Key concepts

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 products for trading — meaning no fees on orders, and fairness at its core.

Our high-throughput, low-latency platform secures transactions by Tendermint, our proof-of-stake consensus layer. The consensus algorithm ensures that 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.

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.

Vega is a protocol for creating decentralised markets which uses a limit order book for trade generation. Different nodes receive different orders from different users, and these 'gossip' between themselves and decide which ones to include in the next block. So at any block height, all the nodes have exactly the same representation of the order book.

The freedom to transact and create markets is central to Vega delivering on the promise of blockchain and DeFi. Anyone can create markets on any underlying asset — and easily attract liquidity with our built-in incentive mechanism that matches traders and market makers.

Vega protocol's rigorous framework continuously monitors whether there is sufficient committed liquidity for a market — 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 liquidity providers to quickly take appropriate action.

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.

Track the best offer when selling a stock and the best bid when buying a security, with pegged orders. This feature also enables advanced trading strategies, and reduces the number of transactions needed to maintain liquidity provider orders.

Vega's live, automated cross margining significantly lowers capital costs meaning markets can exist that previously wouldn't due to forbidding costs. Traditional derivatives exchanges charge an initial margin on open positions and then conduct a daily mark to market across all traders with open positions as a way of covering their risk. Instead, 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. But it does this live instead of over the course of one trading day. And it does this on-chain. Meanwhile, built-in cross margining routes a trader's gains made on one market (realised and/or unrealised), to offset positions on other markets. These combined innovations open up hedging instruments to a far greater range of people and businesses.

Vega has anti-frontrunning protection built in at the consensus layer. 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.

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.

Knowing the latest and most accurate price is key to making good trading decisions. Vega offers subsecond latency together with price protection mechanisms/circuit breakers and auctions in low liquidity regimes to discover true market prices.

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.

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.

Vega works alongside other layer 1 blockchains so developers can easily build immersive web, mobile, or desktop apps on top of the Vega network. Developing with our APIs is very similar to integrating with a centralised exchange except that you connect to a node in the Vega PoS network rather than a central server. Full access to the blockchain and all trading data allows new types of market insight. What's more, with our REST, gRPC, or GraphQL APIs you can unleash the power of completely transparent risk and order books — a necessary element for fairer and faster trading.

Vega is designed from the ground-up, making integration with trading systems and bots seamless and easy. For example, you could easily create responsive markets to monitor various real world/spot dynamics and automatically propose a hedging market when volatility exceeds a threshold.

Unlock trading for the masses by creating status-quo challenging, trading user interfaces. All the information you need to create new trading front-ends is at your fingertips. 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.