chepurnoy. With Chaincash, the intention is that the ordinary citizen can serve as their own bank and print cash. Users can decide if they want to accept cash issued by one’s bank based on one’s reserves and/or whether you are trusted by them. 

Chaincash is coming soon to Ergo, and it is quite a revolutionary way of approaching DeFi. For those who would like to explore this idea more, Alex Chepurnoy has created a Chaincash [video](https://www.youtube.com/watch?v=NxIlIpO6ZVI) that offers further details.

## The Future and Beyond

2023 was an incredible year for Ergo. Rosen Bridge is opening the blockchain to new markets without the need for a centralized exchange, and DeFi products are flourishing in the ecosystem. Ergo is ready for the masses and what that future holds. As we look forward to 2024, it will be exciting to see how all of these tools and products can improve the lives of the ordinary citizen. What kinds of new dApps may arise from cross-chain interoperability? What sorts of organizations will thrive from Paideia’s DAO software suite? Will Chaincash enable a new model for possibly banking the unbanked? 

As events unfold, we will be here to relay all of the ecosystem’s exciting updates! Stay in touch and up to date with all things Ergo on [Discord](https://discord.gg/ergo-platform-668903786361651200), [Telegram](http://t.me/ergoplatform), [Reddit](https://www.reddit.com/r/ergonauts/), and [Twitter](https://twitter.com/ergo_platform).


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Ergo: Year in Review 2023

Last month, the Ergo Foundation held the latest hackathon in their series of ErgoHacks. [ErgoHack VII: The Future of Finance](https://ergohack.io/), encouraged applicants to design new tools and products with a particular focus on useful and powerful financial tools as well as increased adoption of the Ergo blockchain and ecosystem.

All of the applicants submitted excellent proposals, and the innovative ideas developers put forth is a testament to the consistently high level of unique innovations the Ergo community has come to expect from the ecosystem. After much deliberation and careful consideration, the ErgoHack jury of judges have made their decisions, and in tandem with votes held by the Ergo community, the following projects were selected as ErgoHack VII prize winners:

**1st Place and 9000 SigUSD**: Analog Atomic Swap Market
**2nd Place and 5000 SigUSD**: Hodlbox
**3rd Place and 4000 SigUSD**: Ergo Poor Man’s Wallet
**Special Prize for New Wallet Integration and 400 ERG**: Metamask Integration

## Analog Atomic Swap Market

Community developer, Analog Ergo (Deathgripson), submitted a proposal to implement an atomic swap web interface on Ergo. The inspiration behind Analog Atomic Swap Market is to offer a platform for cross-chain atomic swaps. It is a cryptographic protocol that will enable multiple parties to execute exchanges without trusting each other, relying on off-chain and on-chain scripting conditions. For more information, interested parties are encouraged to explore this project’s [GitHub](https://github.com/dzyphr/AtomicAnalogsLocalWebUI).

## Hodlbox

[Hodlbox](https://hodlbox.xyz/) is an open source dApp offering a new avenue for gamification in the Ergo ecosystem. It is a decentralized DeFi game whereby users deposit $ERG in a hodlbox. Once deposited, it is then locked for a period of time, forcing the participant to hold their $ERG long term. The inspiration for this game is as obvious as it seems: storing $ERG long term. The gaming aspect contains variables that discourage participants from selling early. By interacting with this game, users will pay a nominal fee of 1%.

## Ergo Poor Man’s Wallet

“[The Ergo Poors Man's Wallet](https://github.com/epmw/epmw/) (EPMW) project is a simple, DIY, low-cost hardware wallet for [the] Ergo cryptocurrency, which was created during ErgoHack VII hackathon from the Ergo Hackathon series in October 2023. The wallet is designed to be affordable, with a total cost of around $10, including shipping cost of components to Europe.” This wallet will offer a new budget friendly option for those who do not want to use a Ledger or other cold storage options.

## Metamask Integration

Ergo developer, Captain Nemo, and the Nautilus wallet team have implemented Metamask integration on Ergo. Using the following [video](https://twitter.com/NautilusWallet/status/1713730734437883973), users can learn how to integrate their Ergo wallet with Metamask. This is a significant milestone because it allows users from other ecosystems to access their $ERG in this popular mainstream wallet. The Nautilus team hopes that this new route of access will make it much easier for people to perform tasks like atomic swaps as well as simplify bridge integration with different blockchains.

Even though these particular projects are receiving prizes, all of the participants presented worthy proposals for consideration. The Ergo [community raffle](https://ergoraffle.com/raffle/show/b0af5ddb58f2a7d96049d4278d53b56773624e0c46e0742972ae8ecc77af3e91) raised 1000 ERG as a community prize, and 400 ERG of that amount is being paid to the Metamask Integration project as the prize. However, the remaining funds (600 ERG) are going to be evenly dispersed amongst the other ErgoHack VII participants that did not receive a prize. If you missed previous ErgoHack VII updates, or are new to Ergo, you can read all about ErgoHack VII’s contestants in the Ergo Foundation [blog](https://ergoplatform.org/en/blog/Ergohack-Participants-The-Future-of-Finance/).


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ErogHack VII Results

## Sub Blocks Will Allow For Blazing Fast Transaction Confirmations

What kinds of metrics define the potential of a blockchain? With the Ergo Platform, the blockchain has prioritized open source development, decentralization, and protocol security as the basis of a network for smart money. Within the industry however, we often hear a chorus of influencers touting the need for blazing fast transaction speeds (regularly referred to as TPS, or transactions per second).

Being the fastest blockchain was not the initial priority in the development of Ergo. Its builders deliberately took a measured approach to testing and designing a next generation eUTXO Proof of Work network with robust security features. The architecture of this blockchain was also constructed to be scalable and adaptable in order to satisfy the evolving needs of dApp designers, developers, and users.

Now that the framework has been time tested and the ecosystem is demonstrating accelerated dApp development and deployment, Ergo has begun to take significant strides in addressing the scalability of the blockchain. Ergo’s eUTXO model has already proven that it can process thousands of outputs in one transaction, but is there a way for the network to decrease the time between block confirmations? If Ergo could achieve this, the network could handle a significantly higher load and process even more transactions for an expanding user base.

## The Newest Innovation: Sub Blocks

Sub blocks are essentially block candidates with a much lower difficulty threshold than regular blocks. This means that sub blocks can be generated much faster than regular blocks. “[If a [sub] block has 1/128th of a regular block’s difficulty, we could expect one [sub] block to be generated per second on average](https://docs.ergoplatform.com/uses/sidechains/weak-blocks/#references).”

One second. That is very fast.

This new innovation will be a separate protocol that can be utilized by dApps, thereby allowing them to use this tool if needed. The use of sub blocks relies on Ergo’s deployment of side chains. Through side chains, a dedicated chain can perform the specific task of processing sub blocks, thereby reducing network data/load and improving the efficiency of the blockchain. The application of side chains not only presents the opportunity to make the blockchain even faster, it also opens the gate to another revenue stream for miners.

With the imminent launch of Rosen Bridge and Ergo’s booming ecosystem, implementing potential super fast block times only adds to the attractiveness of the Ergo Platform. The blockchain is open source and decentralized, designed to be accessible to all. Ergo’s approach to _build it better, not faster_ continues to demonstrate why it is the blockchain the industry desperately needs. 

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Ergo’s Newest Advancement: Sub Blocks

## NFTs and Real World Utility

The tokenization of real world assets through NFT technology has started to become more commonplace and it has revolutionized how we view NFTs in the industry. Some of the most common examples include the tokenization of real estate via fractional ownership and the ability to offer proof of ownership of real-world assets. Projects like Palmyra DEX are even working on the tokenization of commodities, such as tea and gold. 

The tokenizing of real world assets can assist business owners in digitizing their work in a globally accessible way. NFTs are able to leverage their own technology (proof of unique ownership) with smart contracts to securely authenticate the purchase of tokenized assets, thereby reducing the potential of scams.

## Global Accessibility

One unique feature of this technology is that it has the ability to significantly expand the reach of market access. It has the potential to foster communication and collaborative partnerships with people all around the world in an instant. With internet access and a computer or smart device, NFT technology can immediately connect businesses to the market and offer tokenized assets to customers. 

NFTs are also vital to the new age of trade financing. In a recent [article](https://www.lcx.com/nfts-and-real-world-assets/#:~:text=The%20transformative%20potential%20of%20NFTs,reliability%2C%20provenance%2C%20and%20transparency.) about NFTs and real world assets, the authors state that:

 “When it pertains to trade financing, NFTs can be utilized to increase the process’s efficiency and security. An NFT may, for instance, represent a particular shipment of products. This use case facilitates the monitoring and authentication of an item throughout the supply chain. Important trade finance data, such as certificates of credit and invoice information, can be effectively embedded into the token. This creates a permanent record of the trade. It serves as evidence that is readily accessible and verifiable by all parties involved. In turn, this facilitates the streamlining of the trade process, thereby reducing fraud and enhancing the integrity of finance for trade transactions.” 

### Conclusion

NFTs have the potential to revolutionize the world when it comes to real world assets. Through specific utility, such as smart contract based transactions, fractional ownership, authenticity, fraud prevention, royalties, and much more, NFTs have the ability to bring a new transparency to the trading of commodities and other assets. With ErgoHack VII just around the corner, what sorts of NFT tooling and products would you like to see developed on the Ergo blockchain?


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NFTs Beyond Art: Tokenizing Real-World Assets for Global Accessibility

One of the greatest hurdles for mainstream adoption of blockchain technology is firmly rooted in user experience and user interface. For those who are familiar with DeFi (decentralized finance), dApps (decentralized applications), and blockchain wallets, you no doubt have memories about the learning curve you experienced when first attempting to use this technology.
 
Traditional finance (banks, central banks, loan providers, government agencies, etc.) holds a significant advantage over blockchain technology. It is a legacy system, and as such, it does not need to convince people to use the products and services of that system. People are forced to participate in traditional finance in order to function in our society – we are born into it. You need a bank account, tax identification number, and a healthy credit score if you are going to store your money/income, pay your taxes, and purchase a house, car, or any other item that might require financing.
 
Blockchain and the emergence of DeFi offers an opportunity to disrupt the legacy systems of traditional finance and empower financial independence for all. Traditional finance is riddled with gatekeepers who decide how, where, and when you can use the money you store in a bank account. There can be limits on transactions and/or special requirements for access to investment opportunities. You are probably unaware of it, but you do not have full control over your money and how you can use it.
 
DeFi creates an opportunity for people to participate in a financial system without gatekeepers or third-party intermediaries. Smart contracts and dApps allow anyone to borrow and lend money with ease (assuming the protocols have been vetted). All they need is a blockchain wallet.
 
The industry has not yet achieved a high level of interoperability, so depending on the blockchain(s) you use, you may have several different interfaces. These interfaces are blockchain wallets, and they are the gateway to unlocking how you use your money in DeFi. For those of you who are new to cryptocurrency, you can view a blockchain wallet as a bank account, except that you are the sole custodian of that wallet. If you follow basic security practices, no other entity can gain access to your wallet on the blockchain.
 
The future adoption of blockchain and DeFi rests squarely in user experience and interface. Blockchain wallets need to be easy to use and offer cross chain interoperability. If there is to be any future for mainstream adoption of this technology, that needs to be a priority. Otherwise, the average citizen who does not understand this technology will be hesitant to use blockchain. It is probably a safe bet that the average person does not understand how a debit card (or maybe even the internet) works, but it requires very little effort for them to adopt and use this technology.
 
Developers need to find creative ways to link blockchain wallets with traditional finance systems, so that they can more easily onboard people from legacy systems. If it is easy to set up and use, and offers better products and tools, people will probably not care whether they are using blockchain or not. Simplicity and ease of use are enough to satisfy the criteria for the instant gratification that dominates consumer behavior in the world. So, how do we build this future?
 
As an open source and fairly launched blockchain, Ergo is uniquely positioned via its technology, and the Ergo Manifesto, to address the shortcomings in worldwide financial inequity. The non-profit Ergo Foundation hosts regular hackathons that encourage the development of tools and products that seek to make blockchain technology easy to use, secure, and transparent. With the next ErgoHack just around the corner, the Ergo Foundation is encouraging developers to consider looking at wallets and mainstream adoption. The Ergo Platform has several excellent wallets, but they work solely on Ergo. Can developers find ways to bridge the Ergo blockchain to popular industry wallets, such as Trust Wallet and/or Metamask? Can new technologies be designed that further decrease the technical entry barrier so that the average citizen is more inclined to use blockchain tools?
 
If you are a developer who has been thinking about how to address some of these issues, then you are a prime candidate for participation in [ErgoHack VII](https://ergohack.io/). These events have yielded some of the most widely used technology on the Ergo Platform. With the imminent release of [Rosen Bridge](https://ergoplatform.org/en/blog/Ergo%E2%80%99s-Rosen-Bridge-A-New-and-Better-Way-to-Interact-Cross-Chain/), Ergo is positioned to lead the industry forward with secure cross chain interoperability. When technologies that increase mainstream adoption catch up to the level of development on the blockchain, we will see a new era of blockchain usage.
 
Join [ErgoHack VII today](https://ergohack.io/register/)! Submissions are open until Oct. 13, 2023, and the event will run from Oct. 13-15.


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The Digital Evolution of Money.
Exploring Digital Wallets: The Gateway to Mainstream Adoption

Since the advent of Bitcoin nearly fifteen years ago, the crypto movement has grown to include many elements beyond simply sending, receiving, and mining coins. There has been much excitement around some of these new properties in recent years. Millions of users were swept up in the NFT boom of 2021. Millions more were perhaps disappointed by the unfulfilled promise of life in the metaverse. Innovative ideas continue to emerge today: supply chain verification, digital identities, gaming, telecomm, and more. These technologies are certainly moving the space forward and driving significant activity in the cryptoverse. However, no single aspect of crypto tech has as much potential to change the world as Decentralized Finance. 

DeFi sets itself apart from other areas of innovation in that the traditional monetary system is both a fundamental pillar of society and extremely broken. The opportunity to change the way people use and access money has much broader implications than changing the way they buy and sell houses or verify ownership of a digital image. This is especially true in the face of severe inequality, rampant abuse of power, and protectionism that excludes and oppresses literally billions of people. Thus, development in the DeFi space presents the Ergo community with its best opportunity to make a lasting impact on the world and realize the vision set forth in [The Ergo Manifesto](https://ergoplatform.org/en/blog/2021-04-26-the-ergo-manifesto/). 

As a leader in blockchain design and development, Ergo is well positioned to provide fair, transparent, and decentralized financial tools to people across the world. This mission begins with financial inclusion. The historical and technological barriers to entry are being removed through the development of easily accessible and permissionless financial tools. Ergo’s DeFi ecosystem makes transacting, saving, investing, and trading available to anyone with an internet connection. Technologies such as [NiPoPoWs](https://ergoplatform.org/en/blog/2022-04-01-nipopows-on-ergo-innovations-in-blockchain/) and [Autolykos](https://ergoplatform.org/en/blog/Ergo-and-the-Autolykos-Consensus-Mechanism-Part-I/) ensure that nothing more than consumer hardware is needed to operate with the highest security available in the space. An over-the-counter graphics card is all that is needed to mine. Nothing more than a modest android device is required to run a full node. 

It is only through this uncompromising commitment to decentralization that an open and fair blockchain network can emerge. Ergo’s ethic of transparency creates an environment in which users no longer have to trust each other to safely interact with the blockchain. Many dApps across the ecosystem share this value and foster a culture of open source development. This dramatically reduces both the technological and counterparty risk users face when storing and exchanging value online. By enabling secure and private P2P interactions in this open and decentralized network, Ergo has the ability to deliver true financial sovereignty to everyone. No more unnecessary middle men or censures. No more sacrificing ownership and independence for convenience. 

Ergo’s DeFi ecosystem is here. The cornerstones are in place and further development is continuous. It is only a matter of time before activity on the chain begins to approach its true potential. There are currently many Ergo-centric versions of popular DeFi applications found across the crypto space, with many unique applications as well. [SigUSD](https://sigmausd.io/#/) offers a proven algorithmic stablecoin. [Spectrum Finance](https://spectrum.fi/) provides a truly decentralized trading experience, with LP and Farming opportunities for users to earn. [Duckpools](https://www.duckpools.io/) has launched a pooled lending application, allowing users to lend and borrow assets to earn interest, create leverage, short, or hedge against volatility. [Sigmafi](https://sigmafi.app/#/) offers a unique P2P collateralized bond service, and [Sigma’O](http://sigmao.cc) creates an options market and decentralized orderbook. [Ergopad](https://www.ergopad.io/) has created a seamless launchpad for new projects to ICO, with whitelisting and vesting contracts to ensure a smooth experience for investors. There is even something for the DeFi Degens with HodlCoin, a simple, yet exciting, financial game in which users compete to see who can hodl their coins the longest. On top of all this, the [ErgoMixer](https://docs.ergoplatform.com/eco/ergomixer/) provides users an added layer of safety by ensuring that they can operate privately. This reduces the threat of others tracking activity to attack users digitally or physically, and furthers Ergo’s mission of enabling financial freedom to all. 

