Key concepts

We're creating the critical infrastructure for Web3 and DeFi to mature, and birth a thriving new world of finance

We're building a future of finance to rival, or outdo, CeFi — where control of the markets, products, and fees is in the community's hands.

And the tools to create decentralised markets that give centralised versions a run for their money.

Vega is designed to:

Be as good as CeFi
Vega will rival the current financial system, replacing it with one that puts fairness, efficiency, and accessibility at its heart.

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. And charging high gas fees in the process. Making these blockchains fit for sophisticated trading requires workarounds to avoid unwanted results, such as the unfair practice of front running. Derivatives are too important in finance to use workarounds. Vega is specifically built from the ground up with trading in mind, using high performing, purpose-built smart contracts for trading - meaning no fees on orders, and fairness at its core.

Read more:

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

Anti front-running protection

Our high-throughput, low-latency platform secures transactions by Tendermint, the proof-of-stake consensus layer with anti front-running protection built in. The consensus algorithm ensures all nodes see the same sequence of transactions, maintaining the integrity of the platform and ensuring transparency and auditability of trading outcomes. In this way, we can create a fair marketplace where no participant can routinely gain advantage through malicious actions - and market governance is decentralised.

Our pre-protocol widget, 'Wendy', provides cryptographic proof that a trader has had fair access to the order book. 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'    (development on the original research to include a framework for implementation)

Or try out the Wendy prototype    on a simulated network

Be better than CeFi
By standardising and automating every step of the trade lifecycle, Vega addresses the shortcomings of traditional trading. And strikes a balance between rigidity and flexibility, for confidence and growth.

Permissionless market creation

The freedom to transact and create markets is central to Vega delivering on the promise of blockchain and DeFi. Unlike other decentralised exchanges where market creation is centrally controlled, with Vega, anyone can propose a market on any underlying - which the community must then approve. They can then easily attract liquidity with our built-in incentive mechanism that matches traders and market makers.

Market making with built-in liquidity incentives

Successful markets need enough liquidity to generate bustling activity. Vega shifts power and reward away from rent-seeking exchange owners, towards the liquidity providers of markets. This opens up new sets of business models, and unlocks a “VC” like approach of incubating a portfolio of markets, or “buying in” to more mature markets.

Read more about:

Earning liquidity rewards in the Vega blog 'Getting liquidity rewards'   

Optimised for high capital efficiency

Vega's innovations open up hedging instruments to a far greater range of people and businesses. Live, automated cross margining significantly lowers capital costs allowing markets to exist that previously wouldn't due to cost. Vega runs SPAN-type calculations, ie it evaluates overall portfolio risk by calculating the worst possible loss that a portfolio of derivative and physical instruments might reasonably incur. And it does this live, and on-chain, instead of over the course of one trading day.

Meanwhile, built-in 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

Launch a new market on Vega, or trade, confident in the knowledge that the latest and most accurate price is available to you. Unlike other decentralised exchanges, we don't charge gas fees meaning 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. Automated market makers rely on other price services, whereas with Vega you can have an initial offering of something that has never been traded before.

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 so the network can operate and grow freely, without manual intervention - while minimising risks posed by bad actors. Weighted voting happens through the community allocating, or staking, their tokens to validator nodes. And decisions made 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 much more efficiently than centralised exchanges. With a plugin-like architecture for risk models, it is easy to implement whichever risk model is appropriate for a new market. And we run best-in-class stochastic models fast enough to support frequent margin evaluations - allowing traders with positions to quickly take appropriate action.

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

Forget worrying about latency, or manually tracking order prices. Use pegged orders on any market, at any time to place orders and track another price on the market. By automating this feature, Vega enables advanced trading strategies, fast reaction times - while reducing the number of 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'   

Help DeFi mature
Designed from the ground up, and in a modular way to encourage creativity and incentivise participation — we're creating the critical infrastructure for Web3 and DeFi to mature. And birth a thriving new world of finance.

Cross chain support

Vega lets users choose which digital asset they want to use as collateral, including Bitcoin, Ethereum, ERC-20 tokens, stable coins, and more - though currently it only supports Ether. By making the protocol 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

From providing dev-friendly APIs, to streamlining integration and allowing for custom creation of user-friendly front-ends, Vega makes it easy for developers to unlock fairer and faster trading for the masses. Vega works alongside other layer 1 blockchains so devs can easily build immersive web, mobile or desktop apps. And because integration is so simple, you could, for example, easily create responsive markets to monitor various real world/spot dynamics and automatically propose a hedging market when volatility exceeds a threshold.

What's more, you can create status quo-challenging user interfaces with WebSocket for communication between your app and the server, GraphQL or gRPC APIs for streaming market data. You can also show simple graphs of data from markets using an open source library (such as Vega Pennant graphing library). The possibilities are endless.