What's wrong with VC-funded blockchains?

VC funding creates misaligned incentives: projects must deliver investor returns, leading to token dumps, rushed development, and governance controlled by large stakeholders rather than users.

How is Ergo funded without VCs?

Ergo has a treasury funded by a portion of block rewards (similar to Zcash's approach but without founders reward). This provides sustainable development funding without insider control.

Why does fair launch matter?

Fair launch means everyone competes on equal terms from day one. No insiders got tokens cheaper than you. This creates genuine decentralization and aligned community incentives.

Ergo vs VC-Funded Chains

Built for Users, Not Investors

Fair Distribution

All ERG is mined - no insider allocation, no ICO, no premine

Aligned Incentives

No VCs demanding returns, pivots, or token unlocks

Community Governance

Decisions made by users and miners, not boardrooms

Long-term Focus

Building sustainable technology, not pumping for exits

Feature Comparison

Feature	Ergo	VC-Funded Chains
Consensus	PoW (Autolykos v2, GPU-friendly)	PoS/DPoS variants
Launch & Distribution	Fair launch: No ICO, no premine, no VC	40-60% insider/VC allocation
State / Accounting Model	eUTXO (Programmable UTXO)	Account-based (various)
Smart Contracts	ErgoScript + Sigma Protocols	EVM-compatible typically
L1 Privacy	Programmable privacy (Sigma Protocols)	None typically
Demurrage / Storage Rent	Storage rent on inactive boxes (~4+ years)	None typically
MEV Resistance	MEV-aware design (eUTXO + local ordering)	High MEV typically
Fees & Finality	~$0.01 fees; ~2 min blocks; stable PoW finality	Variable; often subsidized initially
Light Clients	NiPoPoWs (trustless, ~1MB proofs)	Typically trust-based
Censorship Resistance	Strong (PoW, no validators to pressure)	Weak (often centralized validators)
Native Assets	Native L1 tokens (no wrapper contracts)	Usually ERC-20 style

indicates advantage in that category. Last updated: 2025-11-26

Deep Dive

Token Distribution

Typical VC chains allocate 40-60% of tokens to insiders: founders, team, advisors, and VCs. These tokens unlock over time, creating constant sell pressure. Ergo has zero insider allocation - all ERG is mined through PoW.

Ergo Advantage

No token unlocks, no insider dumps. Supply is predictable and fair.

Incentive Alignment

VC-funded projects must deliver returns to investors. This often means prioritizing token price over technology, rushing to market, or pivoting away from original vision. Ergo's only stakeholders are users and miners.

Ergo Advantage

Development focused on technology and users, not investor returns.

Governance Reality

Despite 'decentralized governance' claims, VC chains are typically controlled by foundations holding large token stakes. Ergo's governance emerges from community consensus and miner signaling.

Ergo Advantage

Real decentralization in decision-making, not theater.

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Related Infographics

Who Starts With the Coins?

How typical VC chains reserve large token chunks for insiders while Ergo's supply is earned over time via PoW block rewards.

How It Starts: VC Chain vs Ergo

How a typical VC-backed blockchain launch contrasts with Ergo's fair-launched PoW path from research to long-term security.

Fair & Secure: VC Chain vs Ergo at a Glance

How Ergo's fair PoW launch and Autolykos design differ from typical VC chains.

Ergo vs Avalanche: Funding Story and Power Structure

Infographic comparing Ergo’s $0 VC, 100% mined distribution with Avalanche’s hundreds of millions in venture funding, and how that shapes consensus, control and incentives.

Frequently Asked Questions

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