There are, of course, many more applications currently in development that promise to bring additional opportunities and users into the ecosystem. Perhaps the most anticipated of these is the [Rosen Bridge](https://medium.com/tap-in-with-taptools/rosen-bridge-a-trustless-ergo-centric-second-layer-authentication-bridge-39ab7ee132be). This novel bridge infrastructure will enable users to transfer tokens between the Ergo and Cardano blockchains. While this is the first instance of the bridge, it can and will be used to connect many other blockchains. In fact, Rosen is capable of connecting any two chains that have multisig wallets, even if no tokens are being sent to or from the Ergo blockchain itself. 

Another imminent release is the DexyGold protocol. This is a new stable coin design that will be pegged to the price of gold. [Dexy](https://docs.ergoplatform.com/assets/pdf/dexy.pdf) differs from the SigUSD stablecoin in that it is not simply overcollateralized and incentivized with a reserve token, but operates with a single token being bought, sold, minted, and burned between two protocols. This protocol can and will be used to create additional stable coins, perhaps to include commodities such as oil, copper, or uranium. This protocol will make use of yet another new release, [Oracle Pools v2](https://ergoplatform.org/en/blog/Ergo%E2%80%99s-Oracle-Pools-V2-An-Innovative-Design/). This next iteration has improved tokenomics to incentivize the creation and maintenance of more oracles, providing a more stable and resilient DeFi ecosystem. 

A fourth application, and potential juggernaut in the ecosystem, is [ZenGate Global](https://www.zengate.global/). This project aims to provide micro, small, and medium sized businesses with the infrastructure required to tokenize their assets and leverage the benefits of blockchain technology. The first offering from ZenGate will be a commodity exchange, known as [Palmyra](https://www.zengate.global/products/palmyra-comdex). This will allow small farms to participate in the global market like never before, offering supply chain verification, product traceability, and funding opportunities like only crypto can. 

### Conclusion

All in all, the Ergo ecosystem is booming. The scope of everything being developed here is beyond what can be described in a single article. In fact, the number of new DeFi products has necessitated yet another tool to be developed, [Crux Finance](https://cruxfinance.io/). This tool will enable users to track their crypto portfolio and interact with many of the Ergo DeFi applications all in one place. Look for Crux to release their first product at the start of the new year, and in the meantime, keep an eye on the [Ergo Blog](https://ergoplatform.org/en/blog/) and explore [Sigmaverse.io](https://sigmaverse.io/) for exciting new announcements, developments, and opportunities in the Ergo ecosystem. 


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Building Bridges: The Role of DeFi Protocols in Mass Adoption

For many during the last century, the promise of financial security in North America was through employment, the acquisition of property (a house), and the expectation of a pension to sustain you in retirement. After the Second World War, these were the ideals that were sold to the lower and middle class.

Money is a construct that we have all been born into. We have inherited the traditional economic models of our ancestors, and our governments and central banks typically tweak that model when the need arises (wars, market crashes, inflation, etc). Ideally, the people that hold the power in these institutions are mere custodians who are supposed to be responsible for bettering the lives of their citizens. However, given all of our societal and technological advancements in the last century, the traditional financial system appears more broken than ever. Money and the legacy stakeholders of the financial system continue to be gatekeepers to your financial prosperity and independence.

Today, wealth inequality is greater than ever. A university education has never cost more in North America. Inflation continues to spiral out of control, and central banks are inclined to maintain or further raise interest rates. Our governments have printed money at will, and the devaluation of national currencies is confirmed by their diminishing purchasing power. Even when our governments had an opportunity to learn from past mistakes, it seems that those very same gatekeepers continued to set policies that have increased the wealth inequality gap.

Our society has been on a crash course towards a money revolution. With the advent of computer technology, the previous limitations of various societal constructs can be tested. When humans are pushed to the limit, creative minds will find new paths. Such was the case after the 2008 housing market crash when Satoshi Nakamoto introduced the world to Bitcoin.

[Bitcoin](https://en.wikipedia.org/wiki/Bitcoin) offered the world a peer-to-peer payment system with a fixed (and unalterable) money supply, where all transactions are verifiable and immutable. Built on the UTXO model blockchain, the network is maintained by computers around the world that mine Bitcoin’s Proof of Work algorithm. As a result, the network is decentralized and is designed such that it can not be controlled by a single entity. 

Fast forward over a decade and blockchain technology has grown significantly to create a whole new asset class, known as cryptocurrency. Since Bitcoin, this new financial sector has evolved to be much more than a peer-to-peer payment system. Blockchain developers now strive to create smart contract platforms that offer solutions beyond the financial industry. Decentralized finance (DeFi) has the potential to unlock financial independence with products built on smart contracts. Instead of banks gatekeeping access to liquidity, you can participate in liquidity pools on decentralized exchanges and earn interest from loans through numerous decentralized applications (dApps). Essentially, through the power of smart contracts, you can join the banking class and put your money to work for you - all without the need for a 3rd party intermediary. 

Not since Bitcoin has there been a fairer blockchain launch than Ergo. [The Ergo Platform](https://ergoplatform.org/en/) is built to be a blockchain for everyone where smart contracts empower the average citizen to take control of their money and be free from financial oppression. Ergo is not just a financial tool, it is a social movement. It is a community of free thinkers and dreamers that believe in open source design and the ability for humans to collectively better the world through honest and transparent technological advancements. Ergo employs the time tested UTXO design that Bitcoin is built upon and incorporates smart contracts through its native programming language, ErgoScript. The result is an incredibly powerful and robust blockchain that prioritizes security above all else.

If this is the first time you are reading about the Ergo Platform, we encourage you to take a look [under the hood](https://ergoplatform.org/en/blog/) of this powerful technology. If you are a developer or entrepreneur and are curious how your idea and/or product will benefit from the Ergo blockchain, you are encouraged to participate in the next [ErgoHack from October 13-15, 2023](https://ergohack.io/register/). This competition will focus on the development of tools, products, and dApps that further the adoption of Ergo’s technology as it relates to mainstream technologies.

Stay tuned for the next article in our discussion on the Digital Evolution of Money, where we will explore digital wallets and the ways they can interact with the blockchain. 


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The Digital Evolution of Money. Unraveling the Shift: From Traditional Currency to Digital Assets


In the ever-evolving landscape of technology and the global economy, decentralized finance has emerged as a revolutionary force that holds the potential to reshape the very foundations of our monetary systems. DeFi utilizes the transformative power of cryptocurrency to deliver a new era of fairness, transparency, accessibility, and individual sovereignty. Like never before, individuals from all walks of life, from any place on earth, can participate equally in the global economy. With only a modest device and an internet connection, any person can take responsibility for their own financial wellbeing, without the threat of undemocratic control and surveillance that is now prevalent across the globe. 

The traditional financial sector has long been dominated by established banks and institutions, controlling the flow of money and wielding authority over our economic lives. Most people are at the mercy of opaque processes and arbitrary decisions that are made behind closed doors. However, the majority of these institutions have not been elected and they rarely face justice for their transgressions. The 2008 financial crisis, for example, highlighted the fragility of centralized systems, exposing how a handful of institutions could jeopardize the livelihoods of millions. More recently, the US government made the choice to print over 25% of its money supply in response to the COVID-19 pandemic. Nobody voted on this issue, but now we are all facing the reality of rampant inflation and high interest rates, with the developing world bearing the brunt of this ordeal. Unsurprisingly, no criminal charges have been levied against any party involved in either event for their irresponsible, if not nefarious, behaviors, and very little is expected to change.

Beyond the unfair practices that exist within the financial system, this legacy infrastructure has also excluded billions of people from accessing basic financial services. Individuals from around the world are left with no choice but to use currencies that are manipulated, devalued, and unstable. Their governments exercise capital control to trap them within this environment; meanwhile, the larger governments of the world apply prohibitive regulations that do not allow these people to participate in the world's largest stock exchanges. Being forced to keep savings in a failing currency is enough to ruin any person, not to mention the many millions of people who do not have access to banks or functioning financial institutions of any kind. 

At its core, DeFi seeks to democratize finance by increasing transparency, removing intermediaries, and placing control directly in the hands of users. Built on an open and auditable blockchain network, DeFi enables users to verify transactions, contracts, and protocols in real time. This inherent transparency not only instills trust but also levels the playing field, allowing anyone with an internet connection to participate in and benefit from the global financial ecosystem. By offering borderless access to open source and decentralized financial tools, the Ergo ecosystem offers a myriad of opportunities that transcend the traditional confines of the financial system. In a world where banks can freeze accounts and governments can impose Orwellian levels of control, Ergo’s mission is to flip this script, and spark a transformative movement towards self-sovereign empowerment. 


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Beyond Banks: How Decentralized Finance is Reshaping the Financial Sector

Until recently, ownership of an asset referred to physically owning something or at least having something written on a piece of paper that was representative of said ownership. With the seemingly endless digitization of nearly everything these days, the concept of ownership has begun to change in a revolutionary way. 

## What are NFTs?

NFT stands for non fungible token. A [non fungible token](https://en.wikipedia.org/wiki/Non-fungible_token) is “a unique digital identifier that is recorded on a blockchain, and is used to certify ownership and authenticity. It cannot be copied, substituted, or subdivided. The ownership of an NFT is recorded in the blockchain and can be transferred by the owner, allowing NFTs to be sold and traded.” Depending on the blockchain, it is given a sort of unique token identification number. This is important because if someone decides to attempt to sell an NFT that looks identical, the unique token identification number will confirm which one is real and which one is fake. 

## Why are NFTs Revolutionizing Ownership Within the Digital World?

Within NFTs, there are many layers of never before seen technology that are not only changing the way people own assets, but also changing the way they are bought, sold, and transferred. As was alluded to earlier, one of the most important technological aspects of NFTs are token IDs. This aids in preventing fraudulent acts when buying, selling or transferring an asset from one person to another. For example, a common scam is the selling of fake concert or sports tickets. Bad actors will often stand outside of a stadium and offer to sell discounted tickets to a show or event. After purchasing a ticket and reaching the ticket gate to enter the event, people find out they were sold a fake ticket that looked exactly like the real one. With NFT technology, this is preventable because tickets that are sold with a unique identification code (mint address on Ergo) will immediately distinguish a real ticket from a fake. 

There is also the concept of royalties within NFTs. Most NFT technology supports royalty payments when assets are resold, thereby offering an additional revenue source for an NFT creator. Smart contracts embedded in NFTs enable the process of distributing royalties when an asset is resold, ensuring that artists profit from the rising value of their creations. 

## Speculation on NFT Mass Adoption and Future Utility

What potential use cases could NFTs have on a global scale? One of the biggest areas of conversation is the digitization of real estate. NFTs can potentially provide the real estate industry with significant benefits, such as the simplification of transactions, facilitating fractional ownership, and offering easier ways to buy and sell properties globally. The fractional ownership of real estate through NFTs is already being executed by an NFT project on Cardano called [Platypus Cyberpunks](https://whimsy.gitbook.io/paddle-pond-papers-1.0/platform/introduction).

The digitization of real estate involving NFTs is extremely intriguing but does have potential drawbacks due to potential smart contract bugs or computer hacks. There may also be regulatory pushback and legal issues due to the lack of clarity on security laws in certain jurisdictions around the world. Nonetheless, NFTs offer a unique way of handling real estate ownership in the future if these issues can be worked out. 

Another use case of NFTs is the tokenization and traceability of commodities, such as tea or gold. This is currently being explored by a project on Ergo called [zenGate Global](https://www.zengate.global/). The COO of zenGate, Sam Lambert, states that “The tokenization of real-life assets is the next evolution for NFTs. Through this, we will see the next wave of customers on boarded from outside the blockchain industry.” 

The zenGate team [states](https://medium.com/@zenGate/the-benefits-of-non-fungible-tokens-nfts-in-the-supply-chain-of-commodities-841bc50d9c9d) that “NFTs can [also] be used in the supply chain of commodities to represent physical assets such as metals, minerals, and agricultural products. Each NFT represents a specific asset, and its ownership can be transferred on the blockchain. This means that the authenticity and ownership of the asset can be verified at every stage of the supply chain, from production to consumption. Lastly, other metadata can be collected (e.g certifications, credentials) that can be linked to the NFT to ensure that the asset was produced ethically and sustainably.” 

The zenGate team explain in their [medium article](https://medium.com/@zenGate/the-benefits-of-non-fungible-tokens-nfts-in-the-supply-chain-of-commodities-841bc50d9c9d) that NFTs can aid in automating asset ownership transfers in the supply chain, thereby cutting out intermediaries, increasing efficiency, and reducing costs. They also enable real-time tracking of commodities, reduce delays and help stakeholders respond swiftly to changing demand. NFTs have the potential to also support regulatory compliance by providing a transparent record of a commodity's journey to ensure it meets safety, quality, and environmental standards. Additionally, they establish trust by certifying the commodity's quality, reducing disputes, and enhancing the reliability of the commodities supply chain - which ultimately benefits all stakeholders.

## Conclusion

While many still associate NFTs with JPEGs of monkeys selling for thousands of dollars, it is evident that NFTs have the potential to represent a much deeper sense of utility in the world. NFTs relating to collectibles, art, real estate, commodity markets and so much more are actively revolutionizing the way authenticity and ownership are being handled. Additionally, NFTs are also changing the way assets are bought, sold and transferred. In a world that is becoming increasingly digital, NFTs are sure to play a crucial role in redefining what it means to own something.


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Ergo and NFTs: Revolutionizing Ownership in the Digital World

_The extensive developer activity on the Ergo Platform over the last several years has positioned it to be a leader in decentralized technology. With its powerful scripting language and eUTXO design, developers enjoy an impressive array of tools from which to launch new products and services. This October, the Ergo Foundation will host the latest ErgoHack where developers and crypto enthusiasts will have the opportunity to design and build new decentralized applications on Ergo. The evolution of money has already begun. What new decentralized applications will be built on Ergo to propel the next chapter of the money evolution?_

How many of us have ever questioned the medium by which we exchange goods and services? If you want to buy an apple, you simply pay for it with either cash or card. Voila, the money in your pocket (or bank account/credit card) enabled you to acquire that apple. Since you were born, money and credit have been the medium by which you access shelter, necessities of life, transportation, education and healthcare (depending on your country), and luxuries.

The institutional system (ie. banks, credit providers, central banks, etc) of cash and credit is deeply entrenched in our daily lives, and since the digital era, that system has become even more of a gatekeeper to the growth of personal wealth. All money flows through them, and they alone dictate how, when, and where you can use your money. This can include account fees, trading fees, convenience fees, wire transfers, currency conversions, and access to funds. 

If you think your personal bank account is 100% safe, then you are simply unaware of the systems of control enacted by these institutions. If you wanted to make a significant cash withdrawal from the bank, you might be surprised by that bank's cash withdrawal policy. What if you live in a country where political instability is imminent? One need simply look at history to see how central bank currencies have fared under political duress or wartime. 

If you need to make a large purchase with your money, chances are your checking account has a daily debit and withdrawal limit. In that scenario, your bank may suggest you use your credit card, but then you are accessing their credit system and are pigeon-holed into how you can pay for goods or services - technically, you are not using your money.

What if your bank collapses? What happens to the money you have been saving your whole life? You may want the bank to provide security for your money deposits, but a centralized institution that holds custody over YOUR money may not be able to fully protect or guarantee your money. There are limits to how much an organization like the FDIC (Federal Deposit Insurance Corporation) will insure account deposits.

So, are traditional institutions the only avenue for money? To ask such a thing is to question the very definition of money in our modern society. Have we reached the peak of the potential of money with the current traditional systems, or is there room for money to evolve beyond its current constructs?

Bartering and the most basic forms of trade formed the earliest standards for an exchange of goods and services. With the digital era, centralized bank currencies have evolved to include online banking and digital payment systems on the internet. Even corporations and credit card companies have evolved the definition of money with points programs that allow people to exchange their loyalty rewards for goods and services. 

Traditional money has evolved, but so have the systems that control it. Is there room for a money revolution?

