WTF is Ergo and What happen to it?
This article is part of our “Mining the Digital Gold” epoch.
Ergo (ERG) is a cryptocurrency that supports the creation of smart contracts in its transactions. Its goal is to provide an efficient, secure and easy way to implement financial smart contracts. These smart contracts allow Ergo to support different dApps that run predictably and with known costs.
On Ergo, the token supply is capped at less than 100 million ERG and, unlike many other Proof of Work cryptocurrencies, the block reward drops steadily after the first two years. Block rewards start at 75 ERG and drop to 0 in 8 years, after which the fixed supply will be reached.
Autolykos v2.0 is Ergo’s proof-of-work algorithm. This improved algorithm allows miners to collect and mine in the pool, unlike previous versions that discouraged pool mining. Its power consumption is similar to that of DaggerHashimoto (Ethash), while the computing power is slightly higher.
What seems to be the problem?
There was a significant hashrate migration to other PoW coins after the Merge. Ergo was probably one of the coins that took the biggest blow. The network difficulty levels soared and together, the difficulty levels spiked as well. This led to miner’s becoming unprofitable, and miner’s aren’t happy about it.
The way mining difficulties works is that the system looks at the average hashrate over epochs. And if the difficulty is low and a lot of hashrate comes in at once (like mining farms) The system will then speed up block times and get a lot of coins in a short amount of time. And after some time, the system will balance itself by ramping up the difficulty.
Once it’s it’s no longer profitable, lots of big mining farm would stop mining and wait for the difficulty to come down, while directing their hashrates elsewhere. And as the hashrate dropped, the difficulty did not because the network was designed to adjust difficulty at the start of a new epoch. So what happens next is the loyal miners or small-time miners are left holding the bags. They now get to mine with very high difficulty and long block time. And this will then go on until the next epoch. When the difficulty can get adjusted and lowered.
The problem now is there is nothing stopping the farm from repeating the same thing as soon as the difficulty gets lower again. Potentially this constantly dine and dash can have an adverse effect on the loyal and small miners. However, something I must point out as a miner like myself, it is sometimes not about the profit!
The Solution
Ergo is asking for help from miners. Asking them to bring back their hashrate back to Ergo. As the current exodus of hashrate has extended the block times to upwards. In a nutshell is means that the situation is approaching a possible point of no return. Meaning that if this is left unchecked it might end up killing the whole consensus mechanism for Ergo.
The mining community responded back with lots of support, even I directed my hashrate to help out for a week, even if it’s not profitable.
Introducing EIP-37
The Ergo Foundation released an immediate reference client to address the mining difficulty issue. EIP37 aimed to decrease the amount of time between epochs to 128 blocks, while also capping any change in network difficulty to no more than 50%.
The Ergo Foundation’s Core Developer, Alex Chepurnoy (aka Kushti) published the following about EIP37 on the Ergo Github:
“We propose to make current difficulty readjustment more reactive and smoother by shortening epoch length, amplifying weight of the last epoch and put some limits on difficulty change as follows.”
The Future of Ergo Mining
Losing a PoW coin not to mention a PoW with lots of potential, would not be particularly good. It would put even more strain on an already tough situation for miners and the other PoW coins.
EIP37 has officially passed and the network difficulty has lowered significantly from a peak of 22.67P (just after the Ethereum merge) to 7.11P. Meanwhile, Ergo’s network hashrate has grown steadily over the last few days and now sits at approximately 60TH/s.
Happy mining y’all!
Disclaimer: this article is written from my personal opinions as a miner, I’m not affiliated with Ergo in any way. This article is written with the sole purpose of providing an insight of what happen to Ergo after the great migration of hashrate.
