Vega is a protocol that is optimized for trading, and provides the derivatives scaling layer for Web3 applications, allowing anyone to pseudonymously build and launch decentralized markets for creating and trading margined financial products and derivatives.
Vega is a custom PoS blockchain with built-in liquidity incentives that match traders and market makers across any financial product to solve the problem of attracting and allocating market making resources.
Vega Protocol was founded in 2018 with the aim to develop a protocol that allows anyone to trade derivatives products safely using margin and in a non-custodial manner, so parties can define and exchange real world financial risk without intermediation.
Vega includes built-in liquidity incentives and pseudonymous market creation, which ensures that high-quality markets can be created by anybody in the world, without censorship or restriction.
Vega has a proof-of-stake bridge to connect to all major blockchains for collateral which can be in the form of any digital asset including BTC, ERC20 tokens, and stablecoins,
Vega also offers a toolkit of product features and economic primitives from which all cash flows and settlement instructions can be easily specified.
Vega improves upon automated market maker based DEXs by adding active pricing with limit order books as well as passive liquidity pools. The network, secured with proof-of-stake, will facilitate fully automated, end-to-end margin trading and execution of complex financial products.
By using a blockchain optimized for this purpose, Vega is able to process thousands of transactions per second with low fees and high capital efficiency to support sophisticated derivatives products.
Fees are only charged when trades are executed and it is free to submit, cancel, and amend limit orders. The network is secured through staking, where token holders choose the validators they want to operate the network by delegating tokens to them. Trading fees are distributed to validators, token holders and liquidity providers as a reward for securing and operating the network. Important network functionality is controlled by governance voting.
The Vega whitepaper was published in 2018, the testnet was launched in March 2020, the public testnet was launched in December 2020, and token distribution happened via CoinList. The Vega ERC-20 bridge was launched in January 2021 to connect to Ethereum-based assets, and the restricted mainnet was launched in November 2021
In order to align the interests of the participants that secure and operate the protocol, it makes use of a native token for staking and delegation, and for the operation of the governance protocol.
The VEGA token is an ERC20 token on the Ethereum network, and it interacts with the Vega blockchain via an Ethereum-to-Vega bridge.
The Vega token is used for staking and delegating to secure the network as well as for governance participation.
The governance requires a way to determine how much voting weight to give each user on the network and the delegated proof-of-stake blockchain also requires a way to decide the validator set and give each validator the right amount of power in the block production process.
The token can be staked even while locked, so every member of the community can participate in the network by delegating to a validator to signal support, proposing and voting on proposals for new markets on Vega, and proposing and voting on governance changes that help distribute rewards and incentives from the on-chain treasury, set fee levels, and adjust other behavior on the network.
Token holders are rewarded from the infrastructure fee (decided by token holders via on-chain governance), and from the on-chain treasury. Hence, token holders themselves receive fees and incentives for participating.
Traders are NOT required to use the Vega token to use the protocol to place orders and trade, so it is not needed for access of the protocol itself. There are no separate gas fees on Vega for these activities so unlike other DeFi protocols, only the assets being traded are required.
Full information on token supply, usage, vesting: https://token.vega.xyz/
Users may create a Vega Wallet here, connect to the Vega Console UI, and participate with Testnet collateral currently to trade: https://docs.vega.xyz/docs/tools/vega-wallet/cli-wallet/latest/create-wallet/
To stake, there is a three-step process to follow in order to earn rewards using token.vega.xyz/staking.