What is Ergo PoW Blockchain?
Ergo is a next-generation blockchain that is architectured to support eUTXO-based smart contract ecosystems. Ergo uses a self-developed Proof of Work (PoW) consensus mining protocol known as Autolykos.
Ergo's native token is ERG and has a maximum supply of 97 million tokens. Each ERG is divisible to 1 billion nanoErgs. 1 nanoErgs equals 0.000000001 ERG.
ERG tokens are distributed through block rewards to miners. ERG block rewards were set at 75 ERG for the first 2 years i.e 2019 through 2021.
Initially, all ERG tokens would have been mined over an 8 years period since the first block. After that, miners would earn ERG through transaction fees.
However, after EIP-27 took effect on June 22nd, ERG mining was been extended by roughly 17.38 years. Instead of the last ERG being mined in 2027, it will now be mined in 2045. This mining period extension allows Ergo foundation enough wiggle room to develop a sustainable & secure blockchain.
ERG will be used for the following utility:
- On-chain voting
- Paying transaction fees
- Storage rent fees
|Ergo Allocation||ERG tokens||% ERG allocation|
|No Premiere Proof||1 ERG||0.0000001%|
|Miners rewards||93,409,132 ERG||96.3%|
No premiere proof
This ERG exists as proof that ERG was not privately pre-mined before the launch date. The Ergo box containing this token will stay on-chain until the storage-rent component destroys it.
These ERG tokens will be released gradually to support Ergo development.
These ERG emissions will pay miners until the last ERG mining block.
How to acquire / buy ERG
The other method of acquiring ERG other than mining is buying ERG on centralized exchanges such as Kucoin, CoinEx, Huobi Global and Gate.io. Alternatively, buy ERG tokens on Spectrum DEX (formerly ErgoDEX).
Why Ergo uses a custom proof of work consensus
Ergo settled on a PoW instead of POS because of the higher security guarantees and simplicity of the PoW.
However, PoW's one-CPU-one-vote idea has 2 problems.
The invention of application-specific integrated circuit (ASIC) miners
ASICs are expensive to acquire for ordinary people. Since they are significantly faster and more efficient than commodity hardware, they help centralization of mining by mining companies.
Asymmetric memory-hard PoW schemes can help level the disparity between commodity hardware and ASICs miners.
The coalescing of large mining operations into mining pools centralizes computational power.
Autolykos V1 was the first PoW consensus protocol designed to be memory-hard and mining pool-resistant. For more details on how the protocol achieves this goal please see page 4 & 5 of Ergo's whitepaper
Autolykos V2 removed the pool resistant constraint because:
- It was not fully enforceable. Smart contracts could be used to circumvent it.
- It's beneficial for small miners to pool together and increase their chances of mining a block.
Ergo's storage rent component
To deal with state bloat caused by users' saving arbitrary data on-chain, Ergo enables miners to charge an extra fee for unconsumed output. This fee is only applicable when this kind of output has been untouched for 4 years.
Miners will also be able to return 'lost coins' into circulation under this provision.
Ergo Smart contracts
In Ergo, smart contracts are written in a custom scripting language called Ergoscript.
The Ergo platform will offer custom tokens, which will be treated as first-class citizens. To implement financial contracts, developers will leverage two classes of 'Ergs' i.e:
These will have no restrictions on output and input properties. They will also be able to change their contracts easily.
These Ergs will require transaction inputs and outputs to meet specific properties.
The blockchain architecture follows well-researched solutions that will help avoid security loopholes or performance degradation in the future. It has also been built as upgradable which gives it the flexibility to adopt new ideas.
According to its whitepaper, Ergo is based on the following principles:
Created for regular people.
This is why the protocol is designed to prevent centralized mining operations. The barrier for ordinary people to participate in running full nodes and mining is low. This way, regular people's exclusion on the blockchain will be either by choice or inadequate education and never because of steep competition by whales.
Ergo is also built with light clients' support in mind. Light clients will allow untrusted low-end hardware e.g mobile phones to sync the chain.
A platform for contractual money
Ergo chain main focus is to provide easy, efficient & secure means to build & implement financial contracts.
The chain is built to survive fork attempts and software/hardware improvements. Long-term resiliency is important because financial contracts built on Ergo should at least last a generation. Else, they wouldn't be sound enough to inspire confidence in investors.
Consequently, Ergo's development may seem slow as it avoids situations where half-baked and under-researched solutions are included in Ergo's core. Lest such solutions necessitate hasty bug fixes which in turn lead to death-spiral problems.
Permissionless and open-source spirit
Ergo's protocol may be used by developers as they wish. The public is open to join and participate without preconditions. The chain will also not involve itself in invention activities e.g bailouts, blacklists e.tc
How Ergo compares to other Layer 1s
Here is how Ergo compares to Bitcoin & Cardano
|Consensus protocol||Proof of work (PoW)||Proof of work (PoW)||Proof of stake (PoS)||PoS|
|Native tokens||n/a||1st-class citizens||1st-class citizens||ERC-20|
|Scripting||Bitcoin script||ErgoScript||Plutus, Marlowe||Solidity|
|Fixed token supply cap||yes (21 million tokens)||yes (97 million tokens)||yes (45 billion tokens)||No max cap|
Ergo dApps ecosystem
Ergo ecosystem is still in its early days. However, its community has worked on several notable dApp e.g SigmaUSD, ergoPad, Spectrum.DEX, ErgoMixer, GuapSwap e.t.c.
SigmaUSD (SigUSD) is an Ergo overcollateralized algorithmic stable akin to Cardano's Djed stablecoin. SigUSD currently has a base reserve ratio of 387%. Its reserve coin is SigRSV.
Spectrum (ex-ErgoDEX) is Ergo's first cross-chain non-custodial decentralized exchange. It already works on the Ergo chain where it was first launched. It's scheduled to launch on Cardano mainnet after late July Vasil hardfork.
Ergo mixer uses sigma Ergo's protocols to mix funds in an efficient and trustless manner. This way, willing users are able to securely obtain a high degree of privacy.
GuapSwap is an Ergo dApp that enables ERG miners get paid in any native Ergo token. This feature allows the miners flexibility and cost saving while withdrawing their profits. In its roadmap, the dApp wants to enable users to be paid in multiple tokens.
Imagine pointing your miner at a pool and the being paid in a pallet of tokens of your choosing.
GuapSwap is currently used via the CLI, but the team is working on UI that will improve its user experience.
Via a partnership with Spectrum DEX, GuapSwap will enable its features to be accessible across multiple chains.
Fun fact: GuapSwap is named after Guap song. Its developers are like hiphop.
Ergo wallets include Yoroi, Ergo mobile (terminus wallet on ios), SAFEW, Minotaur, Nautilus, Satergo, and Zelcore wallet
Note: Yoroi announced in January 2023 that it would be dropping support for the Ergo blockchain.
Ledger supports ERG through Nautilus when a ledger device is set to development mode.
|ERG Wallet||Supported platforms||Portfolio||dApp Connector||ErgoPay|
|Ledger Nano (X/S) & Stax||Mobile & desktop||n/a||via Nautilus||n/a|
(Chrome, Edge, Brave, & firefox)
"It's (Ergo) one of the most revolutionary cryptocurrencies ever built. Got so many crazy ideas like sigma protocols and pruning the blockchain and roller chains. All this crazy stuff. Even has proof of no premine. So really a technological marvel in many respects, and it reflects about 8 years of knowledge that Alex has amassed as both a researcher and a developer. Super concise code and it blows my mind that the market cap is where it's at. It should be a top 10 coin or top 15 coin" — Charles Hoskinson
First published on Jun 28, 2022