What is Ergo?
The main objective of Ergo is to provide financial contracts in an efficient and secure way, so that people can use them in a decentralized manner and without any need for prior trust.
Ergo’s consensus protocol — Autolykos — is based on the well-known Proof of Work (PoW) consensus algorithm. Its native token is ERG .
PoW was chosen for several reasons, including that PoW protocols have high security guarantees and are light-client friendly.
However, Autolykos has several significant differences with Bitcoin PoW. One is that Ergo blocks support non-interactive Proofs of Proof of Work (NIPoPoWs), which allows thin clients to synchronize with the network by downloading less than one megabyte of data.
In addition Ergo uses authenticated state, and for any transaction a client can download the proof of its correctness. Thus, regardless of the size of the blockchain, a normal user with a smartphone can join the network and start using Ergo with the same security guarantees as a full node.
What will Ergo bring to Cardano?
The fully Cardano-compatible PoW can make great contributions to all developers in the Cardano ecosystem.
Ergo is the first blockchain to adopt the smart contract language in the same eUTxO (extended UTXO) model as Cardano, enabling Proof of Work compatibility.
Although PoS is a very secure protocol, some smart contracts may require the consensus-theoretic security features of PoW for some part of their execution.
The larger a dApp is, if it is doing collateralized DeFi, the larger the stake it has at its disposal, and since this is not yet fully resolved in the Proof of Stake consensus, it is a weak point.
Ergo brings the proven security of PoW, with sufficient security for all more complex DApps implementations on top of the common UTxO model rather than trying to translate very natural cryptographic concepts inherent in PoW to PoS, where the game theory implications of the protocol are completely different.
On the other hand, Ergo is working on an interoperability protocol that is not proof-based, which is more complex and not easy to integrate with multiple blockchains, but has a federated approach using reputation at stake.
This will open up the entire Cardano ecosystem to interoperability with the Solana blockchain, chosen by large exchanges such as Okex or Binance.
The account-based model adopted by Ethereum faces scalability challenges, and is a problem for Ethereum as ecosystem growth translates into high gas rates. Scalability with sharding for smart contracts has not really been solved yet because a smart contract lives in a single shard, so it is not really scalable for DApps.
While all these advantages of the eUTxO model will not be copied by all other blockchains, thanks to interoperability other projects or DApps will be able to borrow these unique advantages by bringing their tokens to Ergo.
The cryptography employed by the Ergo protocol is more advanced, running on sigma protocols where cryptographic signatures are highly flexible and composable.
DApps being built on top of Ergo, such as auction house, NFTs, crowdfunding application, a DEX, and on-chain zero-knowledge treasury (a mini DAO that controls a certain amount of funds and thanks to sigma protocols, voters can suffrage while maintaining their privacy even though it is on-chain).
Oracles groups will be essential for all applications, not just financial ones, as all kinds of data outside the blockchain will be needed to run applications. The layered oracle groups with deviation checking consensus allowed in Ergo open up a whole new world of applications.
Ergo also implements a local exchange system with the new stablecoin called ageUSD, the first UTxO-based stablecoin.
The stablecoin powers the “Liquidity Machine”, a group of applications needed to bring liquidity to the ERGO blockchain from other tokens issued over the Ergo network to run DApps.
With these complementary features in consensus protocol, with PoW, and cryptographic with sigma, Ergo will be a competitive advantage for Cardano, as developers will have a complete solution to build their DApps.
ERGO, Source: https://ERGOplatform.org/en/