Read in one article what DeFi eco-projects can be built on the Ergo public chain platform

The Ergo public chain is a Layer 1 protocol for powerful decentralized financial contracts, built on a solid foundation of 10 years of blockchain theory and development to build advanced cryptographic features and disruptive new DeFi capabilities.

Read in one article what DeFi eco-projects can be built on the Ergo public chain platform

The Ergo public chain is a Layer 1 protocol for powerful decentralized financial contracts, built on a solid foundation of 10 years of blockchain theory and development to build advanced cryptographic features and disruptive new DeFi capabilities. Proof-of-Work (PoW) consensus algorithms and the underlying extended UTXO model enable robust scalability and security. ergo is also partnering with Cardano’s commerce agency EMURGO to improve research on blockchain and the zero-knowledge ecosystem. You can view the smart contract deployment in our GitHub repository at the following links.

https://github.com/ergoplatform; https://github.com/Emurgo

SigmaUSD Algorithmic Stable Coin – Combining Decentralization and Liquidation Avoidance

Blockchain assets are extremely volatile. That’s why investors often seek digital assets pegged to their national currencies. Stablecoins are the easiest integration of cryptocurrencies with the off-chain world. Before the advent of DAI, fiat currency escrow services were provided by centralized services. USDT is the first example of a stablecoin, backed by actual dollars deposited in banks. However, for decentralized financial systems, we need other forms of currencies pegged to fiat currencies.

SigmaUSD (aka SigUSD), the native stablecoin launched on the Ergo platform, was launched in February and is based on the AgeUSD algorithmic stablecoin protocol, which provides a robust reserve/mint contract, thus providing a truly decentralized financial experience. It uses SigRSV to collateralize with its native cryptocurrency reserve, ERG, thus giving a value of $1 to SigUSD. The SigRSV collateralization rate is set to at least 400% relative to SigUSD’s. This design prevents liquidations from occurring, such as the one that occurred during the March 12, 2020 crash. As Emurgo says, the “3.12” event where the MakerDAO collateralized debt position (CDP) was liquidated due to market volatility and then sold at $0 due to blockchain congestion that prevented others from bidding, suggests the need for a new design. With SigmaUSD, on the other hand, this would not be the case.

Ergo prophecy machine pool – ultra-low cost of use, more decentralized and reliable data feed

The prophecy machine is the core infrastructure of a decentralized financial system. It connects off-chain data to the on-chain world. Usually, ETH has no information about the current market price. During a swap order on a decentralized exchange, the swap contract needs to call data from various data sources to get the market price. Thus, the prophecy machine is the messenger of the cryptocurrency ecosystem. Not only in atomic swaps, but also in more complex interactions such as lending/borrowing assets or dynamic market making, the data provided by the prophecy machine is needed to feed prices. The DeFi ecosystem has been subject to lightning lending attacks due to centralized price prognosticators providing misinformation.

The Ergo team developed the Ergo prophecy machine pool that will maintain a robust DeFi ecosystem. Thanks to the eUTXO (Extended UTXO) design and its rich programming language ErgoScript, the Ergo prophecy machine pool is more decentralized. In the extended UTXO model, we have a lot of flexibility and powerful features to build new protocols. This can be used to build prophecy machine data point confidence hierarchies. In short, they are abstractions on top of the prophecy machine pool that allow us to extend the gains of the prophecy machine pool as much as possible at the cost of price and speed. the prophecy machine pool for ERG / USD pairs is running on the Ergo blockchain. (Translation: Ergo Prophecy Machine Pool is a DeFi application of the Ergo platform, but it is not issuing Prophecy Machine tokens, a move aimed at reducing the cost of Prophecy Machine usage to very low levels and making Prophecy Machine services affordable to ordinary people in regions such as Africa in the future.)

NFT – Low Minting Costs, Say Goodbye to High Gas Fees

Blockchain is not just about cryptocurrencies. Audio or visual artwork can also be deployed on blockchain’s immutable smart contracts. These artworks are represented by non-homogenized tokens (NFTs). In addition, artworks can be traded in decentralized auction houses. This will help artists go global without restrictions or the need for centralized licensing companies. This means that the art market is democratized with the help of public chains.

Examples such as Rarible or Opensea are auction marketplaces that run on the Ethernet network. Any artist can create and sell artwork there. However, the Gas fee for minting an NFT can cost up to $100. Ergo’s scalable and faster design will reduce the Gas fee to almost zero without sacrificing security or speed. the Ergo NFT Auctionhouse has been open for several months, and anyone can go there and put up images, audio or any other kind of NFT for auction.

Decentralized exchange – ErgoDEX allows AMM DEX and commission book-based DEX to share liquidity

Prior to the DeFi firestorm in the summer of 2020, DeFi’s total locked-in value (TVL) was too low to be used effectively across platforms. After growing interest and new token offerings every day, decentralized exchanges (DEX) were created. They are quite beneficial for those who do not want to give up the escrow of their funds. dex democratizes the exchange experience for blockchain developers and cryptocurrency investors.

ErgoDEX can offer more features than the ethereum-based DEX. It has more features such as limit orders, partial transactions and repurchase support. Ergo’s multi-stage contract allows for time-limited release of payments, so if the project’s developers do not deliver on their promises, the code implemented in the contract can help investors cancel their commission orders with minimal loss. With the implementation of NiPoPoW (Non-Interactive Proof of Work), DEX will be able to interoperate between PoS and PoW blockchains. Users will be free to choose an exchange using a self-serviced wallet. (Translation: The biggest advantage of ErgoDEX is that it allows liquidity sharing between AMM DEX and delegate book based DEX.)