The advent of blockchain and Bitcoin has sparked a debate on what the future of money and finance looks like. With decentralized, distributed blockchain ledger, we have seen new potentials in the security and transparency of what can have value. Using smart contract platforms, everyday citizens have access to new revenue streams, including lending protocols and liquidity pools on decentralized exchanges - essentially, they can become bankers.

Ethereum was the first to open the door to the potential of smart contracts. However, high gas fees and the inability to maintain liquid custody of staked coins have made the platform cumbersome to use, especially those who do not have expendable money to pay for gas fees. 

For money to evolve such that it is fair and equitable for all, the industry needs to continue pushing the blockchain revolution. How can blockchain better the lives of the ordinary person? How can blockchain technology progress so the tools and products it provides have a low barrier of entry? The average person does not want to have to learn a new skill set in order to execute their financial choices.

Whatever blockchain platform can offer the necessary solutions will have a significant advantage with mainstream adoption. The Ergo Platform is an open source, Proof of Work blockchain. Its core developers have extensive experience in blockchain design and construction, and even [Charles Hoskinson has indicated](https://www.youtube.com/watch?v=k9a3SYV6FJA) that he considers Ergo to be the “spiritual successor to Bitcoin.”

Throughout the recent bear market, Ergo has witnessed consistent large-scale development with numerous community dApps and wallets being constructed. The blockchain is known for its unique and innovative technology, including [NIPoPoWs](https://twitter.com/Ergo_Platform/status/1687566884890394624), [Storage Rent](https://ergoplatform.org/en/blog/2022-02-18-ergo-explainer-storage-rent/), miner governance, and much more. Ergo’s DEX, [Spectrum Finance](https://app.spectrum.fi/), has recently taken the first steps towards achieving cross-chain interoperability with Cardano. Additionally, Ergo’s [Rosen Bridge](https://twitter.com/RosenBridge_erg) will soon be activated and will enable native asset swaps between Ergo and Cardano. Following the Cardano launch, work will continue on Rosen to bridge Ergo to multiple blockchains (Ethereum, Bitcoin, etc.). All of [Rosen Bridge’s](https://ergoplatform.org/en/blog/Ergo%E2%80%99s-Rosen-Bridge-A-New-and-Better-Way-to-Interact-Cross-Chain/) security assumptions will be performed on Ergo, offering a new security paradigm and revolutionary way to bridge assets between various blockchains.

The Ergo Platform is laying the foundation for an extensive network of blockchain infrastructure. The blockchain’s open source tooling has created SDK’s and existing smart contracts for developers to utilize and deploy for their own dApps. Now is the time for developers to seize the opportunity to build on one of the most robust and secure networks in the industry. With its eUTXO model, it marries the smart contract functionality of Ethereum with the time tested design of Bitcoin, all while ensuring that transaction fees remain at a low cost to the user. 

The future of money is in its ability to be functional. With blockchain technology, we have a chance to evolve money in a way that improves access to financial systems and products. With decentralized technology, blockchain has the potential to remove the gatekeepers of traditional financial products and open new possibilities for how people use their money. 


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Redefining Money with Ergo: The Evolution from Centralized Control to Decentralized Possibilities

Developers are the backbone of any cryptocurrency ecosystem, and they are responsible for creating many of the dApps that we use every day. Generally, a blockchain’s ability to flourish has a positive correlation with not only how many developers are present within an ecosystem, but how easy it is to develop on the blockchain as well. The issue with developing on certain blockchains is that only certain coding languages are compatible. However, with a recent update from prominent [Ergo developer Captain Nemo](https://twitter.com/NautilusWallet) (founder of [Nautilus wallet](https://chrome.google.com/webstore/detail/nautilus-wallet/gjlmehlldlphhljhpnlddaodbjjcchai)), development is much more accessible. 

## What Does this Recent Update Do and What are the Benefits?

Captain Nemo has recently introduced [Fleet SDK v0.1.3](https://github.com/fleet-sdk/fleet) on Ergo. They [state](https://twitter.com/NautilusWallet/status/1682502973115576321) that “This version brings an ErgoScript compiler and a ‘mock chain’ package, which lets you test your Ergo contracts in a simulated blockchain environment using popular test frameworks like Jest and Vitest.”

For those who are not technical, one may be asking what this means exactly. Essentially, developers now have the opportunity to utilize two of the world's most popular programming languages, JavaScript and TypeScript, to build Ergo dApps. Coupled with the open source nature of Ergo, this lowers the barrier for developing on Ergo and could foster greater adoption of the protocol. Developers who want to build dApps on Ergo do not need to start from scratch and are encouraged to innovate on other developer’s code. 

It can be overwhelming for developers coming into a new ecosystem. Finding resources, educational information, and other documentation needed to gain knowledge of certain coding languages is not always easily accessible. However, Ergo provides a plethora of [resources](https://github.com/ergoplatform/awesome-ergo) to assist newcomers with development.

With Captain Nemo’s Fleet v0.1.3 update, it is important to note that an SDK (software development kit) acts as a well-constructed framework with pre-built tools, libraries, and resources that accelerate the coding process. This essential infrastructure will no doubt attract even more developers to the Ergo ecosystem. These time-saving tools allow design choice to be a priority, ensuring that future dApps will be of the highest quality possible.

One of the greatest qualities of Ergo is the ease with which developers (core and community) can be reached. Specifically, the Ergo’s Discord development server is a place where like-minded developers share, debate, and bounce ideas off of each other in order to aid in problem solving.

In order to foster adoption on the blockchain, development needs to be widely accessible to all ranges of developers. Ergo strives to create a seamless transition for developers designing and building on Ergo. Creating permissionless, open source, and transparent code is a part of Ergo’s ethos, and this important update by Captain Nemo is a massive step forward in creating more financial tools for the ordinary person. 

## New Developers


If you are a developer new to the Ergo ecosystem, these links may be useful:

- [Ergo Documentation](https://docs.ergoplatform.com/dev/start/)
- [Ergo Appkit](https://github.com/ergoplatform/ergo-appkit)
- [Fleet](https://fleet-sdk.github.io/docs/)
- [DeCo Education (video)](https://www.youtube.com/@decoeducation9394)
- [DeCo Education (docs)](https://deco-education.github.io/deco-docs/docs/category/into-the-woods/) 
- [Ergohack](https://ergohack.io/)

*To access the development channel in Discord, go to channels in the sidebar. Click Channels & Roles (near the top). Then, select _**Start Developing**_.*



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Build on Ergo with Ease: Fleet SDK v0.1.3


## What Does KYA Mean?

KYA _(Know-Your-Assumptions)_ refers to the importance of being aware of the underlying assumptions and principles of the crypto ecosystem. Cryptocurrencies, blockchain technology, and DeFi protocols are built on specific design choices, and understanding these assumptions is crucial to navigating the crypto space effectively so that one can make informed decisions.

## Knowing Your Assumptions: Examples

Here are a few key areas where knowing your assumptions is particularly relevant in the crypto world:

### Decentralization 

Cryptocurrencies are often designed to be decentralized, meaning they operate without a central authority. However, the degree of decentralization can vary between different cryptocurrencies. It's important to understand the assumptions and mechanisms that govern a particular cryptocurrency's decentralization, such as the consensus algorithm and the distribution of nodes.

### Trustless Transactions

Cryptocurrencies aim to enable trustless transactions, where parties can transact with each other without relying on a central intermediary. However, this assumption relies on the security and reliability of the underlying blockchain technology. Understanding the assumptions behind the security model, consensus mechanisms, and smart contract functionality is crucial for assessing the trustworthiness of a cryptocurrency.

### Economic Models

Many cryptocurrencies incorporate economic models, such as tokenomics, to incentivize participation and secure the network. These models often involve assumptions about token supply, distribution, inflation, and governance. Knowing and evaluating these assumptions can help you assess the long-term viability and potential value of a cryptocurrency.

### Regulatory Environment

The regulatory landscape surrounding cryptocurrencies varies from country to country and is subject to change. Understanding the assumptions and legal considerations related to crypto regulations is important for compliance and managing risks associated with regulatory changes.

## Knowing Your Assumptions, Within The Ergo Ecosystem

With Ergo operating on the [KYA](https://docs.ergoplatform.com/contribute/standards/kya/#research-paper) model and [Kushti's research paper](https://github.com/kushti/kya/blob/master/kya.pdf) shedding light on the importance of assumptions in cryptocurrencies and DeFi, it becomes evident that there is a need for greater understanding and transparency in the crypto industry. Kushti elaborates on this by stating:


>“Traditional financial institutions are doing privacy invasive checks known as KYC/AML practices. In bankless world of cryptographically-powered decentralized finance it is natural to expect reversion of control, that is, now users are checking protocols for their properties, including cryptographic and other assumptions behind them. However, there is no explicit notion of it in the wild. Thus we would like to introduce Know-Your-Assumptions (KYA) practices as an alternative to KYC/AML practices in the world of decentralized money and financial tools, where users of the protocols do have real power, not centralized entities enforcing users to comply with their always-changing rules.”

Asking for transparency and practicing Know-Your-Assumptions (KYA) can contribute to a solid foundation for the industry to build upon. By embracing KYA as an alternative to traditional invasive privacy checks, we empower users to verify the properties and assumptions of decentralized financial tools, ultimately shaping a bankless world where users hold real power.

## Applying Know Your Assumptions - Case 1

Below would be an example in which a KYA prompt is provided: 
![duckpools_KYA.png](https://storage.googleapis.com/ergo-cms-media/duckpools_KYA_c13dc747c9/duckpools_KYA_c13dc747c9.png)
_[Duckpools](https://www.duckpools.io/) dApp Providing KYA_

Having a "Know Your Assumptions" prompt in DeFi protocols promotes risk awareness, user empowerment, transparency, security, and overall industry growth. 

Take Aave (a popular decentralized finance (DeFi) protocol), for example:
![Screen Shot 2023-07-20 at 6.48.49 PM.png](https://storage.googleapis.com/ergo-cms-media/Screen_Shot_2023_07_20_at_6_48_49_PM_ddc883057b/Screen_Shot_2023_07_20_at_6_48_49_PM_ddc883057b.png)

By introducing a KYA prompt during the onboarding process, or within the platform's user interface, Aave can promote transparency and empower its users to make informed decisions.

APY is often the main selling point for most protocols, but we need to go beyond just projected profits and consider the risk profiles. With KYA practices, we can quickly evaluate protocols from L1 blockchains to complex DeFi stacks and inter-chain bridges based on the assumptions they rely on.
![Screen Shot 2023-07-20 at 6.50.09 PM.png](https://storage.googleapis.com/ergo-cms-media/Screen_Shot_2023_07_20_at_6_50_09_PM_ab2bc9d9cf/Screen_Shot_2023_07_20_at_6_50_09_PM_ab2bc9d9cf.png)
_[SigmaFi](https://sigmafi.app/#/) dApp Providing A Know Your Assumptions_

## Applying Know Your Assumptions - Case 2

KYA practices benefit not only users but also protocol researchers and developers. By explicitly stating the assumptions in their papers and specifications, researchers can enhance collaboration and foster a deeper understanding of the protocol's design choices. 

Let's take a look at TrustWallet - a popular crypto wallet. When you first download the extension, you are prompted to read the terms of service/privacy policy:
![legal 01.png](https://storage.googleapis.com/ergo-cms-media/legal_01_1f99f5c429/legal_01_1f99f5c429.png)
_Trust Wallet Legal_

Now when interacting with Nautilus Wallet after the initial download, you are prompted with explicit risk assumptions as well as open source code:
![nautilus_screen_NYA (2).png](https://storage.googleapis.com/ergo-cms-media/nautilus_screen_NYA_2_6aaf64d98a/nautilus_screen_NYA_2_6aaf64d98a.png)
_Example of [Nautilus Wallet](https://ergoplatform.org/en/blog/2022-03-10-storing-crypto-on-ergo-nautilus-wallet/) Providing a Know Your Assumptions_

Using KYA, developers can build more robust, resilient, and secure systems when assumptions are made clear, allowing for better audits and improvements over time.

## Applying Know Your Assumptions - Case 3

Protocols in the crypto industry play a crucial role in fostering user education and understanding. One effective way to achieve this is through comprehensive and accessible documentation. Documentation serves as a valuable resource that enables users to navigate and comprehend the details of a protocol. By providing clear explanations of the protocol's functionality, parameters, and assumptions, documentation can empower users to make informed decisions and utilize the protocol effectively.
![SigmaO.jpeg](https://storage.googleapis.com/ergo-cms-media/Sigma_O_e7001bb59c/Sigma_O_e7001bb59c.jpeg)
_[SigmaO](https://www.sigmao.cc/about) Documentation_ 

![Pancake.jpg](https://storage.googleapis.com/ergo-cms-media/Pancake_90988bb162/Pancake_90988bb162.jpg)
_PancakeSwap Documentation_ 

In the case of Pancake swap (a popular decentralized exchange on the Binance Smart Chain), the documentation is used to promote:


> “Trade where you can instantly swap crypto tokens, Earn where you can earn tokens for free with super high interest rates and Win where Pancake swap makes making money fun!” 

Comparing this to Spectrum Finance, the documentation states:


>“... it is essential to establish clear differentiations among the various aspects of the “Spectrum” as certain elements might confuse novice users.” 

![SPF.png](https://storage.googleapis.com/ergo-cms-media/SPF_c4ee430ebf/SPF_c4ee430ebf.png)
_[Spectrum Finance](https://docs.spectrum.fi/concepts/overview) Documentation_  

It is through these educational materials that protocols can bridge the gap between complex technical concepts and user-friendly comprehension. By prioritizing documentation, protocols demonstrate their commitment to transparency, user empowerment, and the long-term success of their ecosystem.

### Conclusion

Decentralized finance promises a new era of financial freedom. By embracing KYA practices, users can navigate the space more effectively, and we can ensure that this freedom is built on a solid foundation of transparency and informed decision-making.

001-news blog-kya.png

The Importance of Know-Your-Assumptions (KYA): An Alternative to Traditional Know-Your-Customer (KYC) Practices

In an industry with an overwhelming number of cryptocurrency projects, it can be a daunting task for developers, project leads, and community members alike to choose a blockchain upon which to build. Proven to be a robust and secure network, the Ergo Platform offers a vast amount of unique tooling for developers who wish to build smart contract enabled dApps. In this article, we will go in depth on several reasons why it is beneficial for a new project to build on Ergo.

1. Open Source Code + Ergoscript
2. Ergopad: Ergo’s Launchpad
3. NFT Projects: Low Minting Fees and Two Marketplaces
4. Community
5. Miner Governance
6. NiPoPoWs

### Open Source Code

Ergo was created with the mindset that transparent code and decentralization should be the core principles of a blockchain. For those who wish to build on Ergo, they can access a wide variety of open sourced code and technological tooling.

One of the most vital benefits of open sourced code is that it is often more secure. It allows other developers in the ecosystem to check for bugs or glitches. Consequently, it is also much easier to make necessary improvements to existing code. With open sourced code, it can be argued that it is much less effort required for new projects to start building. This is because people can add new ideas onto existing ones. One does not have to start from scratch with every facet of their design. Developers can utilize existing tools such as dApp connectors, oracle frameworks, privacy implementation and more to aid their project’s development. 

For the purposes of this article, several developers from the Ergo community were asked why they chose Ergo?

[Blitz TCG](https://blitztcg.com/home) - “Blitz chose Ergo because of the unparalleled community, strong focus on decentralization, and near non-existent fees on its L1 solution. The community, specifically, is one of the best in crypto, providing an excellent platform for engagement and feedback.”

[Ergopad](https://www.ergopad.io/) + [Paideia](https://www.paideia.im/) - “As ErgoPad and Paideia, we decided to build our project on Ergo because it provides great fundamentals as well as these key facts, which align with our principles and goals:

1. Ergo has no pre-mine, a solid basis, and a fair launch; this means that no one person or group has an undue amount of influence.

2. Low cost of maintenance in comparison to EVM-based blockchains, which require gas payments for transactions.

3. Using NiPoPoWs, the blockchain creates checkpoints at periodic intervals, reducing the user's storage needs for blockchain data to just those intervals. This function allows any device, such as a mobile phone, to operate as a full node, giving you full control over your funds. It takes a third party to grant access to a Node for light clients like Metamask. As a result of NiPoPows, there isn't any middle man.

4. The security features of Sigma protocols are more advanced than those of Bitcoin.

5. The UTXO model upon which Ergo is based offers far more robust security guarantees than the EVM chain accounting model. Transactional behavior is known prior to user submission, and smart contract behavior can be tested with greater certainty. A UTXO blockchain is much less likely to have unanticipated problems.”

