Ergo Coin Tokenomics
If you don’t want to read the full article, the video below goes over everything written.
Ergo Overview
The Ergo mainnet was launched back on July 1st of 2019. It was created by a crypto developer called Alex Chepurnoy, he has had an extensive past in crypto development as he got his start as a developer on Bitcoin back in 2011. Ergo is a relatively new crypto and just celebrated its third birthday. Ergo describes itself as a next-generation smart contract platform that ensures the economic freedom of ordinary people through secure, accessible, and decentralized financial tools. Because Ergo is early in its life cycle, it means that it’s not listed on too many exchanges right now, you can buy it from exchanges such as KuCoin, Gate.io and CoinEx. That’s just a brief overview but we will be diving into all the tokenomics and major features of this coin which I think would be useful to know for users and investors.
Ergo Tokenomics
When Ergo was launched there was no pre-mine, no initial coin offering and no pre-allocation to the founders or venture capitalists. This is good as it favors no parties involved in the coin, this is the best way to launch a cryptocurrency because a lot of other coins have allocations of up to 50% to developers, this means that they just get rich while other investors don’t have a chance to get ahead of these founders. The block time is 2 minutes, the max supply of Ergo is not a round number because of an emission schedule which we will touch on later. But the max supply is 97,739,924. The current circulating supply is just over 59 million, which means over half of the coins have been mined so far. For Ergo mining they use an ASIC resistant hashing algorithm called autolykos, it tends to favor Nvidia cards and AMD has around a 20% less efficiency on this algorithm. The last part of the tokenomics is the block halving, for Ergo they have implemented an emission schedule which is their own unique way of halving mining rewards. Right now the block reward is at 48 ERG with a volume of around 7,500 transactions per day. The hashrate on the mining network fluctuates between 20TH/s-30TH/s.
Ergo Emission Schedule
Many coins choose to just halve the block reward at a certain block number, Bitcoin is the biggest example of this as they havle the reward every 210,000 blocks. However Ergo has implemented an emission schedule which lowers the block reward in a curved fashion instead of halving the reward at a certain block number. Originally for the first two years of mining, the block reward was set at 75 ERG per block. Then after two years the block reward would be reduced by 3 ERG every 3 months. If you do the math, it means that after eight years all of the supply will be mined and then the block reward would come in the form of dapp fees that are on the network.
That was the original plan, but recently the Ergo team proposed a new emission schedule which was called EIP-27. They asked all Ergo holders to vote on this new proposal and there was an overwhelming amount of support with over 90% of holders voting for it. This new proposal sticks to the original emissions schedule up until the block reward gets down to 3 ERG, once it hits this it will continue to have a block reward of 3 ERG for the next 9 years. This means all the Ergo will be mined in 17.83 years. If we look at the emission chart we can see the block reward goes down on the gray line to 3 ERG, then the orange curve is the supply of Ergo which will be all mined around 2040. Lastly we see the emission contract in blue which will spike in a couple years and then move downwards until the contract is finished. Implementing this way of reducing coin supply is new in crypto and Ergo has innovated this for other cryptocurrencies to use in the future. Now the reason they have introduced the new emission schedule was because they want to give developers time to make dapps on the network. If they have more developers it means more dapps, this then means more fees on the network for when the block rewards run out. Ergo is pushing for miners to stay on their network after the block rewards stop, this is good because more miners means more decentralization and a more secure network.
Ergo Treasury Fund
Next I want to touch upon the treasury fund that Ergo has set up to incentivise developers to come and develop on the Ergo network. During the first two years of the mainnet launch, the treasury would receive 7.5 ERG from every block that was mined. All this was collated into a fund with 4,330,791.5 ERG, this is 4.43% of the total supply of the coin. So after two years they stopped it and now the treasury fund is full and can start to be handed out to those who develop dapps on the network. This is a great way to help developers and the network has seen some great additions of dapps. Also with the last block reward being in 2040, it means that we will see more developers join the network and the fees through these dapps will support the miners after 2040.
Ergo Mixer Platform
One dapp that I find very intriguing to privacy is the Ergo mixer platform. This is very similar to many mixer platforms like tornado cash, whereby you send Ergo into the platform and it mixes it through multiple addresses and will then send it to an address of your choosing. Many criminals use this for money laundering and to mix stolen crypto. But the real world purpose would be if someone found out your address. To make sure that they don’t find your next address you would send your Ergo to be mixed and then shoot it out to another address which nobody knows. This is great for privacy and you don’t even have to go through a website to run the mixer program, it can be done through your own computer if you want.
Ergo Metaverse
There is a small metaverse community on the Ergo platform but I think it just needs time to grow. Metaverses haven’t really started to take off as planned, with things like facebook switching to meta it was a disaster in my opinion. This was just because the feel of it wasn’t as planned and we haven’t really seen much well designed metaverses so far. Even the big ones like Sandbox and Decentraland aren’t up to the standard of today’s video games. So over time I think more people will start to develop better metaverses and Ergo might be one of the platforms which start to produce a good metaverse. So they have 4 listed on the official Ergo page. This first is called Blitz TCG, which is a trading card game like Hearthstone, where you battle opponents with cards, and these cards can be purchased on the Ergo auction site. The next is called Eternaeon and this is a game that takes place across multiple planets in space, kind of like a no man’s sky type game where you explore different places and collect things. The 3rd one is called Sigma Valley and is probably the one I’m most interested in as it’s an up to date visualization of the Ergo community. So if you’re in the community then you can sign in and meet other people who are involved in the coin. It’s a way of networking and finding like minded people. You can walk around to different plots of land and get to know the people who have built stuff on their land. So the Sigma Valley falls under the normal type of metaverses we see like Sandbox. Lastly we have Ergo games which is a platform which just supports a range of different games which run on the Ergo network.
