Vega, an app chain that is highly optimised for Trading
Let's deep dive into Vega, a proof-of-stake blockchain in this post
The Crypto derivatives market can expand to $1 Quadrillion if an ETF is approved, says Raoul Pal.
But Dexes like GMX, GNS, & MUX are built on chains that are not optimised for trading.Let's look at Vega, an app chain that is highly optimised for Trading.
What is Vega?
@vegaprotocol is an L1 app chain that is optimised for high-performance derivatives trading and supports cash-settled futures. It's a proof-of-stake blockchain that runs on the Tendermint consensus mechanism with a growing number of validators.
Vega integrates with an Ethereum bridge, enabling users to leverage ERC-20 assets on-chain. Permissionless market creation allows for any asset to be leveraged on Vega. Vega is currently on the alpha mainnet, which is run by a set of validators.
On-Chain Order Book
Vega's features include a full on-chain order book. Only a few derivative trading protocols include such advanced on-chain order books.
Market Creation
Permissionless market creation sets the Vega Protocol apart from other derivatives trading platforms, where anyone can:
Propose a market by following the governance process.
Garner votes, support, and liquidity from the community.
Six steps of permissionless market creation:
1. Sense-check the market with the community.
2. Formalise the proposal.
3. Submit to the Vega chain.
4. Garner support and get voting.
5. Attract Liquidity
6. Launch the market
Comparisons:
Perp DEXes like GMX, GNS, MUX are built on top of generic chains that are not optimised for trading with high throughput and low latency. But Vega is a protocol with a consensus layer that can handle thousands of trans per block with one-second block times.
MEV protection
Other chains validators front-run profitable transactions by using the chain's transparency. This might result in a loss for the user at times. Vega's Wendy runs alongside consensus and doesn't allow such front-running by MEVs. This feature is not live yet.
Gas fees
When you trade on platforms like GMX, MUX, and GNS, users need to pay for every transaction they do on them. Vega allows traders to trade without gas fees; hence, they don't have the necessity to hold VEGA to pay for gas.
Capital Efficiency
The high latency in generic chains leads to low capital efficiency, which reduces the User Experience & makes the markets less liquid. But Vega uses live position monitoring, risk recalculation & automatic recapitalization to improve capital efficiency.
VEGA token
VEGA is can be used by the community to vote on key protocol decisions, which markets to open, etc. Lets look at how VEGA tokens can help users in earning rewards.
Real Yield
Trading fees collected are distributed between node operators and liquidity providers of the VEGA protocol. A portion of the infrastructucre fees are passed on by the validators as staking rewards to any user that has delegated VEGA to that validator.
Maker & LP fees
Maker fees are paid to any participant placing static or pegged limit order volume on the book when their order matches an incoming trade. LP provider fees is paid to any user who commit their assets to maintain liquidity on the book.
Backing
Vega has an impressive backing list, including PanteraCapital, Hashed, 3commascapital, Edenblock, Delphi, Arrington Capital, Ripple, Parafi Capital, etc.
Roadmap
Vega will support Ethereum oracle contracts via the Ethereum bridge in the near future. This means the entire ecosystem of Ethereum-based oracle protocols will be open for use on Vega markets. The team also has Metamask integration on their roadmap.
Sept-23 --> Stop orders, iceberg orders, successor markets, Vega Wallet, and browser extension
Oct-23 --> Perps, Ethereum Oracles, and Potential Chainlink Integration Vega team is working around the clock to implement this roadmap.
Conclusion
@vegaprotocol looks like a project that is committed to improving the on-chain experience of traders with its continuous innovation and superior technology. I think the team can accomplish what they set out to with the kind of backing they have.