The seed round raised US$2 million, and the transaction volume exceeded US$1 billion in the 10 months since the launch of the mainnet: Can the Vega protocol gain momentum?

The Vega protocol has attracted widespread attention for its innovative approach to creating and trading derivatives on a fully decentralized network.

On March 12, 2024, Vega launched the first "points" futures market in history, which attracted attention. Previously in May 2023, Vega completed a $2 million seed round of financing. According to reports, Vega Protocol is a protocol for creating and trading derivatives on a completely decentralized network.

Using Vega Protocol, anyone can create products, create markets and trade. This project focuses on system optimization of DeFi and transactions, locks user assets in multi-signature addresses, and then generates corresponding assets on the Vega Protocol network to solve cross-chain asset issues while ensuring user asset security.

The following introduces the Vega Protocol project from multiple dimensions.

How does Vega build a more ideal financial system through a decentralized trading environment?

The Vega protocol aims to solve many problems existing in the traditional financial market, such as reliance on centralized third parties, high costs caused by intermediaries, and structures and organizations that limit market accessibility and innovation capabilities, while paving the way for financial product innovation. the way.

By providing a decentralized trading environment, Vega aims to remove obstacles in the existing financial market and achieve a more fair, efficient and open financial system. It implements end-to-end margin trading through a decentralized architecture and uses a proof-of-stake mechanism to ensure the security of the network. The main features of Vega are:

1. Non-custodial and pseudonymous: The Vega protocol ensures that no third party can use or control your funds, providing users with complete financial sovereignty;

2. Purpose-built proof-of-stake blockchain: Vega sets new standards for decentralized financial transactions through fully decentralized, high-performance peer-to-peer network transactions;

3. Low fees, no cost for placing orders: Similar to the fee structure of centralized exchanges (CEX), order submission on the Vega platform does not require gas fees for each transaction, significantly reducing transaction costs;

4. Transparent and open source transactions: All source code and transaction data of Vega are public, ensuring the transparency and openness of the platform;

5. Capital efficiency margin trading: Vega supports leverage trading with full cross-margin, which improves the efficiency of capital use;

6. Rich CEX-style order books and APIs: Vega provides a completely decentralized limit order book (dCLOB) and historical data API, bringing users an experience similar to that of a centralized exchange;

7. Decentralized liquidity incentives: The Vega protocol incentivizes decentralized liquidity provision by fairly rewarding liquidity providers from transaction fees;

8. Permission-free market creation: Vega supports the creation of markets on any basis without any permission through on-chain governance, which greatly promotes market innovation and diversification.

Analysis of the liquidity incentive mechanism in the Vega protocol: there are rewards and penalties, and interest rates are dynamically adjusted

The development of decentralized derivatives markets faces significant challenges, particularly in attracting and maintaining liquidity. The Vega protocol provides an effective solution to this problem through a series of innovative incentive mechanisms. The following is an analysis of the main features and mechanisms of the Vega protocol in terms of liquidity incentives.

1. Multi-dimensional quantitative indicators: The Vega protocol conducts a comprehensive assessment of market liquidity by introducing multi-dimensional indicators including order book depth, distance between orders and the market mid-price, and order duration. The comprehensive use of these indicators makes the assessment of liquidity more accurate and provides a solid quantitative basis for incentive allocation;

2. Dynamic liquidity demand response: The protocol dynamically adjusts liquidity demand assessment standards by analyzing market conditions in real time to ensure an effective match between liquidity supply and market demand. This flexible response mechanism improves market adaptability and efficiency;

3. Contribution-based reward system: The Vega protocol adopts a contribution-based reward mechanism based on the actual contribution of liquidity providers to market liquidity to ensure that liquidity providers receive rewards that match their contributions. This mechanism incentivizes market makers to provide higher quality liquidity while encouraging early market participation;

4. Penalty system: In order to ensure the execution of liquidity commitments, the Vega protocol has designed a mechanism to punish participants who fail to fulfill their liquidity provision commitments. This penalty system further ensures a stable supply of market liquidity;

5. Application of consensus mechanism: The Vega protocol uses the continuum consensus mechanism to coordinate the behavior of market makers and achieve the optimal allocation of liquidity supply through consensus. This consensus mechanism not only promotes information sharing and collaboration among market participants, but also enhances the overall efficiency and security of the market;

6. Dynamic market adjustment: Through continuum consensus, the Vega protocol can dynamically adjust incentives to adapt to market changes. This flexible adjustment mechanism ensures that it can effectively attract and maintain the required liquidity under different market conditions.

The first points derivatives market in the DeFi industry is born. Can Vega lead the change in the industry?

On March 12, Vega brought unprecedented innovation to the DeFi world with its groundbreaking permissionless infrastructure - the birth of the first points derivatives market. The launch of the Vega protocol enables anyone to propose new derivatives market ideas and turn these ideas into reality through on-chain voting. This not only democratizes market access, but also opens the door to previously unimaginable market types. Since the launch of the mainnet in May 2023, Vega DEX’s total trading volume has reached nearly $1 billion, and the newly launched Palazzo feature further strengthens its position as the preferred decentralized trading platform for mature traders. ,

It is particularly worth mentioning that through the proposals and votes of the Vega community, the EigenLayer points derivatives market was successfully launched, becoming the first such market in the cryptocurrency field. This innovation not only facilitates price discovery but also provides EigenLayer users with a way to hedge the value of their points, while also providing the entire cryptocurrency community with the opportunity to explore the future value of the ecosystem.

The rise of the points system has changed the incentive form of cryptocurrency, and Vega's points market provides users with a new way to test and realize the value of points. At the same time, the potential value and inherent advantages of points have become the focus of the crypto industry. The intervention of the Vega protocol brings liquidity, risk management and hedging opportunities to point holders through a permissionless market creation mechanism, and promotes price discovery of points through the market.

Vega is not only a protocol that supports DeFi application chains, it also defines the key parameters of the market through a community-driven approach, challenging the conventional practices of the traditional cryptocurrency and pre-release token markets. With the help of UMA's Optimistic Oracle, Vega provides an innovative solution for the points market, ensuring the transparency and fairness of transactions.

Vega’s engineering team also provided sample smart contract code showing how to implement this on-chain settlement, further demonstrating Vega’s leadership in driving DeFi innovation. With the launch of the Vega points futures market, we can look forward to how Vega will continue to unlock new DeFi use cases and lead the market in exploring and responding to these new products.