As the fastest growing transactional category in the DeFi space today, the derivatives market is particularly noteworthy in the DeFi boom. Its market share in the crypto space is also on the rise. At the same time, decentralized derivatives protocols are enriching the structure of the underlying financial products in the DeFi world. Based on these protocols, more standardized investment and financial products are being introduced to meet the ever-changing investment needs of users.
While the financial derivatives are gradually enriched and the market system is increasingly improved, we also see that the current options market still faces many challenges. From futures expansion to options, financial derivatives have also been introduced in numerous categories. Futures and options are inherently a game, and as prices fluctuate, profits on one side of the transaction are destined to result in losses on the other. Therefore, when creating financial derivatives, it is necessary to consider how to ensure fairness and justice for both sides of the transaction, which is the demand of decentralization. So how will financial derivatives ride the wave and achieve a qualitative breakthrough?
Vega is developing a protocol that enables people to trade derivatives securely, with margin, and without escrow. Advanced built-in liquidity incentives and anonymous market creation ensure that anyone in the world can create high-quality markets without censorship or restrictions. In short, Vega provides the technology needed to move large volumes of transactions from traditional financial markets on-chain in a safe, secure and fair manner.
Vega is a proof-of-stake blockchain built on Tendermint that enables trading of derivatives on a decentralized network with experience similar to that of a centralized exchange. By using an optimized blockchain as well as Ether or other general purpose public chains, Vega is able to fairly process and manage the risk of settling thousands of transactions per second for assets such as Ether, Bitcoin and standard ERC20 tokens. Fees are charged only when a transaction is executed, and limit orders can be submitted, cancelled and modified at no cost.
Vega’s mission is to develop software that gives everyone fair access to high-quality derivatives markets. the founders of Vega believe that no one should have to cheat or gain an unfair advantage because of wealth, status, or technical ability. Vega was designed to enable all participants to benefit equally from competitive fees, with returns proportional to the value added.
Vega’s Core Highlights
Vega’s mission is to build tools that guarantee freedom of exchange and make that freedom available to anyone. vega is targeting the fundamental problems we see with the current centralized financial system and creating a parallel financial system to solve them. At the same time, the team is writing reward and incentive rules to balance the system, keep it fair, and help it grow.
Vega is the protocol used to create and trade margin financial products on a fully decentralized network. The network is based on proof of stake and will facilitate fully automated, point-to-point margin trading and execution of complex financial products. Anyone can use the protocol to create decentralized markets. The protocol must be open and will ultimately be free and open source software managed by the community so that it can be developed and evolved according to the needs of its users.
Built-in liquidity incentives make it available to traders and market makers in any financial product to solve the problem of attracting and allocating market makers, especially for decentralized markets.
Second, Vega will connect to major blockchain connections as collateral, which can exist in any digital asset, including Bitcoin, ERC20 tokens and stablecoins, so participants will be able to choose from a range of collateral.
Any participant can easily create and launch a marketplace anonymously by using tools that use product features and economic fundamentals so that all cash flows and settlement instructions can be easily specified.
Vega’s technical innovations
Atomic margin calculation: The Vega trading engine uses an industry-standard risk model that optimizes the market’s margin requirements based on the market’s expected volatility and open positions. Each time a new block is created, the network recalculates margin levels to ensure that traders receive the most competitive leverage without compromising market security.
Built-in liquidity incentives: Vega implements a novel liquidity mining mechanism where liquidity providers (LPs) set the transaction fees for each market by bidding. This results in lower fees in highly competitive markets and fully incentivizes liquidity in new markets with low trading volumes.
Low latency and high throughput: The Vega blockchain is optimized for the design. It runs with a blocking time of about one second and is capable of processing thousands of transactions per second. There are no fees to create, cancel or modify orders. Instead, traders pay fees only when their order matches both sides of the transaction, or for example to make deposits and withdrawals from the Etherbridge smart contract.
Protected auctions and price monitoring: The Vega network has built-in triggers to ensure that trades are conducted within safe limits. For highly leveraged counterparties, large price movements may result in insufficient margin to cover their open positions. The network implements price monitoring and triggers auctions in the event of false price movements to protect market participants from the risk of losses due to manipulation or black swan events.
Permissionless market creation: The Vega network enables users to propose, modify and approve markets for any asset they wish to trade with each other without seeking permission. By aligning the interests of liquidity providers, traders and token holders, Vega will be able to quickly create new markets and unlock a wealth of new opportunities on the decentralized network.
Anonymous trading and governance: Trading and governance on Vega is executed by anonymous users. Traders do not need to know each other’s identities to trade together in a secure environment. Proven incentives and strong protocol governance ensure that the marketplace serves the best interests of all traders equally at all times.
Rich and user-friendly API: The network exposes market data and trading privileges through a modern, user-friendly API. Markets can be accessed via REST, RPC and GraphQL. Developers can build complex real-time applications using HTTP to establish synchronous interactions or utilize streaming via web sockets.