[MrStahlfelge](https://github.com/ergoplatform/ergo-wallet-app) is a reputable developer on Ergo that is responsible for creating one of the most popular wallets: the [Ergo wallet](https://ergoplatform.org/en/ergo-wallet-app/). He stated that Ergo is a great blockchain to build on “Because it has the best community.”

Ilya [@RozaLuxemburgg](https://twitter.com/RozaLuxemburgg) is a software engineer that is responsible for working on dappstepjs and the kaching tool on Ergo. Ilya believes that “Ergo is beneficial to develop on because it's easy to make an impact. It's still a relatively small community that doesn't have all the tools that bigger projects have, and when you build something, it gets noticed and appreciated, and you feel like you make a difference.”

[Krasavice Blasen](https://twitter.com/KrasaviceBlasen) is a co-founder of reputable Ergo projects such as Skyharbor and Duckpools. He stated that it is beneficial to build on Ergo because “As a maturing complete smart contract language, Ergoscript is extremely expressive but surprisingly simple. As a developer, I cherish how easy it is to develop dApps which meet high-level security standards. In consequence, the development cost (the amount of man-power to build some serious DeFi products) is magnitudes lower than that of any other chains. [Also], coupled with the ideals of the community, their attitudes towards decentralization, transparency and good technology, you can easily see why I decided to build on Ergo.”

[Crypto Quokka](https://twitter.com/crypto_quokka) works closely alongside Krasavice Blasen and is also one of the co-founders of Duckpools and Skyharbor. He stated that “What others can build in a year, on Ergo you can build in a month.”

[Morphic](https://twitter.com/avslesarenko) is an Ergo Foundation board member and core developer for Ergo. He believes that “The Ergo protocol is to UTXO smart contracts what TCP/IP is to the internet, acting as a crucial foundation. Since Ergo is still in its early years, many use cases remain to be identified, indicating ample room for growth and development.”

### Ergopad: Ergo’s Launchpad

One of Ergo’s top projects, [Ergopad](https://www.ergopad.io/), serves as a launchpad for new projects in the Ergo ecosystem. As you may imagine, starting a new project can be very difficult. Ergopad launches IDOs for vetted projects, aiding with marketing as well as the coding process. As a launchpad, it offers anyone the ability to invest in the early stages of a new project. In essence, it allows the community the opportunity to act collectively as pseudo angel investors.

### Building NFT Projects

The Ergo ecosystem provides a robust and diverse set of platforms for new artists and project leads to build NFT projects. There are two primary NFT platforms/marketplaces on Ergo: [SkyHarbor](https://www.skyharbor.io/) and the [Auction House](https://ergoauctions.org/). 

The Auction House is an excellent platform for allowing artists to explore price discovery for their art. Currently, it is the only platform that enables the minting of NFTs. One of the many reasons Ergo is an ideal blockchain for NFT projects is because it costs only pennies to mint an NFT. Specifically, it currently costs 0.003 ERG, which at the time of writing is about $0.013.

SkyHarbor is an equally impressive platform because it has deployed a verification process for artists. This helps promote and maintain brand recognition and reputation within the ecosystem. This also assists with preventing buyers from getting scammed by fake copies and/or artists.

### Community Engagement

Within social media circles, the Ergo community is well recognized for its passion, knowledge and promotion of the blockchain. It has grown organically from only grassroots initiatives. Many of Ergo’s social media channels highlight how willing community members are to educate and promote the unique tools and products available on the blockchain. Because of Ergo’s measured and deliberate approach to community marketing, the community is always growing and new developers are regularly onboarding. As is evident below, [Ergo’s social metrics](https://www.reddit.com/r/ergonauts/comments/vmmuoy/despite_market_cap_this_subreddits_activity/) are comparable to many top 100 projects - even with fewer members. 

![photo_2023-07-03 14.19.25.jpeg](https://storage.googleapis.com/ergo-cms-media/photo_2023_07_03_14_19_25_dd4afb26f2/photo_2023_07_03_14_19_25_dd4afb26f2.jpeg)

### Miner Governance

Ergo strives to be as decentralized as possible and therefore incorporates a robust [governance](https://docs.ergoplatform.com/mining/governance/) system to ensure that those who secure the network have a voice in any potential changes to the protocol. Miners on Ergo have the unique ability to modify various parameters through voting. This can include factors such as instruction costs, computational limits per block, block size limits, storage fee factors, etc. The long-term economic security of the protocol is essentially determined by the collective decisions of miners. For changes related to the block version, a voting period of 32 epochs is allocated, and a minimum threshold of over 90 percent of miners is required to support any proposed change. Miners secure the network and are crucial to the longevity and future of Ergo.

### NiPoPoWs

Another reason to build on top of Ergo is due to a revolutionary piece of technology called [NiPoPoWs](https://ergoplatform.org/en/blog/2022-04-01-nipopows-on-ergo-innovations-in-blockchain/). NiPoPoWs, put simply, are a blockchain compression technique. It has the potential to address key technical challenges in blockchain and offer unique solutions for widespread adoption. This type of technology has the potential to significantly reduce the blockchain data size, enabling ultra-light clients to sync with less than 1MB of data. This breakthrough revolutionizes the industry by lowering technological requirements, thus allowing limited devices to achieve full node security. 

When developers build dApps on Ergo, they want a multitude of users utilizing their applications. If NiPoPoWs are able to reduce the technology requirements of users, this should bring a new wave of widespread adoption to Ergo.

### A Guiding Founder

Ergo’s founder, Alex Chepurnoy, is a reputable developer who has an impressive past within the cryptocurrency space. He co-founded [www.smartcontract.com](http://www.smartcontract.com) which is now Chainlink, and was a core developer and researcher for Cardano. He personally adds to the base layer of the protocol and continually works on node client upgrades. His extensive work in these areas allow for smooth and efficient dApp experiences for developers and users alike. 

### Conclusion

Ergo represents a chance for new projects to build in an ecosystem that values technology, first principles, transparency and open sourced code. This ecosystem is early but rapidly growing and is an opportunity to be part of one of the most fairly launched blockchains since Bitcoin. With its unique and intuitive scripting language, developer resources, launchpad and a strong community, Ergo is cementing itself as a project with strong fundamentals, poised to flourish in the industry in the coming years. 

news blog_Building_Ergo.png

The Benefits of Building on Ergo

## Ergo’s Mission

Ergo has been designed to empower the ordinary person. The [Ergo Manifesto](https://ergoplatform.org/en/blog/2021-04-26-the-ergo-manifesto/), written by Ergo co-founder Alexander Chepurnoy, states that:


>“Cryptocurrency should provide tools to enrich ordinary people. Small businesses struggling to make ends meet, not big depersonalized financial capital. This is what inspired me. This is my dream. In the eyes of the original broad community vision, the tools of a cryptocurrency should allow people to do economic activity whatever the business size, geographic location, or interest rates set by big players. The tools should allow people to make contracts (digital, self-enforcing, reasonable smart contracts) regardless of the differences in jurisdictions, traditions, followed business practices, etc. I hope Ergo will be helpful here. Thousands of small cooperatives and individual entrepreneurs are much more critical to healthy and sustainable wealth growth around the globe compared to a couple of corporations hiding profits in offshore havens. Let's consider the use and integration with communities, cooperative federations, nonprofit foundations, and philanthropic trusts.” 

## Interest Free Kenya Business Loan

Through [ErgoRaffle](https://ergoraffle.com/raffle/show/f3d8d94c2af7a9bc7ea8615cc4bacb827960a60392d0264944b3638bce1c8ff9) (a decentralized application built on top of Ergo), the Ergo community has come together to fund an interest free loan that is going to a cooperative in Kenya, Africa. ErgoRaffle is essentially a decentralized crowdfunding tool that allows people to fund any sort of initiative (in a decentralized way). This initiative seeks to harness the potential of decentralized finance and active community involvement to nurture sustainable economic growth and create new avenues of prosperity for those who are a part of the cooperative. 

Alexander Chepurnoy and members of the Exle team initially provided loans to the Kenyan cooperative without formal contracts. Since then, the Kenyan cooperative’s timely repayments have demonstrated financial responsibility, and Exle has introduced zero-interest loans through EXLE’s contracts. 

To engage a wider community, Alex Chepurnoy decided to utilize a raffle model by selling tickets to raise funds. Going forward, they plan to establish a DAO through another Ergo dApp ([Paideia](https://ergoplatform.org/en/blog/Paideia-A-DAO-Management-Software-Suite/)) to encourage transparency and further community involvement. Donors will have a say in how funding will be utilized for new loans as well as being able to participate in innovative experiments through peer-to-peer/community finance. 

## Conclusion

Ergo's interest-free loan initiative in Kenya is a testament to its commitment of empowering communities and fostering sustainable economic growth through the power of blockchain. Using decentralized finance and active community participation,  Ergo propels its mission forward of making an impact in the lives of ordinary people.

Check out [ErgoRaffle](https://ergoraffle.com/) to learn more about decentralized crowdfunding. The [Exle](https://exle.io/) team also plays an important role in micro loans on Ergo and more information about their work can be found on their website. 


ergoblog_loans_14062023.png

Empowering Communities: Interest-Free Loans Drive Economic Growth for Kenyan Cooperative

Ergo is a layer-1, proof of work blockchain that utilizes the eUTXO model. eUTXO stands for extended unspent transaction output and is used by several other notable blockchains such as Cardano, Komodo and Nervos Network. By comparison, the Ethereum network uses the Account model as the framework for recording transactions on the blockchain.

Ergo’s eUTXO model continues to bring new innovations to the cryptocurrency industry, and in this article we will explore several of the various eUTXO benefits.

## Babel Fees

Babel fees represent a flexible way of paying for transactions. On Ergo, fees are currently 0.001 ERG to complete a transaction. Instead of using ERG however, Babel fees allow a user to pay transaction fees using Ergo native tokens. This can be useful if one does not want to spend their ERG or if they do not have any ERG in their wallet.

## Chained Transactions

Chained transactions are one of the biggest benefits that the eUTXO model provides to a blockchain. When using the eUTXO model, transactions create funds that are left over (called UTXOs) which can be used in future transactions. In essence, the UTXO represents the change after you pay for something. When it comes to chained transactions, we are referring to multiple transactions linked into one transaction.

Ergo’s record for chained transactions was the execution of 10,000 outputs in a single transaction. Chained transactions are beneficial because they can be used to send ERG, multiple NFTs, or multiple native tokens all at once. For example, if you wanted to send 50 NFTs to somebody, you could actually complete this in one transaction instead of having to execute 50 separate transactions. This saves a lot of time, and the transaction fee on Ergo stays the same at 0.001 ERG.

## Off-Chain Computation

The eUTXO model allows for greater flexibility with smart contracts through off chain computation. When comparing the Account model to [eUTXO](https://ergoplatform.org/en/blog/2021-10-04-off-chain-logic-and-eutxo/), the Account model executes all smart contract logic on chain. This can lead to scalability issues as the blockchain grows and the number of transactions increase. However, the eUTXO model overcomes this issue by moving most of the smart contract logic off chain. It only executes the validation process on the blockchain, thereby improving the efficiency and scalability of the blockchain. 

An Account model blockchain can face severe congestion as well as high fees with an increase in the number of users. “The issue of [scalability](https://ergoplatform.org/en/blog/2021-10-04-off-chain-logic-and-eutxo/) is one of the main reasons Ethereum is attempting to push transactions to Layer 2/Sidechain scaling solutions that are governed by off-chain code. In essence, the solutions Ethereum is exploring in order to address its scalability concerns mimic the eUTXO model in practice.” It is important to note that Ergo has no gas fees, making it an ideal blockchain for scaling. On Ergo, the transaction fee is stable at 0.001 ERG and is predictable as the price potentially appreciates. 

## Metadata

With the eUTXO model, metadata can be attached to transactions to provide additional information. Two types of metadata are generally used. Firstly, transaction metadata, which describes the transaction as a whole. Secondly, output metadata, which describes specific outputs. Transaction metadata is stored in the transaction itself, while output metadata is stored in the output's lock script. This provides greater flexibility for transactions and supports more complex use cases.

## Benefits of the UTXO Model and How it Differs from the eUTXO Model

The [UTXO](https://docs.ergoplatform.com/dev/protocol/eutxo/#utxo) model offers numerous benefits to a blockchain. Some of these benefits include improved privacy through the use of one-time objects which can allow for the identification and management of privacy leaks. In simpler terms, when one says UTXOs act as one-time objects it means that they are a bit like special tokens or units of value that can only be used once. This unique characteristic of UTXOs helps with privacy leaks by providing a way to identify and manage them effectively. It enhances scalability by enabling parallel transaction processing while also promoting interoperability with off-chain and sidechain protocols. Another benefit of the UTXO model is that it facilitates transaction cost predictability by eliminating the need for intricate gas calculations. 

As mentioned earlier, Ergo uses the eUTXO model which is based on Bitcoin's original model, but it offers increased functionality through the deployment of smart contracts. With the eUTXO model, smart contracts can utilize UTXOs as input data without requiring any modifications. Therefore, nodes can primarily verify transactions rather than focus on balance checks - which distinguishes it from Ethereum's Account model. It is important to note as well that Ergo's multi-stage UTXO model allows for the implementation of turing-complete smart contracts. The eUTXO model allows for more flexibility and complexity when utilizing smart contracts on the blockchain. 

## Conclusion

When it comes to scalability and efficiency, the eUTXO model provides flexibility and greater output power. Even if ERG went to $1000 per coin, the transaction fee would still be just $1. The fact that multiple transactions can be linked within one transaction makes Ergo’s fees sustainable with massive growth. With any future blockchain adoption, the technology needs to easily adapt to massive growth and scalability. Ergo solves this. 


ergoblog_eUTXO_model _05062023.png

The Benefits of the eUTXO Model

[Oracle pools](https://www.ergoforum.org/t/oracle-pools-a-new-oracle-model/263) represent an innovative piece of technology that are essential for bridging the gap between blockchain and the real world by providing access to external data sources. An oracle pools’ purpose is to reliably forward data to the blockchain (relevant to the needs of a dApp or other product) and promote the validity and accuracy of that data.

Dapps are the backbone of blockchain ecosystems, and solid oracle frameworks are essential in facilitating a thriving ecosystem. Ergo developers have placed a high priority on the development of dependable oracles.

## What are Oracle Pools and How Do They Work?

Ergo offers pools of oracles that act to decentralize the provision of data, ensuring that both the process of obtaining the external data, and the data itself, is more reliable. The group of oracles within the pool agree on the data sources, and each post their data points to the blockchain. This increases the reliability and validity of the data. At the end of an epoch, these data points are averaged (after removing outliers) in a final transaction which reads each data point. This results in the oracle pool producing a new finalized datapoint. The reason why oracles are so vital for a crypto ecosystem is because they enable dApps to be able to interact with real-world events and execute smart contracts based on real-time data. They can also enhance the security and reliability of applications by verifying and authenticating external information. For example, one major application of oracles is enhancing the DeFi experience for users. This could be by providing accurate price feed and market data information which is crucial for borrowing/lending protocols and decentralized trading on DEXs. 

## Oracles: Ergo Vs Chainlink 

Currently, Chainlink is the leader in oracles by market capitalization, but Ergo has been developing improvements on existing oracle frameworks for several years now. 

There are many [differences between Chainlink and Ergo oracle technology](https://www.ergoforum.org/t/oracle-pools-a-new-oracle-model/263). The [$LINK](https://cointelegraph.com/learn/what-is-chainlink-a-beginners-guide-to-the-cross-chain-interoperability-protocol#:~:text=The%20Chainlink%20(LINK)%20DON%20is,and%20application%20user%20interfaces%20securely.) token is an important part of Chainlink because it acts as a token that enables users to access its oracle services. Users pay for the data the oracle gets from external sources in $LINK, which can then be used in smart contracts. LINK tokens essentially serve as incentives for node operators to contribute accurate and reliable data, ensuring the dependability and trustworthiness of the Chainlink ecosystem.

Ergo’s oracle pools operate differently in a variety of ways. Firstly, Ergo’s oracle pools utilize the native cryptocurrency of the blockchain ($ERG) for payments, eliminating the need for an additional oracle token (like $LINK). As a result, users do not need to purchase an additional token to use blockchain services. 

Ergo’s oracle pools use epochs to ensure regular data updates and discourage collusion, making the data feeds more reliable. Oracles in these pools are required to post external data points within specific time intervals which creates stronger incentives for timely updates. These incentives include earning rewards for accurate data updates while also building a strong reputation within the pool. This attracts more users and maintains the integrity and reliability of the oracle pool. An oracle pools’ goal is to essentially forward external data reliably and promote validity and accuracy within that data.

