5 interesting questions about Vega with answers

I’ve been following the Vega project for quite some time now and have had time to study it well, so I want to present you with 5 interesting questions with detailed answers:

1. How is it planned to scale Vega?
Vega has been designed from the outset to scale beyond
the early adopter phase, to the level required for serious
real-world use as part of the world’s financial infrastructure:

  • The protocol allows for the network to be sharded by risk universe, effectively meaning that each market can have its own network.
  • Each blockchain, and therefore each market, is limited in transaction throughput by the blockchain technology in use as well as the physical network and computing infrastructure in place.
  • Risk models can be run asynchronously.

2. What is the difference between ordinary financial platforms and decentralized ones?
Traditionally, financial products are created and traded in markets consisting of various organisations (and sometimes individuals) connected by technology systems and contractual obligations that simultaneously facilitate trading and create barriers to entry.
A decentralised platform for financial products — in which no individual node or party being
compromised5 would pose a risk to the ongoing operation of the network or availability of markets — could provide a genuine alternative, allowing everyone to trade on a more equal basis.

3. What is the Vega Protocol?
Vega is a protocol for decentralized trading and execution of financial products. It is designed for fully automated end-to-end margin trading on open, proof-of-stake secured public networks.

4. What is Vega’s main risk and how does she deal with it?
The primary financial risk facing a Vega network is credit risk.
It is therefore essential that the protocol be designed to constantly maintain effective collateralisation for all positions.
This property of cryptocurrencies and decentralised systems in general leads us to design
Vega as a collateralised, margined, and leveraged20 platform with margin calculations taking into
account the probability of the liquidation value of a position falling short of the available capital.

5. What are the reasons for the market being closed?
In rare circumstances it may be preferable to close a market rather than allow it to continue trading. This may be the case if a market is later found to be fraudulent, if there is a failure or major disruption in an external price source, or for ethical reasons.