The growth of decentralized finance (DeFi) has created alternatives for many outside of traditional financial markets in recent years. This means that the challenges of high fees, third-party intermediaries, censorship and more that have plagued financial markets for years can now be avoided. Many platforms have jumped on the DeFi trend, offering a variety of financial products and services through blockchain technology. VEGA token with Vega platform is one of them. The platform is a decentralized bridge connecting the blockchain to the world of finance and commerce.
What is VEGA Coin?
Vega is a decentralized protocol that facilitates the execution and trading of financial products. It is proof of a stock network built for fully automated trading on public networks. Anyone can use the protocol to create decentralized markets. However, the implementation of the protocol can only be done in a distributed manner among the nodes forming the backbone of the network. Each node joins the network through the Proof of Stake (PoS) mechanism and all nodes run a Byzantine consensus protocol to ensure complete security.
The Vega blockchain is built on Tendermint, which makes it possible to trade derivatives on its decentralized network with similar experience and capabilities as centralized exchanges. Also, the platform is optimized for decentralized trading.
It is a technical layer that enables all kinds of complex markets and products to be created on-chain. It is a platform for everyone, including developers, traders and market creators. The purpose of the platform is to be one of the core infrastructures of the DeFi system and its mission is to develop tools that will provide freedom to trade for everyone.
Vega’s Innovative Approach
The platform uses an innovative approach that leverages the dynamic liquidity market to attract and allocate market maker resources. These built-in liquidity incentives allow the protocol to match traders and market makers on any financial product. To encourage innovation on the platform, Vega has included a feature known as Smart Products. It allows users to create new products and launch new markets.
A comprehensive suite of economic fundamentals and product features enables participants to identify all instructions regarding cash flows and payments. The platform also operates according to decentralized risk management standards to ensure secure trading of complex instruments.
Vega Market Network
The Vega Network is the foundation upon which other components of its framework such as markets, participants, governance actions, and products are built. Markets on the network refer to tradable instruments designed for a particular type of trading. There are different types of markets, depending on the instrument lifecycle stage and whether any transactions affect trading. These are suggested, active, suspended, and closed. In general, markets fall into two categories:
Open Markets: Open to participants with sufficient collateral for clearing. These include stocks, forex, etc. similar to public markets. They also mostly trade using the limit order book, although they do use other modes from time to time.
Temporary or OTC Markets: They are created by a participant for a specific purpose, such as initiating a trade based on prices accepted offline or using the Vega protocol to enable the price discovery process.
Vega’s Collateral Management
Secure trading is an essential part of the Vega network. To ensure this, every trade on a public Vega network is subject to adequate collateral. Otherwise, they will be closed. Therefore, the network maintains collateral on all assets using a decentralized system that allows for easy management with a simple deposit/withdrawal protocol interface between the Vega network and the main chain for the crypto asset. This allows adding assets as needed. The performance of the host chain will determine the speed of deposits and withdrawals. However, after the assets are invested in Vega Network, Vega Infrastructures determines the rate of allocation, settlement, release or transfer.
The criterion for an asset that qualifies as collateral is the ability of the Vega network to manage it and depends on these four criteria. Currently, only blockchain-based cryptocurrencies and digital tokens meet these criteria.
Trade and Settlement in Vega
Trading and clearing is fully automated on the Vega network to ensure that all transactions, from trading orders to final clearing, occur deterministically on every node. This is in line with decentralization requirements to ensure that every participant in the market sees the same outcome for every action.
There are six trading modes or new trade creation methods available on the Vega network. These are perpetual trading, discrete trading, auctions, suspended markets, requests for quotes (RFQ), and matching transactions. They can be applied in a variety of conditions and meet the market’s needs while meeting standards of fairness and flexibility. On the other hand, the settlement market ensures that traders’ accounts are credited and debited accurately at specified points in a trade’s life cycle.
About VEGA Token
Vega’s native cryptocurrency is VEGA token. VEGA is an ERC-20 token, meaning it is compatible with Ethereum and interacts with the Vega blockchain via an Ethereum-Vega bridge. The token serves as a management token and its holders have voting rights on the platform. Part of the token has already been allocated through the ICO. Although they remain locked, holders can stake and roll over the token when the network is live. This means that token holders can participate in the network by assigning tokens to the validator and suggesting and voting on issues such as new markets and management of the platform. When holders share or transfer the token, they will receive rewards in the form of a percentage of the infrastructure fee and on-chain treasury.
The total supply of Vega token is 64,999,723.
From June 2 to June 3, 2021 Vega ICO took place on CoinList. There, it sold over 4 million tokens worth $59,750.00. The remaining unsold tokens will go towards spending on community and incentives. In other words, Vega will continue to hold a small treasury for future use in raising additional funds or funding other initiatives for the further development of the protocol.
ICO
The Vega ICO took place on CoinList from June 2 to June 3, 2021. There, Vega sold over 4 million tokens worth $59,750.00. The ICO had three price categories, with tokens going up to $5, $10 or $15 depending on some criteria. Specifically, $5 tokens have a 12-month lock-in period, followed by a 12-month release period, with a maximum of $1,000. Also, $10 tokens have a 6-month lock-in period, after which a 6-month release period, with a maximum of $2,500. Finally, the $15 token will be freely traded after a 90-day lockdown with a maximum of $10,000.
The ICO was a huge success for the Vega protocol.
VEGA Coin Review and Future 2022
The Vega protocol has a lofty goal of becoming one of the core infrastructures of decentralized finance, just like Ethereum. It aims to create tools that guarantee freedom of trade and make that freedom accessible to everyone in the world. It is too early to say whether it will succeed. However, the protocol has several innovative approaches that make it a project worth watching.
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