It is also important to note that the eUTXO model allows the user to easily create hierarchical oracle datapoint structures, including pools of pools. This enables scaling accuracy and makes the oracles more efficient. Chainlink's design does not support this feature because the oracles in Chainlink act individually and cannot be combined together.

## Oracle Pools V2

Ergo is currently developing [Oracle Pools V2](https://docs.ergoplatform.com/eco/oracles-v2/) which is building improvements upon the existing technology. One key improvement is the ability to gather data from multiple sources, including CoinGecko, CoinMarketCap, XAU, and more. This expanded data collection enhances the accuracy and reliability of the oracle pools, providing comprehensive data feeds for smart contracts.

Ergo’s Oracle Pools V1 were an extremely valuable piece of technology but developers are continually finding ways to improve upon the existing technology. With Oracle Pools V1, there were challenges such as generating excessive dust as rewards, low rewards, and it had trouble managing the complexity associated with two types of pool boxes. Oracle Pools V2 introduces significant changes and improvements upon that system. These improvements include:
- consolidating the pool address into a single entity;
- integrating an epoch counter within the pool box to support advanced decentralized applications (dApps);
- separating the pool box from pool management logic for smoother operations;
- transitioning from ERG to tokens as rewards;
- enabling the transferring of both oracle tokens.

While these improvements are implemented, the update mechanism and the role of the pool box in other dApps remain similar to the previous oracle pool version. What this means is that although Oracle Pools V2 have introduced improvements, the base function for updates and the pool box's role in other decentralized applications (dApps) remain mostly the same.

Ergo's Oracle Pools V2 is bringing intriguing advancements to oracle technology. These technological improvements aim to overcome the limitations of Oracle Pools V1 and establish a more resilient and efficient oracle framework.

To delve deeper into Ergo’s core oracle frameworks, consult the [GitHub](https://github.com/ergoplatform/oracle-core) as well as this [educational video](https://www.youtube.com/watch?v=CzGqYAlQRWQ&t=445s&ab_channel=HashitOutw%2FCW) on all things Ergo (time index 11:30 for oracle pool information).



ergoblog_oraclepools_02062023.png

Ergo’s Oracle Pools V2 - An Innovative Design

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!


Ergo_blog_wallet_310523.png

What Wallet is Right for Me?

As the blockchain industry continues towards increased adoption, the need for clear and informative education materials grows evermore important. Still an emerging technology, the technical concepts can be complicated and overwhelming for a person that is new to crypto. In order for blockchain to be accessible to new markets, the barrier to entry requires that relatable, concise, and informative resources increase a user's access to blockchain technology. How does one mint an NFT? How do you set up a wallet? Where and how can someone buy and sell cryptocurrency? Understanding these topics (and many more) are vital to welcoming newcomers to blockchain.

### What are Ergo Tutorials?

The [Ergo Tutorials](https://ergotutorials.com/) website offers instructive and detailed guides on how to perform various unique tasks on the Ergo blockchain. Presented in several languages, this website helps guide prospective Ergonauts on topics such as creating and operating various wallets, performing token swaps, using the Ergomixer, and much more. Presented in video format, they provide clear step-by-step instructions to become more familiar with these various products and processes on Ergo. These tutorials cover the basics and even go into more complex topics, such as creating a token with python or learning about Ergo APIs. 

With more than 26 videos to choose from, some of the more notable tutorials include:

- buying and withdrawing $ERG from exchanges
- operating within the Spectrum Finance DEX with different wallets
- how to download several wallets
- interacting with the Skyharbor NFT marketplace

Although blockchain technology can seem intimidating, these tutorials serve to empower newcomers so that they may feel comfortable participating in the Ergo ecosystem.

To learn more about Ergo and the resources available through Ergo Tutorials, please visit the following websites:

[Ergo Tutorials Youtube](https://www.youtube.com/@ErgoTutorialscom)
[Ergo Tutorials Twitter](https://twitter.com/ErgoTutorials)
[Ergo Tutorials Website](https://ergotutorials.com/)
### Language Editions
[Ergo Tutorials - Français](https://ergotutorials.com/french)
[Ergo Tutorials - Italiano](https://ergotutorials.com/italian)
[Ergo Tutorials - Deutsch](https://ergotutorials.com/deutsch)
[Ergo Tutorials - Português](https://ergotutorials.com/portuguese)
[Ergo Tutorials - Español](https://ergotutorials.com/spanish)



01_ergoblog_tutorials_12052023.png

Ergo Tutorials


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. 



01_ergoblog_stablecoins_05052023.png

Stablecoins: What Are They and How Do They Work?


In 2022, **The Sigmanauts Program** was created as a community-run organization to encourage people to participate in, and take ownership of, Ergo. The program focuses on fostering a culture that creates a safe and open digital community, all while working to promote the unique tools and products of the Ergo ecosystem. Members volunteer their time, skills, and resources to deliver on the goals of the Sigmanauts.

Ergo is a grassroots protocol. That means there are no VC firms paying for advertising, market making, or exchange listings. Although the Ergo Foundation has a marketing and creative content team, the growth of the Ergo blockchain also depends on grassroots marketing in tandem with active participation from the community. Community marketing takes many forms, from promoting Ergo related content on social media (such as Twitter, Reddit, Instagram, etc.) to offering creative content, such as blog posts or videos on Youtube and/or TikTok. 

The promotion of Ergo related content is crucial for the growth of the ecosystem. As more people come to Ergo, it is essential that they are warmly welcomed by a knowledgeable and trusted community. Dedicated individuals are necessary to help maintain a healthy and safe community, where Sigmanauts help new demographics feel comfortable and assist in the creation of sub-communities. It is important to remember that Ergo has no borders and strives to be accessible to people of all backgrounds and languages - translators play a crucial role.

The Sigmanaut Program currently has two tiers of members: Sigmanauts and SigCans (Sigmanaut Candidates). Anyone who is passionate about promoting Ergo is encouraged to consider joining the Sigmanaut Program as a SigCan. If you carve out a role in the community and show commitment and initiative, you can be sponsored by a current Sigmanaut to apply to become a full member of the team. Sigmanaut status comes with voting and committee/committee leadership responsibilities. 

The future of [decentralized autonomous organizations (DAOs)](https://ergoplatform.org/en/blog/2022-03-15-what-is-a-dao-decentralized-autonomous-organization/) is still a work in progress. With the Sigmanauts, voting on proposals is carried out through the SigmaVote app (developed by one of the members). As [Paideia](https://ergoplatform.org/en/blog/Paideia-A-Secure-Easy-to-Use-DAO/) gets closer to offering its full suite of tooling, DAO decisions will soon migrate to on-chain voting. Using Padeia’s software, the Sigmanauts Program will become a prime example of how DAO’s can create real value for a community and ecosystem. 

The goal of a Sigmanaut is to spread awareness about the Ergo blockchain, all while helping to foster an ecosystem where stewardship remains with the people in a decentralized and transparent manner. If you want to learn more about the program, please visit the [Sigmanauts Twitter](https://twitter.com/Sigmanauts), or fill out an application [here](https://ergoplatform.org/en/blog/the-sigmanauts-programme/). You can also explore the archival recordings of Sigmanaut meetings, which are hosted every Sunday and posted in the main Ergo general chats. These meetings go over pertinent weekly discussion topics, such as organizational structure, contribution ideas, and how to find new and creative ways to promote the Ergo Platform. 

**Links to Main Ergo Chats**
Discord: https://discord.gg/ergo-platform-668903786361651200
Telegram: https://t.me/ergoplatform
Twitter: @Ergo_Platform


ergo_blog_sigmanauts_250423.png

Ergo’s Sigmanauts Program

As the Ergo ecosystem continues to grow and evolve, there are several keystone projects that will bring new functionality and utility to the blockchain. One dApp that is set to usher in this wave of innovation is Paideia’s DAO software suite. If decentralized systems are to ever fully realize their potential, then trustless and transparent DAOs will be an essential part of the future. 

## What is Paideia?

Paideia is a decentralized autonomous organization (DAO) software suite. A [DAO](https://ergoplatform.org/en/blog/What-is-a-Decentralized-Autonomous-Organization-(DAO)-and-How-can-it-benefit-you/) is an organized collective that is not controlled by a central authority. Ideally, a functioning DAO should be transparent and deployed via smart contracts. With smart contracts, DAOs offer the ability for an organized community to have fair and equitable discussion, table proposals and vote on said proposals. DAOs are governed entirely by their individual members who, as a collective, make crucial decisions on how the DAO operates. These decisions can include the constitution of a DAO, the long-term goals of the project and the allocation of treasury funds. A DAO’s primary use case is to reduce the trust needed between multiple users in order to promote decentralization in the decision making process for a collective. As per Paideia’s [Twitter bio](https://twitter.com/PaideiaDAO):


>“Paideia is a DAO management software suite. It is designed to make it easy for anyone to create, manage and be involved in a DAO.”

## Paideia Updates

Paideia is ramping up to release its MVP (minimum viable product) this April, which will include several key features, such as creating a DAO, staking, profit sharing and standard governance. The MVP will also include parameters to create basic proposals as well as the ability to send funds from a treasury to a specific address.

Paideia will be fully customizable and allow for an expansive range of programmable variables, including staking emissions (per staking period), staking period length, staking delay, profit share percentage, quorum threshold, majority threshold, whitelisted proposals and whitelisted tokens for profit sharing. DAOs on Ergo will also be able to update contracts for different parts of Paideia and implement their own custom configurations to their DAO. At time of publication, the team has announced that they have already begun private testing of Paideia’s products. 

![photo_2023-04-10 19.40.45.jpeg](https://storage.googleapis.com/ergo-cms-media/photo_2023_04_10_19_40_45_650d53132d/photo_2023_04_10_19_40_45_650d53132d.jpeg)

## Paideia’s Features

Paideia’s software suite will enable the ability to adjust DAO parameters via community proposals. This includes DAO creation fees, proposal creation fees, DAO running fees and upgraded default/template contracts for newly created DAOs. This high degree of flexibility will allow any DAO to reconfigure their respective parameters as needed with efficiency and transparency.

It is important to note that voting proposals are strictly enforced with smart contracts in Paideia. The [founder](https://twitter.com/esot321c/status/1642890689632673792) of Paideia and Ergopad has stated that “One problem with DAOs like arbitrum is that when a vote concludes, nothing is enforced. The team still gets the final say. This means that the vote is essentially a formality and the team behind the vote can veto what the community wants regardless of how the vote turned out.” 

This exact situation occurred with [Arbitrum](https://cointelegraph.com/news/arbitrum-to-break-up-governance-votes-after-community-backlash) on April 2nd, 2023. The community voted ‘no’ to allowing the foundation to receive 750 million $ARB tokens. Since the governance structure was not enforced by smart contracts, the foundation essentially vetoed the community vote and allocated the $ARB tokens to the foundation. Without smart contract enforced voting, governance is not decentralized and a team can essentially do whatever they want, regardless of community voting. With Paideia, “The PaideiaDAO does it differently, where treasury-based votes are enforced by smart contracts.” This means that the result of a DAO vote will automatically execute the action of the vote consensus. In other words, a team cannot override a community vote.

Paideia’s voting mechanism will exclude yes/yes voting proposals to ensure the protection of members within a DAO. [Luivatra](https://twitter.com/Luivatra/status/1642574180695564289) (core dev of Paideia) has stated that he _“...will start testing the proposal feature of PaideiaDAO. A DAO’s funds are in a smart contract based treasury and can only be spent through passed proposals. Proposals will always have a no option, no yes/yes shenanigans.”_ This means that a particular DAO’s community will always have the option to veto a proposal by the DAO. 

Paideia's DAO tooling represents a significant step forward in DeFi and crypto governance, offering a powerful set of tools and features for creating and managing DAOs. Projects on Ergo will soon be able to use Paideia to fit their project’s needs. 
To learn more about Paideia, please visit their [Twitter](https://twitter.com/PaideiaDAO), [website](https://www.paideia.im/) and [Linktree](https://linktr.ee/paideiadao). 


ergo_blog_paideia_080423.png

Paideia - A DAO Management Software Suite

## What is a Bridge in Cryptocurrency?

A [bridge](https://www.coindesk.com/learn/what-are-blockchain-bridges-and-how-do-they-work/) is a tool that allows digital assets to be moved from one blockchain to another. As such, a cross-chain bridge acts as a layer of interoperability between one or more blockchains. If you are active in cryptocurrency communities, you are no doubt aware of discussions about projects and their ability to be multi-chain. What does this mean? 

Within the industry, there tends to be a segment of cryptocurrency users that hold a maximalist philosophy - the idea that only one particular blockchain will be necessary in the future. There are numerous blockchain projects that will probably fade into the history books as a footnote, but maximalist thinking is quite restrictive and short-sighted. After all, there are so many blockchain projects that are building effective projects, and each of these will provide their own unique utility. To dismiss them with maximalist philosophy is to limit the potential of the industry as a whole. Instead of dismissing blockchains that offer different tooling, it is much more advantageous to find ways to develop interoperability between different chains. That way, developers and users can maximize the usage of their assets while extracting the most value out of each blockchain.

A bridge allows for this. Ergo’s newly created Rosen Bridge will offer a new standard of bridge innovation in the cryptocurrency industry, and it is positioned to usher in a new type of multi-chain interoperability. Before we explore Rosen bridge, let’s take a look at some other notable bridges and the importance of security when performing cross-chain transactions. 

## Crypto Bridges and Security Assumptions 

Although the concept of a multi-chain bridge sounds appealing, it does not come without some concerns and security assumptions. Each blockchain protocol is designed differently, therefore it makes sense that there are unique complexities to creating each bridge. To quote Frank Zappa: “One size does not fit all.”

There are currently over 20,000 cryptocurrencies and the industry continues to grow. Many bridges have already been built between various chains, but security issues and recent exploits have created some hesitation when interacting with bridges. If bridges are to be the gateway to multi-chain interoperability, then a new standard in security assumptions is necessary.

## Harmony One - Horizon Bridge

Harmony One’s bridge, [Horizon](https://techcrunch.com/2022/06/24/harmony-blockchain-crypto-hack/), was hacked for approximately $100M USD on June 23, 2022. This particular bridge’s security assumptions hinged on the fact that its [multi-sig wallet](https://ergoplatform.org/en/blog/Ergo-Multisig-Wallet-What-is-it-and-How-to-Create-One/) only had four (4) people in control of the wallet. Furthermore, the wallet only needed two (2) signings to initiate a transaction. The founder of crypto venture fund Chainstride Capital, who goes by the handle _Ape Dev_, [stated](https://techcrunch.com/2022/06/24/harmony-blockchain-crypto-hack/) at the time: “So all in all, if two of the four multisig signers are compromised, we’re going to see another nine-figure hack.” He went on to say that “Considering all that’s been going on lately, it’d be interesting to hear some details from Harmony Protocol on how these [externally owned accounts] are secured.” In this instance, the lack of transparency with the bridge as well as any sort of code should be a red flag for future investors. Open sourced code and transparent security assumptions are a must when dealing with DeFi finances.

## Axie Infinity - Ronin Bridge

Axie Infinity’s bridge, [Ronin](https://cointelegraph.com/news/the-aftermath-of-axie-infinity-s-650m-ronin-bridge-hack), was hacked for approximately $650M USD on March 23, 2022. Centralization, human error and a lack of security assumptions were the primary culprit of this hack. [Cointelegraph](https://cointelegraph.com/news/the-aftermath-of-axie-infinity-s-650m-ronin-bridge-hack) reported that:

“The official report from the company noted that the hackers managed to get access to private keys to validator nodes resulting in the compromise of five validator nodes, which is also the threshold required to approve a transaction. The Ronin chain currently consists of nine validator nodes and the hacker managed to get access to four of them along with a third-party validator run by decentralized autonomous organization (DAO) Axie DAO. The root cause for the exploit could be traced back to last year when Axie DAO gave access to Sky Mavis to sign off on transactions on its behalf to mitigate user volume. However, this access was never revoked, which eventually led to backdoor access by hackers resulting in the $600 million hacks.”

In essence, the hackers were able to steal users’ digital assets because the hackers were actually able to approve fraudulent transactions.

