The Ergo blockchain and its ERG cryptocurrency have been on the radar of many recently, especially within the Cardano community, but what is Ergo (ERG)?
The Cryptonomist contacted the team behind ErgoDEX, a decentralized exchange on Ergo, to answer some questions about their DEX and this innovative Proof of Work blockchain.
Hi there. As it is still quite an unknown project, can you tell us what Ergo (ERG) is?
Ergo is a unique Proof-of-Work (PoW) cryptocurrency and DeFi platform that builds on the first principles of Bitcoin with a research-driven but practical development model that has prioritised useful features without compromising on security. Ergo’s smart contracts are built on the extended UTXO model, which offers a unique data input concept, offering a radically different approach to provide robust, flexible cryptography and easy, safe scripting on privacy-centric Sigma Protocols. Ergo has several other novel features, such as storage rent for long-term survivability, which reclaims ~.13 erg every four years on unmoved coins.
The cryptographic part of ErgoScript is based on ‘Sigma Protocols’ and naturally supports threshold m-of-n signature schemes, ring signatures and much more. Keeping all this in mind, ErgoScript and Ergo’s design could be uniquely valuable as Contractual Money with countless possible applications in the future.
Ergo is becoming quite popular in the Cardano community, what are the overlaps between these 2 blockchains?
The main objective of Ergo is to provide financial contracts efficiently and securely so that people can use them in a decentralised manner and without any need for prior trust. The fully Cardano-compatible PoW can make significant contributions to all developers in the Cardano ecosystem. Ergo is the first blockchain to adopt the smart contract language in a similar eUTxO (extended UTXO) model as Cardano. It is one of the only to have enabled NiPoPoWs since their genesis light-weight compatibility with Proof-of-Stake.
The lead developer of Ergo, Alex Chepurnoy, also publishes academic papers as an IOHK researcher. Charles Hoskinson recognised Chepurnoy as a marvellous researcher, so he invited him to collaborate on UTXO-based financial contracts. Besides this joint research done in collaboration, Ergo and Cardano are also partners of EMURGO. This technology company provides solutions and support for its partners, such as Yoroi wallet for these two blockchains.
Please introduce ErgoDEX to our readers and tell us why you have chosen this particular blockchain to develop your DEX.
ErgoDEX is a non-custodial, decentralised exchange built on top of Ergo and Cardano. The eUTXO model shared by these blockchains enables the unique possibility of sharing liquidity among different types of exchanges on top of both the Ergo and Cardano ecosystems.
ErgoDEX is not merely a simple AMM type decentralised exchange but also allows shared liquidity between order-book and AMM type exchanges. So that people have access to both instant swaps and limit orders when using the exchange. Initial Coin Offerings – or ‘ICOs’ on ErgoDEX can also be much safer and more enjoyable because the Ergo UTXO design allows time-released swaps and buy-back guarantees – adding an extra protection layer in the exchange. There will be a lot of other features but we will tell you about them when the time comes.
Ergo and Cardano use the eUTXO model, which is somewhat reminiscent of Bitcoin’s UTXO model and quite different from Ethereum’s Account model. Can you tell us what eUTXO is and what are its advantages?
Under UTXO, each object is immutable – lumps of coins cannot be ‘edited’ as we usually do when changing an Account balance after a transaction. Instead, this balance is calculated from the transaction history itself, right back to when those coins first came into existence.
That makes security much more straightforward overall because either a UTXO exists or it does not. In contrast, under the account model, you need to carefully check that the account you’re dealing with is in the state it should be, which is often done incorrectly. This feature also makes UTXOs more friendly for off-chain protocols, like sidechains and the Lightning Network.
Accounts make it easier to store the ‘state’, but easy doesn’t always mean better. With Ergo’s extended UTXO model, state transitions are more explicit and cleaner – there are no unwanted surprises. It might be a bit more burdensome to deal with, but it’s a lot better and more straightforward in terms of security.
Thank you for your time, do you have any final comments? Where can people find you?
Thanks for this opportunity. UTXO based financial contracts are a novelty because Bitcoin’s UTXO design doesn’t allow chain or ring computations, so it wouldn’t be possible to create complex smart contracts that will fuel billions of different transactions. ErgoDEX is the first of its kind, UTXO based decentralised exchange that allows both AMM and Order Book type exchange while letting you keep full custody of your funds.
Our socials:
The post Interview with ErgoDEX, a decentralized exchange on Ergo appeared first on The Cryptonomist.
