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Vega Protocol: First Look

What is Vega?

Vega is a proof of stake protocol for creating and trading financial products with margin on a decentralized network. Vega will facilitate fully automated margin trading, and anyone will be able to build decentralized markets using it. The protocol has built-in liquidity incentives to match traders and market makers across any financial product, solving the problem of attracting and allocating market-making resources. 

Vega will connect to a wide variety of blockchains giving users the ability to choose which digital asset they wish to use as collateral, including Bitcoin, Ethereum, ERC-20 tokens, stable coins, and more. Any user has the ability to create and deploy markets permissionlessly using a wide range of product features.

Decentralized Derivatives 

Vega introduces unique derivative trading capabilities to users in the DeFi and Web 3 ecosystem. Vega allows anyone to trade decentralized derivatives in a safe, self-custodial way. With Vega, the trading platform as a whole is fully decentralized, allowing any user to permissionlessly create a market. Through its decentralization, Vega is potentially available  to any user across the globe. 

Vega offers real-time access to market data for free, offering transparency across all markets. On top of Vega improving the existing trading experience, the Vega team expects the innovation of permissionless trading and market creation will drive a new wave of innovation in markets. 

Trading on Vega

Since market creation on Vega is a fully decentralized process, there are a couple of community checks and balances in place. In order for a market to be created, it must pass a community governance vote, and secure enough liquidity from market makers. 

Markets on Vega are provably fair, meaning that since everything is executed transparently on a blockchain, all actions are visible and everyone follows the same rules. Vega is built using a decentralized ledger of transactions, along with a professional grade trading user interface, and API. 

As creating markets is a decentralized and permissionless process on Vega, so is becoming a market maker. In order to sustain the creation of markets, market makers will be crucial to the liquidity aspect of the trading functionality on the protocol. Market makers receive a dynamic fee for providing liquidity to a market based on the market size. 

The VEGA Token

The VEGA token will be used for staking, and governance. Vega as a whole is a decentralized network, and the community will govern it to help make important protocol decisions. VEGA tokens can be staked and delegated even while locked, allowing every member of the VEGA community to participate in the network on day one. 

Some of the ways the community can use the VEGA token are delegating to a validator, proposing and voting on new market proposals, and proposing and voting on governance changes that will help steer the overall trajectory of the network. 

Staking Information

Token holders who delegate to a validator earn rewards in a couple of ways. Delegators earn rewards from the infrastructure fee, a fee decided by the token holders through on-chain governance. The other way delegates earn rewards is from the on-chain treasury, which will also be distributed through governance processes. Initially, while Vega is new and growing, it’s likely that there will be a significant allocation of VEGA to incentivise early usage. In future, as the network matures, it’s expected that the incentives within the system will take over and provide rewards to token holders in a sustainable way.

At launch, Vega will have an on-chain treasury that allows the protocol and community to allocate funds towards trade mining, liquidity mining, market creation, and other incentives through governance. Learn more about the Vega token here, and how to become a Vega validator here

What’s coming for Vega? 

Currently, the Vega testnet is a place where users can safely try out Vega for themselves. So far, the testnet allows access to the Vega Console app, along with the protocol’s decentralized APIs. On top of this, testnet users can try out permissionless market creation, and order book liquidity mining. Learn more about how to participate in the testnet here.

Vega has been designed to provide trading tools for all. Vega addresses fundamental problems with the current financial system that restrict access and fairness. As the protocol matures, it will eventually be entirely governed by the community, so that Vega can develop and evolve with the needs of its users.

Learn more about Vega



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