## Wormhole Bridge

Yet another massive hack occurred when [Wormhole](https://techcrunch.com/2022/02/03/blockchain-bridge-wormhole-confirms-that-exploiter-stole-320-million-worth-of-crypto-assets/) lost $320M USD worth of crypto assets on February 2, 2022. Wormhole was a bridge between Ethereum and Solana, and it was used quite frequently within those ecosystems. The hack resulted from an update to the project’s GitHub repository, which showed a fix to a bug that had not yet been implemented to the project itself. The old code was still in effect and the hacker was able to exploit the bridge using the information in the GitHub repository.

## Avalanche Bridges

When looking at bridges that offer positive cross-chain functionality, the Avalanche network offers a glimpse at how an open source bridge can bring immense value. Just [last month](https://www.coindesk.com/markets/2023/03/03/record-btcb-mint-lifts-bitcoin-on-avalanche-tally-above-8k/), Avalanche’s BTC.b (essentially wrapped BTC) supply grew by over $44 million USD. This particular bridge is open source and uses a Pay-To-Witness-Public-Key-Hash transaction on Bitcoin. This particular bridge uses only one smart contract to bridge assets.

Another Avalanche Bridge (AVAX - ETH bridge) has brought over [$2.1 billion USD in Ethereum assets](https://li.fi/knowledge-hub/avalanche-bridge-a-deep-dive/) to the Avalanche network. This particular bridge uses wardens to sign off on approved bridge transactions. However, these [wardens are overseen](https://li.fi/knowledge-hub/avalanche-bridge-a-deep-dive/) by Intel SGX and are part of a “private enclave” (Ava Labs, Halborn, BwareLabs, and Avascan) that must be trusted in this scenario. Three out of four wardens are needed to approve bridge transactions. If the wardens “were to collude or get hacked,” it creates a unique attack vector through which funds could be compromised.

## Rosen Bridge: A Simpler Way to Bridge

[Rosen bridge](https://github.com/rosen-bridge) is an Ergo-centric bridge that allows users to send and receive coins and tokens between Ergo and other blockchains. **To be clear, the Rosen bridge prioritizes security over transaction speed.** One of the benefits of using Rosen bridge is that there is “no need to deploy and utilize smart contracts on the other chains since the consensus on any action can be done on Ergo.” This minimizes the attack vector of the bridge because there is no need to worry about the security assumptions of the other blockchain. Removing the need to interact with smart contracts on the other chain is one of the key innovations that sets Rosen apart from other bridges. 

It is important to note that Rosen Bridge is also a 2nd layer authentication bridge. This means that there are _**two layers of security**_ - in the form of watchers and guards.


>“In the first layer, watchers are monitoring and [reporting] the events on the networks. Upon reaching a consensus on a particular event, the second layer is being notified. In the second layer, Guards will verify the event and create/sign the required transaction for Ergo or chainX. Watchers monitor the chains, verify and report the events, and try to reach a consensus on the verified events. Then they notify the Guards of an approved event. Guards will verify the approved events and try to sign the required transaction. Watchers actively monitor the chains and trigger the events, while Guards only verify the approved events.”

In the simplest terms, the watchers and guards have built in redundancies, arming Rosen bridge with multiple layers of security to protect users from potential exploits. It’s also worth noting that any blockchain that supports multisignature or threshold signatures can be added to the Rosen bridge network.

When dealing with financial assets, it is imperative that security is the first priority. As has been noted, depending on the structure and security assumptions, bridges have been prone to hacks. Rosen bridge ushers in a new era for bridge interaction. Coupled with Ergo’s robust and time tested security assumptions, its unique innovations offer a new standard for multi-chain bridge design. Ergo is built to offer secure financial transactions. It is designed to be a haven for research and open source coding, where like-minded developers can build dApps and tools that benefit the average person. The Ergo Platform did not pre-allocate tokens, and the coin has had one of the fairest launches since Bitcoin. Just take a look under the hood and see the engine that drives this blockchain. Ergo has been innovating since its inception, developing secure financial contracts on the eUTXO model and pushing the limits of Proof of Work to new heights. 

Rosen bridge is just the latest innovation in a long line of DeFi tools and products on Ergo. Cross-chain interoperability is the future of the cryptocurrency space, and with Rosen bridge, we have a new standard in bridge security. Security should never be sacrificed for speed when it comes to ensuring the safety of your money. By minimizing potential attack vectors through watchers and guards, as well as the exclusive use of smart contracts on Ergo, funds will be more secure and cross-chain interoperability will have an opportunity to flourish in new ways.

To learn more about Rosen Bridge, please consult [GitHub](https://github.com/rosen-bridge) and this [video](https://www.youtube.com/watch?v=Xsiy-yPJQ6w&ab_channel=ErgoPlatform) by Joseph Armenio.

ergo_blog_rosenbridge_050423.png

Ergo’s Rosen Bridge: A New and Better Way to Interact Cross-Chain

## Ergo’s Rosen Bridge: A New Way to Bridge

[Rosen Bridge](https://github.com/rosen-bridge) is an Ergo-centric bridge that allows users to send and receive coins and tokens between Ergo and other blockchains. To be clear, the Rosen Bridge prioritizes security over transaction speed. One of the benefits of using Rosen Bridge is that there is  
>“no need to deploy and utilize smart contracts on the other chains since the consensus on any action can be done on Ergo.”

This minimizes the attack vector of the bridge because there is no need to worry about the security assumptions of the other blockchain. Removing the need to interact with smart contracts on the other chain is one of the key innovations that sets Rosen apart from other bridges. 

It is important to note that Rosen Bridge is also a 2nd layer authentication bridge. This means that there are _two layers of security_ - in the form of watchers and guards.


>“In the first layer, watchers are monitoring and [reporting] the events on the networks. Upon reaching a consensus on a particular event, the second layer is being notified. In the second layer, Guards will verify the event and create/sign the required transaction for Ergo or chainX. Watchers monitor the chains, verify and report the events, and try to reach a consensus on the verified events. Then they notify the Guards of an approved event. Guards will verify the approved events and try to sign the required transaction. Watchers actively monitor the chains and trigger the events, while Guards only verify the approved events.”

In simplest terms, the watchers and guards have built-in redundancies, arming Rosen Bridge with multiple layers of security to protect users from potential exploits. It is also worth noting that any blockchain that supports multisignature or threshold signatures can be added to the Rosen Bridge network.

## What are Bridges?

A [bridge](https://www.coindesk.com/learn/what-are-blockchain-bridges-and-how-do-they-work/) is a tool that allows digital assets to be moved from one blockchain to another. As such, a cross-chain bridge acts as a layer of interoperability between one or more blockchains.

## Why do we Need Bridges?

Crypto bridges allow different blockchains to transfer digital assets between each other in a quick and efficient way. Alternative methods can be time consuming with users sometimes having to do multiple swaps between various exchanges in order to acquire their cryptocurrency of choice. Crypto bridges are also generally more decentralized than CEXs, which removes the need to trust a centralized entity. Trustless bridges are also attractive to many users since they do not require KYC.

## Types of Blockchain Bridges

Although there are a plethora of different bridges that have been built on top of several blockchains, in this article we will discuss the two main [categories](https://ethereum.org/en/bridges/#:~:text=Types%20of%20bridge,-Bridges%20have%20many&text=Generally%2C%20bridges%20fall%20into%20two%20categories%3A%20trusted%20and%20trustless%20bridges.&text=Trusted%20bridges%20depend%20upon%20a,using%20smart%20contracts%20and%20algorithms.) that all bridges fall under: **trusted bridges and trustless bridges**. Trusted bridges need a central entity or system to function reliably, whereas trustless bridges rely on smart contracts and concrete coding to operate independently (and are ideally decentralized). The Rosen Bridge on Ergo is classified as a trustless bridge because it is fully decentralized.

## Why Use a Blockchain Bridge?

For most people, the main use case of a bridge is for the seamless transfer of assets across multiple blockchain platforms. This removes the need for a central figure (like a CEX) to authorize the transfer of digital assets. For many within the industry (especially those who appreciate cypherpunk philosophy), the ability for blockchain technology to provide trustless systems and mitigate the need for centralized entities is a high priority. It allows the user to take their finances into their own hands. The need for trustless and decentralized technology is vital for users to have transparent trust assumptions when using a bridge. 

Another reason one might use a bridge is because a bridge’s fees could be lower than the transaction fees on a particular blockchain. This can potentially save the user money in gas fees. Bridges also enable users the ability to transfer their assets to a blockchain with less network congestion. A bridge ultimately gives the user much more flexibility and autonomy with regards to how they deploy their assets for their DeFi needs.

## What are the Risks of Using Bridges?

Although bridges are valuable and enable cross-chain interoperability, they can come with significant risks depending on the bridge you are using. It is important that the bridge’s code is open sourced so that security assumptions can be more transparent and trustworthy. Alarmingly, the biggest [risk](https://www.coinchange.io/blog/why-crypto-bridges-are-getting-hacked-and-how-to-secure-them#:~:text=Poor%20bridge%20security%20can%20result,close%20to%2015%20incidents%20reported.) with crypto bridges is that:


>“...poor bridge security can result in a hack and loss of user funds… According to the blockchain data platform, Chainalysis, almost $2 billion has been stolen from bridges over the past two years, with close to 15 incidents reported. This data from [Chainalysis](https://blog.chainalysis.com/reports/cross-chain-bridge-hacks-2022/) reveals that bridge hacks constitute a significant proportion of the total funds stolen in DeFi in 2022, amounting to an alarming 69% of the total.”

This technology is in its early stages within an industry that is still in its infancy. Historically, bridges come with a high degree of risk and users should take care to research any bridge they wish to use. 

## Rosen Bridge: Why It’s Different From Other Bridges?

From a technological standpoint, Rosen Bridge possesses many attributes that other bridges do not. Firstly, it is open source. This means that the community can verify the code to ensure that there are no vulnerabilities. Additionally, the Rosen Bridge relies only on Ergo’s smart contract capabilities - **no smart contracts are used on the other chain**. This feature is unique in the industry, and it lowers the attack vectors that bad actors could potentially use to steal funds.

Rosen Bridge allows for easy implementation with other blockchains. Any blockchain that has “multisignature or threshold signature support can be added to the [bridge](https://github.com/rosen-bridge) network.” It is also decentralized and trustless, offering users increased transparency and security.

#### Conclusion

Bridges are an essential part of a decentralized future. They not only enable an interoperable space, but they also allow users to maximize the unique properties of different blockchains. As this industry is still a new frontier, understanding the security assumptions of each bridge is crucial in keeping digital assets safe. With Rosen Bridge, we have a new standard in bridge innovation and design. Along with Ergo’s decentralization, security assumptions and open sourced code, Rosen Bridge has the potential to unify the crypto space as a major hub for interoperability, in a way this industry has not yet witnessed.


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Cryptocurrency Bridges: The Future of Interoperability

[Mining](https://www.coinbase.com/learn/crypto-basics/what-is-mining) is the process by which Ergo (or any other PoW (Proof of Work) blockchain) secures the network, generates new coins and verifies transactions. Mining is largely incentive driven, and in return for providing mining hash power, miners are rewarded with the type of cryptocurrency they are mining. The miners secure the blockchain and the blockchain in turn provides coins.

[Mining on Ergo](https://ergoplatform.org/en/get-erg/#Mining) is based on Autolykos II, a fairly launched, efficient ASIC-resistant Proof of Work algorithm.This mining algorithm is more energy efficient than other PoW protocols, and it has demonstrated that it puts much less wear and tear on GPU hardware with lower mining temperatures.

## Why is Mining Important to Ergo?

The primary role of miners is to secure the network. Bitcoin’s PoW UTXO model is time tested, and with Ergo, the creators drew inspiration from this design. They built a protocol that enabled Ergo’s PoW network to deploy smart contracts through the eUTXO model.

In order to secure the network and validate transactions, Ergo (like other PoW blockchains) needs hash power. Miners offer a vital service to the ecosystem by providing this necessary hashing power, thereby securing the network and validating transactions. As an ASIC-resistant blockchain, Ergo prioritizes GPU miners, allowing those with consumer grade hardware the opportunity to participate in the network. 

## What Innovation does Ergo Bring to the Mining Industry?

One of the innovations that Ergo offers its mining community is governance responsibilities over the network. For those who have been actively mining PoW cryptocurrencies over the last decade, you will note that this decentralization of power is incredibly rare in the blockchain industry. With Ergo, miners have the power to collectively vote on any EIP proposal, thereby having a say in the future of the network. This feature has allowed miners to vote on several important proposals, including [EIP-27](https://ergoplatform.org/en/blog/A-New-Era-for-Ergo-EIP-27-Begins-Today/).

## What is a Mining Pool?
 
When a miner chooses to mine Ergo, they need to decide if they will solo mine or mine as part of a pool. A mining pool is a collaborative effort among miners to combine their hash power. By participating in a mining pool, a miner has a better chance of receiving steady mining rewards. Whenever a miner within the pool hits a block, everyone else in the pool gets paid. In this scenario, a miner receives block rewards proportional to their hashrate contribution within the pool. 

Solo miners often go longer periods of time before hitting a block, but when they do they receive the whole block’s reward. Choosing to solo mine or mine within a pool is a personal choice - some miners prefer the peace of mind knowing that they will receive regular rewards while mining within a pool. 

## Innovation on Ergo and the Future of Mining Pools

During the most recent [Ergohack](https://ergohack.io/) (ErgoHack VI: Cypherpunk Finance), one of the submissions proposed working on developing a way to fully decentralize collateralized mining pools. The[ Lithos Protocol team](https://github.com/Lithos-Protocol/Lithos/blob/ErgoHack/documents/ErgoHack.MD) seeks “...to create the contracts needed to support collateralization by third parties, in a way which allows for miners to select their collateral, while at the same time supporting novel concepts in PoW, such as PoW-DeFi and Fair Initial Mining Offerings.” Collateralized mining pools essentially allow miners to have increased flexibility, giving them greater control over the transactions they choose to include in their blocks and how they establish governance frameworks for the network. 

In their [Litepaper](https://github.com/Lithos-Protocol/LitePaper#readme), Lithos also states that “Collateralized mining pools allow for local block creation and full censorship resistance. Miners may choose whatever transactions make it into their block, and may also set parameters related to governance of the Ergo blockchain. Collateralization also supports a native DeFi application built into the Lithos protocol, in which lenders provide collateral to miners in return for fees.” This gives miners more [freedom and power](https://twitter.com/LithosProtocol/status/1632552516406632450) over their hashrate because miners will no longer have to worry about the possibility of mining pools cheating them out of shares and payments. Share and payment data will be processed and stored on the Ergo blockchain instead of a pool operator's centralized database.

## Looking to the Future

Those in the Ergo ecosystem are keenly aware that blockchain research did not stop with the advent of Bitcoin and subsequent launch of smart contracts on Ethereum. Ergo developers have continued to actively research and build during the recent bear market, and all eyes are focused on creating a blockchain that improves the lives of ordinary citizens. With Ergo, users are accessing a blockchain that prioritizes open source coding, decentralization and transparency. With tools like the Lithos Protocol, Ergo is revolutionizing the way miners operate in the industry. Stay tuned to Ergo’s social media channels for the release of _Mining Pool Innovation: Lithos Protocol Part II_ for a more in-depth look at what Lithos is building.


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Mining Pool Innovation: Lithos Protocol Part 1

As [ErgoHack VI: Cypherpunk Finance](https://ergohack.io/) enters its adjudication period, the [judges](https://ergoplatform.org/en/blog/Meet-Your-Judges-ErgoHack-6/) have the unenvious task of picking winners from a group of very skilled developers and visionaries. Prizewinners will be chosen based on a criteria of innovation, quality of code, and completed implementation. With a prize pool of 18k $SigUSD and 300K $ERGOPAD (plus a [successfully funded raffle](https://ergoraffle.com/raffle/show/b312c002a0b1671a0089fabc2d1a028e5938d46b1b2180d7e480e760526408ce) for community choice awards worth an additional 1,000 ERG) on the line, let's take a look at what the contestants have accomplished thus far. 

### Analog Ergo

This project aims to use cryptographic primitives (well established, low level algorithms) as the basis for a cross-chain peer-to-peer marketplace. It will enable users to set and agree to listing prices and other parameters in a private and fungible manner, without the involvement of intermediaries.

