Key Concepts

Explore the features that enable you to trade and create derivatives on a fully decentralised network.

Vega is designed to:

Purpose built bespoke blockchain

Ethereum and other blockchains suffer slow performance since they're generalist tools, with smart contracts for everything - applying the same rules regardless of what you use them for. They charge high gas fees and require workarounds to be applied to trading. Vega is built from the ground up using high performing, purpose-built smart contracts specifically for trading - meaning no fees on orders, and fairness at its core.

Read more about:

The importance of a purpose built blockchain for trading on the Vega blog 'Innovating in decentralised financial markets'   

Runs slowlyFast trading
Allows for unfair front runningBuilt for fairness from the ground up
A fee for every transactionNo fees on orders
Generalist tool - A workaround for tradingSpecifically built for trading
Smart contracts for anythingSmall, purpose built smart products for trading
Coming soon

Anti front-running

Vega's pre-protocol widget, 'Wendy', ensures all nodes see the same sequence of transactions and provides cryptographic proof that all traders have fair access to the order book. This creates a fair marketplace where no participant can gain an unfair advantage, an issue rampant in DeFi and something not even sophisticated traditional exchanges can offer.

Read more about:

Vega's front running protection in the papers'Wendy, the Good Little Fairness Widget'    and 'Wendy grows up'   

Or try out the Wendy prototype    on a simulated network

Permissionless market creation

Key to delivering on the promise of blockchain and DeFi, anyone can propose a market on any underlying and the community decides what gets created (unlike other decentralised exchanges).

Built-in liquidity incentives

Unlock a “VC” like approach of incubating a portfolio of new markets with built in liquidity incentives, or “buying in” to more mature markets - shifting the power and reward away from exchange owners to market liquidity providers. Successful markets have enough liquidity to generate bustling activity.

Optimised for high capital efficiency

Vega's cross margining and portfolio risk evaluation innovations significantly lower capital costs opening up hedging instruments to a far greater range of people and businesses and allowing markets to exist that previously wouldn't due to cost.

Overall portfolio risk is evaluated by calculating the worst possible loss that a portfolio of derivative and physical instruments might reasonably incur - live, and on-chain, instead of over the course of one trading day.

Built-in live, automated cross margining routes a trader's gains made on one market to offset positions on other markets.

Read more about:

High capital efficiency in section 3 of the Vega blog Pro traders & Vega   

How Vega optimises for high capital efficiency in sections 3.5 and 6.6 of the Vegawhitepaper   

Efficient Price Discovery

Unlike other decentralised exchanges, Vega doesn't charge gas fees, allowing better price discovery. What's more, Vega offers subsecond latency together with price protection mechanisms/circuit breakers and auctions in low liquidity regimes to discover true market prices.

Launch a new market on Vega, or trade, confident in the knowledge that the latest and most accurate price is available to you.

Read more about:

Different methods of price discovery in section 5 of the Vega blog Pro traders & Vega   

Pseudonymous trading

Lowering the barrier to wealth and value creation calls for pseudonymous identities. In this way, the Vega network is accessible to anyone in the world without restriction.

Read more about:

The risk considerations behind pseudonymous environments and Vega's protective measures in the Vega whitepaper   

Community curation of markets

Vega's market governance is designed to allow the network to operate and grow freely, without manual or centralised intervention. Weighted voting happens by the community allocating, or staking, their tokens to validator nodes. Governance decisions include creation and closure of markets, and the setting of parameters that influence market behaviour.

Read more about:

Market curation in section 3.4 of the Vega whitepaper   

Dynamic margins with cross margining

Vega protocol's rigorous framework continuously monitors and manages credit risk more efficiently than centralised exchanges. A plugin-like architecture for risk models and best-in-class stochastic models that run fast enough to support frequent margin evaluations allows traders with positions to adjust quickly.

Read more about:

Cross margining in the Vega blog 'Credit Risk and Margins on Vega'   

Automated cross margining in section 3 of the Vega blog 'Pro traders & Vega'   

Pegged orders for automated order management

Use pegged orders on any market, at any time, to place orders and automatically track another price on the market. This enables advanced trading strategies and fast reaction times while removing concerns about latency and reducing the number of manual transactions needed to maintain liquidity provider orders.

Read more about:

Pegged orders for automated management in the Vega blog 'How pegged orders work'   

Completely decentralised network

Most decentralised exchanges use a centralised order book, and centrally control what can be traded. With Vega, everything from the order book to market creation and maintenance, liquidity provision and rewards, prices, management of margin and how that position eventually settles happen on chain as part of the network - all of it is managed and governed by the community. This is trading with full transparency - and no black boxes - doing away with the risks that come with centralised servers and single points of failure and control.

No gas fees on trading

Vega does not charge gas fees. It uses a different fee structure that rewards participants and stimulates trading activity. Fees are incurred on every trade on a market in continuous trading, but it is the price taker who pays the fee. During a market's opening auction, no fees are collected.

Read more about:

Gas fees under 'Miner extractable value (MEV) on blockchains' on the blog 'Fair access to efficient derivatives markets'   

Cross chain support

Vega currently lets users propose any ERC-20 tokens to use as collateral. Once the protocol is fully blockchain-agnostic, trades will be able to settle in any crypto-asset on a supported chain, paving the way for physically settled and cash settled products, as commodity and asset tokenisation become widespread.

Read more about:

Cross chain support and multi-chain collateral in the Vega paper'Vega Technical Overview'   

Scalable DeFi infrastructure

Vega works alongside other layer 1 blockchains - with open source APIs and libraries - making it easy to build status quo-challenging user interfaces.

For example, by using WebSocket for communication between your app and the server, GraphQL or gRPC APIs for streaming market data and Vega Pennant for simple graphs you could easily create responsive markets to monitor real world/spot dynamics and automatically propose a hedging market when volatility exceeds a threshold.