Vega’s token economics and its distribution mechanism
Project token: VEGA
Total number of tokens: 64,999,723 VEGA
Project website: https://vega.xyz/
Token Sales: 487,479.225 VEGA (7.5%)
Team: 1930417.731 VEGA (29.7%)
Community: 17094927.149 VEGA (26.3%)
Early investors: 23724898.895 VEGA (36.5%)
- Whitelisted community members will receive tokens from the community allocation Tokens were allocated to early investors and team members prior to the sale of VEGA tokens. All of these allocations are subject to a lock-up period, with a few early investor tokens beginning to be released after 4 months of the public offering.
VEGA’s total supply is 64,999,723 tokens, of which 7.5% is available through the token sale. After the token public sale, the remaining tokens will be used for community incentives to guide the growth of the network and for future fundraising activities.
The following chart shows the expected release cycle of VEGA tokens, including the number of tokens owned per category and the duration of token release.
Token Public Offering
VEGA will begin a public token sale on CoinList on June 2 at 0:00 UTC, with three rounds of sales.
- A small number (<100) of long-term Vega backers will be able to use private options for $2. In addition, up to 3,000 community members will have access to option 1 on the whitelist, capped at $2,000. Neither option will affect the number of tokens available to other participants through the primary sale.
Excluded Participants: Residents of the United States, Canada, China and CoinList unsupported jurisdictions
VEGA tokens are standard ERC20 tokens that are used to protect and manage the Vega network. After the launch of the main network, the VEGA Token has the following main functions.
The ability to approve new markets
Active markets on Vega are decided by token holders through a governance vote. Anyone in the world can submit a proposal to create, change or delete a market to the network. The token holder community will collectively control whether the proposal is approved or not. Designing secure markets requires careful analysis and collaboration with liquidity providers, and Vega empowers network stakeholders to ensure that the markets they need are prioritized and created.
Important network functions are controlled by governance votes. For example, the number of bulk confirmations before deposits are made to lenders, or the threshold for voting participation in new markets. Token holders play a critical role in ensuring that the Vega network always provides a safe and secure environment for decentralized transactions.
The Vega blockchain implements delegated proofs of interest to reach consensus. The network consists of validator nodes that collectively operate the market by running the Vega software. By pledging to protect the network, token holders select the validators they want to operate the network by entrusting them with their tokens. As a reward for protecting and operating the network, fees are allocated to the validators, token holders and liquidity providers.
Top Founding Team
Vega’s founder, BARNEY MANNERINGS, is responsible for the vision, strategy and protocol design. He has built trading systems at major exchanges and investment banks such as Accenture, and was involved in early bitcoin mining and investing in ethereum pre-sales; he was funded by Google and co-founded Pik.
RAMSEY KHOURY is responsible for Vega’s investor relations and business strategy. He is a seasoned entrepreneur with two successful technology project exits, including Chainspace (a sharded smart contract platform). In addition, he is a tech startup investor and startup mentor.
In August 2018, Vega’s founding team raised funding from venture capitalists, as well as a small round of funding from family, friends and founders to make Vega’s launch possible.
Vega’s seed round raised a total of $5.5 million in 2019 (at a price of $0.36 per Vega) to develop a decentralized derivatives trading marketplace. The round was led by Pantera Capital and received participation from KR1, Ripple’s Xpring, Rockaway, Eden Block, and others.
In November 2020, Vega raised $5.5 million in financing from VC institutions and traditional trading platforms. Investors include strategic backers such as Arrington Capital, Coinbase Ventures, and Cumberland DRW. This round of funding will support Vega’s mission to advance the derivatives marketplace, enabling anyone to create and launch a derivatives marketplace while addressing some of the challenges and conundrums that plague decentralized systems and hinder their widespread growth.
The next giant in derivatives trading is on the rise
The DeFi ecosystem is blossoming, and smart contract-based decentralized derivatives are undoubtedly more accessible to investors. Derivatives are continuously going to the financial sector, providing an excellent way for ordinary investors in need to participate in asset trading with low barriers. Turnover in the traditional derivatives space is subject to market volatility, but derivatives trading volume still accounts for 80% of DeFi market trading volume. And the size of derivatives trading volume on decentralized exchanges is catching up with the spot market.
However, most existing financial markets exhibit several key problems: the importance of trusted third parties, the high cost of finding intermediaries, and the presence of organizations acting as gatekeepers and censors in a structure that controls product availability and stifles innovation. vega is part of a wave of change in decentralized derivatives trading that can fundamentally change the way markets operate in relation to each other.
Vega allows anyone to create products and new markets that work in concert with decentralized risk management, making it possible to trade securely on any complex instrument. Allowing any crypto asset transaction on the chain to be settled, optimizing the market’s margin requirements based on the expected volatility of the market and open positions. This technology could transform the financial system.
As the derivatives industry accelerates, Vega is reshaping and changing the existing decentralized derivatives landscape through decentralized margin trading products.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/learn-about-vega-the-next-generation-decentralized-derivatives-protocol-that-will-soon-go-live-on-coinlist/
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