**Update from the team:** _Commendable progress has been made towards creating a decentralized atomic order book on Ergo. Proof of concept Solidity contracts have been [successfully tested](https://goerli.etherscan.io/address/0xc5a8ab3a59627120e02041c9783cf8dc20a79f43#code). Initial ErgoScript implementation looks promising with [testnet transactions](https://tn-ergo-explorer.anetabtc.io/en/transactions/a9d32f4b38350301b09a64f0847370a9fe871395c49874c64caa59fb7f56c4f1) having been completed, and contracts currently need to be updated to reflect elliptic curve differences between Solidity and ErgoScript. _

### ChainCash

With an insatiable need to continually improve and build new innovations on Ergo, powerhouse developers Kushti and Scalahub have decided to submit a proposal to ErgoHack VI (while excluding themselves from the prize pool). The goal of ChainCash is to create a peer-to-peer monetary system, utilizing [spender-signed currency](https://www.ergoforum.org/t/chaincash-a-spender-signed-currency-on-ergo/4015) with decentralized issuance and an elastic supply.

**Update from the team:** _With ErgoScript contracts complete, mainnet transactions have been successfully tested [creating reserves](https://explorer.ergoplatform.com/en/addresses/2yJgWs3wJGHYECtp9p4kzg4DUxpY283jvsRLgfUs5QFYSqnQZctqBYpZr4khWY3t6kURo3mbYJBPgPW3UqJQ9zpLN4fQcSWayjPrQUtD5iGD6e4oS8JWFn57ovg9Sh8V1q4Nfr3aazA9mszLt57cEAMfxRznENG1jUFdrUqtjG9C2h8bmwP2iEoKCGYnEnh87M9jPk7QgdjPQvydczCxeEu4aX6wck6Cv7RYwYC5E89qzVH6R7EteHvfy3AuLWuR1z1VsUB6DWP4Egn6k7AyXtZT18PVP7RfroPmSAGBE7AJcFbH8ZEgKd8F4ztL6hf1sxLoZQbw6pVH212HhwjiXBQdEnNTjqcXdC3X2iqWm5Fojmr9q1mAuySozFX82v4UR2zdqbNCbg2bRJaKiZBDKkQoL1eHPwK85Ag), as well as [issuing](https://explorer.ergoplatform.com/en/addresses/QfHohuFF4u3mRHnxqCcwPFMB8fqgseztg7jfKy4VivdgW2vCGNHLANAcPXhJLC6941BNnqhf14eLPoiDuYQRheJu6s8SMZRJjAmWQqgra4awgHWXybKNyrST1XqZMZb9BdFmfmq3cnyYULGxqnyhWCxeW95c19PWwaUWuaDYx4YXa1WJnTkzusM5ks6Ku1SFbHZ9kZd8JaKR5CW7BS7mxkYfWew5HNCQo2QuJaoXupdUdWtHHkKrJ3iYRkfESsGHVV7xGQ2PSChisVBpdBsuiaeAEFF619ELGMfct4ihWc785ozS8oAfkoiyx7eDBN8iQcEbNeat8K2gJmuKZUspWXcKRVVDn4zgbBQfpSSavui7VEKB5TM4opraHg6uvPPB15eS98EQkAMnVqY9Y2) and [spending notes](https://explorer.ergoplatform.com/en/transactions/307696f33cc8b03ac731616f025cb33555f854ddb3ab58cfd8af884c59225cd1). A to-do list of what’s still needed for overall project completion, and an early whitepaper draft have been made available for [reference](https://github.com/kushti/chaincash)._

### Ergo Stats

Ergo Stats is creating an iOS application that will allow users to more conveniently monitor blockchain statistics on mobile devices.

**Update from the team:** _The [ErgoStats iOS app](https://github.com/ach2swift/ErgoStats) has been completed and submitted to the Apple App Store for review. TestFlight launch has also been requested so that eager Ergonauts can start to experience Ergo statistics in the palms of their hands._

### Ergo Tizen

Initially using Samsung’s open source TizenOS, Ergo Tizen aims to allow the operation of Ergo nodes on any number of smart devices, such as televisions, refrigerators, smart phones, watches, et cetera.

**Update from the team:** _A basic, yet functional dashboard has been created in TizenOS to demonstrate the viability of running an Ergo node on smart devices. “[Ergode](https://github.com/ross-weir/ergode)” is successfully operating on a TV emulator, communicating with its testnet peers. A video demonstration can be viewed [here](https://clipchamp.com/watch/wDZ9t0Hq3tp)._

### Explorer-UI 

The team at Spectrum Labs has thrown their hat into the ring with a proposal to update the Ergo explorer design. Their proposal aims to simplify the visual representation of the UTXO model to improve the user experience and increase ecosystem adoption.

**Update from the team:** _Providing clear [examples and feedback](https://twitter.com/_yashablack/status/1628066492322312193) of their vision, Spectrum is offering a number of improvements to the existing Ergo explorer experience, including a simplified transaction list, a more intuitive interface, and dark mode._

### Lithos

The Lithos team will be using this ErgoHack as an opportunity to showcase the collateralization side of their [Lithos Protocol](https://github.com/Lithos-Protocol/LitePaper). In doing so, they hope to provide a low risk opportunity for lenders to earn yield on their ERG by providing collateral to mining pools, while promoting increasingly decentralized block production in the process.

**Update from the team:** _Collateral contracts have been completed. Also, the ability of miners to directly insert necessary [transactions](https://tn-ergo-explorer.anetabtc.io/en/transactions/7efbc232622a0db6c602042a20a2022486a3b757e22fd1cc5fecb0ba98680f21) into blocks has been successfully demonstrated._

### Lilium

Lilium seeks to create decentralized NFT minting, distribution, and sales infrastructure capable of being seamlessly integrated into business applications and programs.

**Update from the team:** _A Lilium V1 MVP (minimum viable product) has been delivered, with UI design complete and contracts audited. Front end work continues._

### Netnotes

Proposing a method of base level file communication, [Netnotes](https://github.com/networkspore/Netnotes/blob/main/Netnotes%20-%20ergohack%20VI.pdf) is working to enable “hybrid interaction” between a web browser and an Ergo node (while still allowing the node to maintain its boundaries). 

**Update from the team:** _An initial framework has been established and the process of integrating a user interface has begun. The web application being used for testing will be the [Arcturus](https://github.com/networkspore/arcturus) project, a tabletop role-playing game wherein assets can be traded._

### OpenBoard 

The goal of OpenBoard is to create an uncensorable message board of sorts, allowing authors to pin boxes of text on the Ergo blockchain. Once operational, messages will be updateable with a simple transaction. Using an app, messages will be fetched from an Ergo node and displayed locally.

**Update from the team:** _Sometimes life has plans for us that inconveniently coincide with ErgoHack. Though OpenBoard won't be submitting anything further for review during this event, progress will continue and we look forward to future developments._

### Sigma’O

The goal of [Sigma’O](https://github.com/ThierryM1212/SigmaO) is to create a permissionless and fully hedged smart contract, effectively allowing for call and put options on Ergo tokens.

**Update from the team:** _Sigma’O has delivered a working product and entered [public beta](https://www.sigmao.cc/)! UI improvements are ongoing._

### SigmaStamp

An idea born during the very first ErgoHack and resurrected for Cypherpunk Finance, SigmaStamp is building open source tooling to enable Ergo users to add timestamp verification to their created works and documents. The process of “stamping” will insert file data in the form of a hash into the blockchain and provide the “stamper” with an NFT for verification purposes.

**Update from the team:** _We were able to complete the fully working Proof of Concept of our application. We were also able to make a brief explanation on the "proof of concept" wiki which explains how our application works and how it can be used. The technology itself is completed. However, the UI experience, and the whole "explain like I'm five" explanation, needs to be provided (wiki needs to be much more extended) in order for ordinary computer users to be able to understand all of the security assumptions and guarantees of this project. Feel free to try the application at:_ www.sigmastamp.ml/

### Sigma Subscriptions

Making use of [FleetSDK](https://github.com/fleet-sdk/fleet), Sigma Subscriptions intends to build a framework that will allow for the creation, management, and integration of subscription services on Ergo.

**Update from the team:** _[Sigma Subscriptions](https://github.com/cornbelt-dev/sigma-subscriptions) has finished the contracts necessary to perform all actions related to subscription management, as well as created a simple Fleet plugin and frontend to demonstrate functionality._

### Single-TX-Swap

Late entrants to ErgoHack VI, this team is building a trustless escrow service aimed at Discord users who wish to swap NFTs. Making use of [multisig wallets](https://ergoplatform.org/en/blog/Ergo-Multisig-Wallet-What-is-it-and-How-to-Create-One/), users will be able to view one another’s wallet contents and construct trades that, if agreed upon, will execute a swap in a single transaction (without the need for smart contracts).

**Update from the team:** _A public beta of [Single-TX-Swap](https://www.single-tx-swap.com/) has been made available. Interacting with this version requires a pre-release download of [Nautilus Wallet](https://github.com/capt-nemo429/nautilus-wallet/releases/tag/v0.8.0-alpha.0)._

### SIPS

ErgoHack VI judge Joseph Armeanio is contributing to the fun as well (while excluding himself from the prize pool). Numerous _SigmaUSD Improvement Proposals_ have been gathered together, and his submission will put forward a multitude of potential improvements that aim to improve resiliency and better balance the protocol’s economics

**Update from the team:** _The [discussion](https://github.com/ergoplatform/sips/discussions/17) around SigmaUSD Improvement Proposals continues with various potential improvements and methods of implementation being collected and considered._

### What’s Next?

Although the official contribution period has concluded, plenty of excitement still lies ahead as winners are to be decided. So be sure to keep an eye on Ergo’s social media channels for the latest announcements!


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ErgoHack VI: Updates 


For the next chapter of “Ergo: The Roadmap to Success,” we take an in depth look at aspects of Ergo that have the potential to propel the blockchain to new levels of exposure and adoption. These include education initiatives, low-risk investing based technology, NFT marketplaces and the security to ensure the safety of your assets.

## Education: The Gateway to Adoption

Educating investors on the technological capabilities of a project is vital for the growth of a successful cryptocurrency. There are several approaches to education within the Ergo ecosystem that interested parties can explore.

One such approach is the community led initiative known as DeCo. Created by the same group behind ErgoLend, DeCo offers courses for anyone who wants to learn how to build and code on Ergo. Students gain valuable experience learning about Ergo’s scripting language (Ergoscript) with some additional exposure to Scala.

The [Sigmanauts](https://ergonaut.space/en/Ergo/Contributing/Sigmanauts) program is another avenue people can explore to learn more about the Ergo Platform. This program was created to build a community-driven approach to the growth and promotion of the blockchain. Interested parties can apply to become part of the Sigmanauts program where they will learn more in depth information about what Ergo has to offer. Once they have established themselves in the program, individuals may be offered the opportunity to take on a community role where they help to promote and educate others about Ergo.

In addition to these very successful community initiatives, the Ergo Foundation’s strategic advisor, Daniel Friedman, has announced that the foundation is in talks to partner with an accredited university to create a curriculum centered around Ergo.

## Refundable ICOs: Protecting the Retail Investor

When it comes to preventing scams and creating a move level playing field, the creation of tooling that enables refundable ICOs is a game changer. ICO stands for initial coin offering, and it refers to raising capital in the early stages of a cryptocurrency project. ICOs are fairly common throughout the industry and can be beneficial to a project’s growth. However, there can be potential problems for retail investors. Depending on the structure of an ICO, there can be an uneven distribution of coins to insiders and venture capitalists. If this insider group sells their tokens together at a later date, it can leave retail investors hanging. It is important to note that this unfortunate scenario does not always happen and many projects have put ICOs to good use, but the possibility of it happening is a serious drawback for ICOs. 

A refundable ICO is essentially a contract whereby the consumer can reverse their investment trade and recover a portion of their investment if the project does not work out, or is going in a direction that makes the investor uncomfortable. This puts a greater amount of responsibility and risk on the project organizers. The comet token is an example of a project that has implemented a refundable ICO on the Ergo blockchain. 

## SkyHarbor

The team behind SkyHarbor have set out to build a user-friendly NFT marketplace on the Ergo blockchain, and it is quickly becoming a popular dApp in the community. 

Sky Harbor allows users to buy and sell NFTs seamlessly for very low fees. 
Key Features of Sky Harbor include:
1. Recently Listed Section
2. Trending Section
3. Top 8 Weekly Volume Trending
4. Activity → Last sold price and how long ago it was sold
5. Collections Section
6. Verification Check
7. FAQ Section
8. Floor Collection Price
9. Seamless Buy and Sell Experience
10. User Friendly Experience

## Ledger Support

With so many exchanges being liquidated recently, crypto consumers are looking for ways to store their assets in secure and private wallets. Although Ergo does have several excellent wallets that enable self-custody, it is only recently that Ledger hardware support has been made available to the community via Ledger dev mode. If you are comfortable operating in dev mode, you can start using your Ledger device to securely store assets. With dev mode now enabled for Ledger, it is just a matter of time before the Ergo app is made fully available on Ledger.

Ergo is still a young blockchain and developer activity continues to grow significantly throughout this recent bear market. ErgoHack VI has just recently ended and the community eagerly awaits to see who will win awards from the extensive prize pool. With so much going on for Ergo, it’s exciting to watch and wonder where the blockchain will be in the years to come. 


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Ergo: The Roadmap to Success - Part 4


The Cypherpunk theme for Ergo’s first [ErgoHack](https://ergohack.io/) of 2023 looks to inspire ideas relating to cryptocurrencies’ first principles. Since its inception, optional privacy and robust security have been recognized as some of Ergo’s identifying features. One of the first dApps deployed on Ergo was the first non-interactive, non-custodial mixer in the cryptocurrency industry. With Ergo, the tooling is in place to create financial products that are decentralized, permissionless and promote autonomy for the ordinary person.  

## Exploring the use cases of security and privacy tools in cryptocurrency

During the 2022 [Ergo Summit](https://www.youtube.com/watch?v=h6g5WahEUSk&list=PL8-KVrs6vXLQQwL_1cS2sIAK3mxfkuo2B&index=3&ab_channel=ErgoPlatform), the founder of Ergo, Alex Chepurnoy, spoke at great length on the topic of privacy and security. He offered an in-depth presentation on the various use cases for certain privacy applications, such as Schnorr signatures, mixers, stealth addresses and other various aspects of privacy tooling. Let’s take a brief look at some of the features he discussed:

1. [Schnorr signatures](https://www.bitstamp.net/learn/blockchain/what-are-schnorr-signatures/) essentially “enable a transaction to be signed with a single signature, regardless of how many addresses the funds are being sent from.” The primary utility of Schnorr signatures is to allow for enhanced privacy while securing one’s cryptocurrency. In order to improve the security and privacy of your transactions, one can use multiple signatures when sending transactions. This can involve requiring approval from multiple people or devices - known as multisig. However, some people prefer to keep everything private for reasons of their own. With the implementation of Schnorr signatures, these types of signatures are blended in with regular ones.
2. The [ErgoMixer’s](https://ergoplatform.org/en/blog/2021-05-12-ergomixer/) primary use case is to allow users to send tokens and execute transactions whereby both sides of the transaction are private. The Ergomixer also reduces risk by being self custodial. Your coins and tokens are never in someone else’s possession when mixing.
3. “[Stealth addresses](https://www.investopedia.com/terms/s/stealth-address-cryptocurrency.asp) are a one-time wallet address used to create more anonymity in cryptocurrency transactions.” Alex Chepurnoy [clarifies](https://www.youtube.com/watch?v=h6g5WahEUSk&list=PL8-KVrs6vXLQQwL_1cS2sIAK3mxfkuo2B&index=2) that they are a “tool to hide recipient privacy” (13:11-13:22). Due to the fact that crypto wallet addresses are public, transactions can be linked to respective addresses. [Ross Weir](https://github.com/ross-weir/just-ergo-things/tree/main/stealth-addresses), a developer building on Ergo, states that “if your name or other information is somehow associated publicly with your wallet address, transactions can be traced to you. A stealth address acts as a proxy for your wallet address.”

These are just a few examples of security and privacy tooling on the Ergo blockchain. Financial privacy is imperative in ensuring that people have protection from corrupt government surveillance and abuse, and that their sensitive financial information is not compromised. In a world where the financial playing field is not only uneven but also malicious at times, it is vital that the ordinary citizen have tools at their disposal to aid them in securing their financial autonomy.

The privacy features laid out in this article are just a few examples of what the Ergo blockchain currently offers. With ErgoHack VI, participants are hard at work developing new products that are inspired by Cypherpunk philosophies and how they may relate to privacy and security. What new tools and dApps will come from this exciting hackathon?

If you are interested in staying up to date on ErgoHack VI - Cypherpunk Finance, please visit the [website](https://ergohack.io/) and stay tuned to Ergo’s social media channels. ErgoHack VI runs from February 8-22, after which the jury will deliberate to decide the winners.


