As we approach the ErgoDEX launch, it is important to highlight the capabilities of UTXO based DeFi (Decentralized Finance) smart contracts. More recent Layer 1 projects tend to be built on the Accounts model of Ethereum while Ergo is one of the few blockchains working to improve DeFi on the UTXO model that Bitcoin introduced. UTXO offers greater functionality and scalability for DeFi contracts through its lighter design when compared to the Accounts model.
Disclaimer: Decentralized Finance platforms are still in the experimental phase, therefore it is important to VERIFY and RESEARCH before TRUSTING the properties of a smart contract. When investing in new projects on decentralized exchanges, users should verify that the smart contract is designed in the way the ISSUER claims.
Initial Coin Offering on ErgoDEX
An Initial Coin Offering (ICO) is somewhat similar to an Initial Public Offering for traditional financial instruments such as stocks. It is basically a crowdfunding phase for independent developers who want to build their particular DeFi project.
A decentralized exchange creates an equal playing field for both developers and investors. It removes certain entry barriers and allows each participant to participate in the crypto ecosystem. With ErgoDEX, users can initialize coin offerings without the need for a centralized structure (eg. Binance’s Initial Exchange Offering) with the potential to reach a larger user base.
Similarly, investors can participate in an ICO (or in the case of a decentralized platform, Initial DEX Offering - IDO) with amounts as little as five dollars without the need for KYC compliance. During the ICO process, users enjoy full control of their funds while interacting with the ErgoDEX. The user’s private wallet (like a Yoroi wallet) interacts with ErgoDEX and holds the assets until transactions are...
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