Decentralized Autonomous Organization (DAO)

DAO refers to decentralized autonomous organization. Cryptocurrencies are decentralized (not all of them are) and therefore so are cryptocurrency platforms. The governance of these platforms is handled by decentralized entities. Every decision is made by pseudo-anonymous individuals on the DeFi platform to prohibit the concentration of power. Therefore, certain tokens are used to vote or make enhancements to these DeFi platforms. The issuance of new coins, redefinition of uses, etc. are very important functions that cannot be left in the hands of a small group of individuals if the cryptocurrency ecosystem is to serve the masses. The Zero-Knowledge Treasury with multiple key signatures is the first example of a DAO in the Ergo blockchain. (Translation: Ergo’s Zero-Knowledge Treasury allows users to easily create federated digital signatures, as well as money-spending custom conditions, while ensuring that the signer remains anonymous to the address created)

Lending

Lending and borrowing are two components that increase liquidity in the financial system. For example, you have bitcoins, but you want to utilize your BTC holdings without selling them. therefore, you can pledge bitcoins (in the sense that you can also use your house as collateral) as collateral for borrowing into SigUSD and using it for an exchange or liquidity mining (Yield Farming) protocol. On the other end of the interaction, another user can lend unused SigUSD by participating in a loan agreement. traditional banks have very low interest rates and they may take a lot of revenue from your deposits. With a decentralized lending agreement like Compound, users will be able to use lending services and transfer funds between all cryptocurrency ecosystems without the need for a centralized platform like a bank or exchange. Cryptocurrency lending protocols are open to more experimental designs like interest-free lending, thus innovating more use cases on the blockchain.

Derivatives

In addition to buying and selling protocol tokens, traders are looking to profit from various strategies such as options or leveraged futures contracts. In traditional finance, these instruments are provided by brokerage firms; in the cryptocurrency world, they are provided through centralized exchanges. Exchanges are the equivalent of large casinos where players’ hands can be seen, which is very detrimental to traders. Therefore, there are alternative options or derivatives trading smart contract platforms in decentralized finance. synthetix is an example of a leveraged asset trading platform. The platform tokens create liquidity for traders who want to acquire leveraged positions. Hegic, on the other hand, offers an options trading platform where traders can place call/put options via smart contracts. These are just two examples of derivatives protocols on Ether. multi-stage contracts on the Ergo blockchain are also available on it.

Insurance

Another big area of the financial industry is insurance. Every tradable asset has a risk of loss: whether it is unprecedented (e.g. a hardware wallet being shot through by a bullet) or foreseeable (e.g. a project owner running away with the money). New protocols such as Nexus Mutual have emerged to address the decentralized insurance problem. If you are considering insurance, then exchange your money for security and it will pay premiums to the risk bearer in case of a nasty event. In a decentralized insurance platform: your participation, the risk bearer’s participation and the prophecy machine’s transaction validation can all be governed by smart contracts to create a smoothly functioning DeFi ecosystem.

Revenue Aggregation

With the expansion of new decentralized exchanges such as Bancor, Balancer, Uniswap, Sushiswap and Curve, people are looking for easier ways to transfer capital between these exchanges to create optimal returns. Yield Aggregator (also known as “machine gun pool” in Chinese) helps users automate their liquidity mining operations. An example of a Yield Aggregator protocol is Yearn Finance, in which users can choose different liquidity mining strategies among deployed Vault pools. Both users and developers can leverage the liquidity mining platform by creating their own unique liquidity mining strategies and deploying them to the protocol. This example will be very useful for future market-making algorithms as it supports deep liquidity across DeFi.

Index Tokens

Not all cryptocurrency investors are aware of the different blockchain use cases. Some investors may wish to benefit from index tokens to invest in various cryptocurrencies. For such an innovation, a dynamic market making (DMM) algorithm is needed to adjust the funds after price changes. In addition, those who will release index tokens will have to understand the market to decide which tokens must be included in the index and what percentage. Some of the index coins that are running on Ether are ASSY, YETI, PIPT and YLA, which are issued with the Powerpool protocol.

Asset Tokenization

Asset Tokenization (also known as Asset Pass-Through) is using cryptocurrencies to meet the needs of traditional financial assets. The centralized exchange FTX offers U.S. stocks in exchange for cryptocurrencies. However, this phenomenon is still very new due to regulatory issues. Stock tokens are not yet traded on decentralized exchanges. Another example of real-world asset tokenization is real estate tokenization. With the help of cryptocurrencies, houses can be split into numerous tokens representing real estate. This implementation will help retail investors to invest in homes around the world with minimal savings.

All the functions of traditional banks are becoming decentralized applications on smart contract platforms. ergo is using the ErgoScript language to provide a robust and rich infrastructure to support the complex DeFi ecosystem with multi-stage contracts as the technical backbone.

Author: root7Z

Original Post Date: May 10, 2021

Link to original article: https://ergoplatform.org/en/blog/2021-05-10-defi-ecosystem/

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/read-in-one-article-what-defi-eco-projects-can-be-built-on-the-ergo-public-chain-platform/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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