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Security and Privacy Tooling On Ergo


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 

[Ergohack VI: Cypherpunk Finance](https://ergohack.io/) has officially started and our contestants are hard at work. With a focus on building tools and projects that promote Cypherpunk principles, it is incredibly encouraging to have such a large applicant pool for this ErgoHack. Attracting this many registrants, in a bear market no less, speaks volumes about the spirit of Ergo’s developer community and the potential of the blockchain. As the contestants dive into their first week of the hackathon, let’s take a look at the projects they are building.

### Analog Ergo

This project aims to use cryptographic primitives (well established, low level algorithms) as the basis for a cross-chain peer-to-peer marketplace. It will enable users to set and agree to listing prices and other parameters in a private and fungible manner, without the involvement of intermediaries.

### ChainCash

With an insatiable need to continually improve and build new innovations on Ergo, powerhouse developers Kushti and Scalahub have decided to submit a proposal to ErgoHack VI (while excluding themselves from the prize pool). The goal of ChainCash is to create a peer-to-peer monetary system, utilizing [spender-signed currency](https://www.ergoforum.org/t/chaincash-a-spender-signed-currency-on-ergo/4015) with decentralized issuance and an elastic supply.

### Ergo Stats

Ergo Stats is creating an iOS application that will allow users to more conveniently monitor blockchain statistics on mobile devices.

### Ergo Tizen

Initially using Samsung’s open source TizenOS, Ergo Tizen aims to allow the operation of Ergo nodes on any number of smart devices, such as televisions, refrigerators, smart phones, watches, et cetera.

### Explorer-UI 

The team at Spectrum Labs has thrown their hat into the ring with a proposal to update the Ergo explorer design. Their proposal aims to simplify the visual representation of the UTXO model to improve the user experience and increase ecosystem adoption.

### Lithos

The Lithos team will be using this ErgoHack as an opportunity to showcase the collateralization side of their [Lithos Protocol](https://github.com/Lithos-Protocol/LitePaper). In doing so, they hope to provide a low risk opportunity for lenders to earn yield on their ERG by providing collateral to mining pools, while promoting increasingly decentralized block production in the process.

### Lilium

Lilium seeks to create decentralized NFT minting, distribution, and sales infrastructure capable of being seamlessly integrated into business applications and programs.

### Netnotes

Proposing a method of base level file communication, [Netnotes](https://github.com/networkspore/Netnotes/blob/main/Netnotes%20-%20ergohack%20VI.pdf) is working to enable “hybrid interaction” between a web browser and an Ergo node (while still allowing the node to maintain its boundaries). 

### OpenBoard

The goal of OpenBoard is to create an uncensorable message board of sorts, allowing authors to pin boxes of text on the Ergo blockchain. Once operational, messages will be updateable with a simple transaction. Using an app, messages will be fetched from an Ergo node and displayed locally.

### Perma-Ergo

With the goal to decentralize food production, Perma-Ergo will utilize the Ergo blockchain to provide micro loans to farmers who are typically excluded from contributing to holistic natural systems (i.e. permaculture/agroecology).

### Privacy Guide

This will be a 100% free online module, consisting of both written materials and video demonstrations, teaching the importance of online privacy. After completion, users will have an anonymous wallet and a step-by-step guide on how to safely navigate the Ergo blockchain. 

### Quantum Swap

Quantum Swap entered this hackathon with the goal of building a peer-to-peer Ergo NFT and native asset exchange service. The team intends to make use of existing tools to provide users with the ability to scan the blockchain for assets of interest, mint and send NFTs containing text messages to the holders, and construct “trading rooms” for the execution of agreeable transactions.

### SigmaO

The goal of [SigmaO](https://github.com/ThierryM1212/SigmaO) is to create a permissionless and fully hedged smart contract, effectively allowing for call and put options on Ergo tokens.

### Sigma Subscriptions

Making use of [FleetSDK](https://github.com/fleet-sdk/fleet), Sigma Subscriptions intends to build a framework that will allow for the creation, management, and integration of subscription services on Ergo.

### SIPS

Ergohack VI judge Joseph Armeanio is contributing to the fun as well (while excluding himself from the prize pool). Numerous _**SigmaUSD Improvement Proposals**_ have been gathered together, and his submission will put forward a multitude of potential improvements that aim to improve resiliency and better balance the protocol’s economics.

### Other Applicants

Several late entrants are currently formulating their projects and will be submitting proposals over the course of the event.

Competitors are vying to make meaningful contributions to the Ergo ecosystem and take home a share of the prize pool, consisting of 18k $SigUSD and 300k $Ergopad. [Registration](https://ergohack.io/register/) remains open through February 21st, after which the [judges](https://ergoplatform.org/en/blog/Meet-Your-Judges-ErgoHack-6/) will begin to assess submissions and determine winners. In addition to this hackathon’s prize pool, social media manager CW has set up a raffle to potentially fund an additional [community choice award](https://ergoraffle.com/raffle/show/b312c002a0b1671a0089fabc2d1a028e5938d46b1b2180d7e480e760526408ce)! 

**Good luck to all of the participants, and be sure to keep an eye on Ergo’s social media channels for the latest ErgoHack VI updates!**


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Ergohack VI Participants: Week One Overview


The Ergo Platform’s first major event of 2023 is just around the corner with ErgoHack VI - Cypherpunk Finance set to kick off on February 8th. This ErgoHack attempts to inspire competitors to revisit the first principles cryptocurrency was founded upon - an ethos that the Ergo Platform strives to embody. So what, or who, is a cypherpunk? Well, “[cypherpunks](https://river.com/learn/terms/c/cypherpunk/) generally believe in using cryptography and software rather than politics and advocacy to achieve freedom and privacy.” With Ergo, part of the blockchain’s design was inspired by the belief that privacy is a fundamental human right, and that this technology is uniquely designed to aid in the protections of certain privacies. 

It can be argued that digital privacy has come under attack in recent years (some may suggest that it has always been under attack). The developer of [Tornado cash](https://www.coindesk.com/policy/2022/11/22/tornado-cash-developer-alexey-pertsev-to-remain-in-jail-until-at-least-late-februrary/) was imprisoned and certain cryptocurrencies have been [delisted from exchanges](https://medium.com/efficient-frontier/six-reasons-coins-get-delisted-from-crytpocurrency-exchanges-3666deb1ef9f) due to their inherent privacy features. Additionally, various centralized exchanges require KYC and other sensitive information from users in order to access the services they provide. While still respecting the regulations and laws of various jurisdictions, it can be argued that online privacy protections are severely underdeveloped. With Ergo, there is an opportunity to rewrite that script and explore the various tools that enable the blockchain to offer optional privacy features. 

With Ergohack VI - Cypherpunk Finance, developers and entrepreneurs are tasked with designing mechanisms that ordinary citizens can use to protect their privacy and anonymity. They are also encouraged to explore building other types of tools that embody the first principles that Ergo was founded on (see [Ergo Manifesto](https://ergoplatform.org/en/blog/2021-04-26-the-ergo-manifesto/)).

When it comes to privacy tooling, Ergo possesses [sigma protocols](https://docs.ergoplatform.com/dev/scs/sigma/) which are a form of zero-knowledge proof. A zero-knowledge proof allows someone to prove that they know the solution to a problem without actually revealing the solution itself. Ergo has also deployed the use of a [mixer](https://ergoplatform.org/en/blog/2021-05-12-ergomixer/) within the ecosystem. With ErgoHack VI, the Ergo Foundation encourages applicants to take advantage of existing Ergo privacy features and to further develop open sourced privacy and/or DeFi tooling on the blockchain.

The [Ergo Manifesto](https://ergoplatform.org/en/blog/2021-04-26-the-ergo-manifesto/) states that “Privacy must remain an option to protect the individual, and it does not have to be forced; let people make their own choices. Privacy is the ability to create barriers and erect boundaries to create a space for the individual. It is up to each what borders and boundaries they choose to make.” Depending on your upbringing and where you live in the world, you may question the need for strong privacy protections. Regardless of any freedoms you may enjoy, there is a need for certain privacy protections, especially in places where governments have eliminated the basic freedoms of their citizens.

The [Ergo Manifesto](https://ergoplatform.org/en/blog/2021-04-26-the-ergo-manifesto/) states that “[Civilizations exist] under a continuous tension between what is best for society and what is best for the individual. The only real entities in a community are individuals, and all collectives, associations, and governments stem from individual participation and interaction. _Privacy protects the individual from society_. Privacy creates space to allow personal autonomy. Personal autonomy is the basis of individual rights.” 

Ergohack VI - Cypherpunk Finance is calling on developers and project leads alike to build financial tooling that embodies crypto’s first principles. These first principles can include privacy tooling, decentralization, open sourced code, self-custody, security and transparency. At the end of the hackathon, all submissions will be judged by a jury that will then determine how the prize pool of 18k $SigUSD and 300k $Ergopad will be awarded.

ErgoHack VI starts in two days! Be sure to register soon to take full advantage of this opportunity. For more details and the registration form, please visit the [ErgoHack website](https://ergohack.io/).



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ErgoHack VI Cypherpunk Finance: A Focus on Privacy


ErgoHack VI: Cypherpunk Finance is fast approaching! This iteration of Ergo’s popular hackathon series will be a [celebration of Cypherpunk philosophy and crypto's first principles](https://ergoplatform.org/en/news/Announcing-ErgoHack-6-Cypherpunk-Finance/). Applicants will compete for a prize pool of 18k SigUSD and 300k ErgoPad while they design and build future dApps and tools on the Ergo Platform.

## ErgoHack VI Adjudication

Contestants will have the opportunity to present their work to some of the most innovative and creative minds in the crypto space. During the adjudication process, judges may consider any of the following criteria to make their final decisions:

- Innovation
- Code quality
- Completed implementation

The jurors are made up of core and community developers (as well as other Ergo Foundation members) who have built, and continue to build, many of the unique features and dApps of the Ergo ecosystem. Many of them are prominent figures in Ergo, working to promote the tools and products the blockchain has to offer. 

ErgoHack participants will enjoy this rare opportunity to not only present their work to these esteemed judges, but they will also benefit from their oversight and comments during the hackathon. In addition to Ergo Foundation Board members, contestants will be judged by  several prominent developers from projects such as ErgoPad, Spectrum Finance and Paper Wallet.

## Judges

### Joseph Armeanio

Joseph has been involved in crypto on the investment side since 2013, and was a partner CIO at Big Bear Investments. Joseph has been on the board of Universal Education Foundation, a 501(c)3 organization since 2008. He brings a passion for counter economic frameworks and tools for social good. His role as business developer at the Ergo Foundation is to create partnerships in the crypto industry, as well as educational partnerships and research opportunities that drive the adoption of Ergo tooling in the public and non-profit sectors.

### Mark Glasgow

Mark is an Ergo Foundation member and works across various roles in Ergo. As a Computing Science graduate with a personal passion for improving inclusive systems, he is also the Technical Director for Disabled Students UK CIC -  a non-profit that was named as one of the most influential disability-led organizations in the UK.

### Ilya Oskin

Ilya Oskin is an experienced software engineer and has been a core developer at Ergo since the launch of the project. Ilya has a degree in Economics from The Russian Presidential Academy of National Economy and Public Administration. He is also the supervisor at GeekBrains, an online educational platform devoted to blockchain development.
Ilya is the founder of ErgoDEX (now Spectrum Finance) where he is currently working as the lead developer for the project. 

### Alison Robson AKA anon_br 

Anon_br is a software engineer passionate about facilitating crypto adoption through enhanced user experience. As a member of the Ergo Foundation, he is very active in the Ergo Portuguese community and wallet chats. He is also responsible for helping to build tools to improve the user experience with Paper Wallet and Ledger.

### Luivatra from ErgoPad

Luivatra has a Bachelor of Science in computer science (with a specialization in AI) and a Master of Science (in Games) from the University of Utrecht and IT University in Copenhagen, respectively. After over ten years of experience as an engineer and software architect in the financial sector, Luivatra sought new challenges and transitioned to the unique and exciting developer work at ErgoPad and Paidia. Luivatra has been active in Ergo since 2021 and continues to explore the inner workings of eUTXO while working full time as ergoscript developer at Ergopad.

## Registration

ErgoHack’s are an identifying feature of the Ergo ecosystem, and previous hackathons have yielded many of Ergo’s most popular dApps and wallets. Are you an entrepreneur and/or developer? Maybe your idea will one day become a signature dApp in the Ergo ecosystem.

Registration is now open and ErgoHack VI will begin February 8, 2023. For complete details and the [registration form](https://ergohack.io/register/), please visit the [ErgoHack website](https://ergohack.io/). Good luck!


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Meet Your Judges: ErgoHack VI

_**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. 

News blog 12 (3) (1).png

Sigma Finance: A Peer-to-Peer Bond Protocol


As innovation on the Ergo blockchain continues, another vital decentralized application within the ecosystem is emerging. Ergo already offers several dApps, such as NFT marketplaces, a DEX, raffles, mixers, games, etc., but the addition of a lending and borrowing protocol will bring an important DeFi utility to the blockchain. 

### What is Duckpools?

Duckpools is a pool-based lending and collateralized borrowing protocol on Ergo. This dApp enables users to earn a yield on their ERG holdings, providing the coin with additional utility. Currently, Ergo native assets such as Ergopad, Neta, and EGIO can be [staked with a preset APY](https://www.ergopad.io/projects). However, Duckpools aims to add a similar utility, whereby a user can stake their ERG and increase their position through the yield that they receive upon lending their ERG. This is important because Proof of Work coins have traditionally not been staked. Additionally, users can borrow ERG from this new protocol. Duckpools is currently operating in beta and interested parties can test the product for themselves via the [website](https://www.duckpools.io/).

### Why did Duckpools choose to build on Ergo?

As per the Duckpools whitepaper (Section 1.2), the Ergo Platform was chosen for a variety of reasons. Firstly, the Duckpools team wanted to “[solve] Ergo’s need for a foundational lending protocol that could be used to enable ecosystem growth.” Furthermore, “[we] wanted to showcase its development process. We firmly believe that developing on Ergo is simpler, faster, and more scalable than developing decentralized applications on other blockchains.” Due to these factors, the Duckpools team also believes that they can build this protocol for “a fraction of the development cost.” This is especially important when the crypto space is currently mired in a deep bear market and funding sources are scarce. The Duckpools team have highlighted that it is not their team that allows for fractionally priced development, but the Ergo Platform’s core protocol. This means that it is not necessarily their coding prowess per se that allows for cheap development, but the way that the base layer of the blockchain has been designed.

### What types of unique features does Duckpools offer?

Duckpools will bring some revolutionary features to the Ergo ecosystem. One of these features is that all revenue will go to a treasury that will be entered into a DAO type structure. This revenue will be shared with Duckpools token holders, while also empowering the community in how Duckpools will operate. As part of their roadmap, the Duckpools team will release a detailed budget on how funds will be spent to develop additional tools on the lending protocol. These features will add UI improvements and increased functionality for the user.

It is also worth noting that Duckpools will increase the borrowing power of members in the ecosystem. Duckpools will be the first to allow native assets to act as collateral for a loan. It will also be the first protocol on Ergo that allows an investor to short or long ERG and native assets. These pools will be permissionless and open source, thus staying true to Ergo’s first principles. Additionally, users will keep full custody of their funds - a feature that is not always offered to customers on centralized exchanges. 

### Tokenomics

Duckpools will offer a token sale to fund the development of the protocol, and the dApp will provide governance responsibilities to holders of this token. Once launched, users will have the power to vote over all of the protocol’s decision-making and finances going forward. 

As per the Duckpools whitepaper (Section 3.1), all platform revenue will be directed to the token treasury. Only Duckpools token holders will be able to utilize the benefits of governance. 
The Duckpools team offered the following quote on the formation of the DAO and corresponding governance features:

>“Whether they decide to simply airdrop revenue to token holders, or use funds to develop new platform features - we as project founders will pass on both the responsibility and profits of the Duckpools protocol, in its entirety, to the community.”

### Conclusion

As the Ergo ecosystem continues to develop real-world utility for users, dApps like Duckpools are helping to build the bridge from traditional finance to decentralized finance. The ability to lend and borrow cryptocurrency in a decentralized and private manner creates real value in the crypto industry. This type of DeFi tooling has the potential to enhance the lives of ordinary citizens and create a level playing field within the financial world - one that removes our reliance on centralized banks and monopolitized finances.

For more information about Duckpools, join their [Discord](https://discord.com/invite/znRMge8kQm) or browse their [Twitter](https://twitter.com/duckpools_io).

News blog 20 (3).png

Duckpools: A Lending and Borrowing Protocol on Ergo


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. 



News blog 9 (1).png

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. 