5 Vega questions with Answers by Kumxy

  1. In traditional financial trading systems, there are major issues of front-running, how does Vega intend to tackle this?

In decentralized financial systems, the concept of trust and fairness is held with utmost regards, Vega Proposed a system that is trusted and fair to all parties regardless of the conditions and within the confines of decentralization. As a decentralized sovereign blockchain, designed specifically for trading derivatives, Vega’s framework firmly provide certainty to participants, while being flexible enough to encourage free market expansion. To ensure fairness and eliminate front-running, Vega implements an order book protocol called Wendy which runs in tandem with the Vega consensus.

  1. Are there reasons why Vega leverage both on-chain Limit Order Book (CLOB) and also Automated Market Market altogether?

The Vega framework offers unlimited trading experience using both the on-chain Central Limit Order Book (CLOB) and the hybrid design of both Automated Market Maker (AMM) and CLOB . Vega leverages on the advantages of both AMM and CLOB; because though CLOBs are much better than AMMs for trading derivatives, the AMM is an important complement in the early and illiquid phases of a market which is an essential part of the life cycle of a Market. While this can be seen in other generic blockchains, the clear difference is that unlike these chains, there are no fees to place orders on Vega chain, this goes a long way in incentivizing limit orders.

3.How does Vega prevent Order Spamming, where a user tries to abuse the order book by constantly spamming it with small orders?

Vega further optimize this process by applying the diseconomy of scale using client-side Proof of Work which will make it incentive incompatible and puts the participant at a disadvantage in acceptance into the mempool.

  1. What is the total amount of Vega staked and the APY?
    As at this momoent the total amount of vega stake is 33 237 313, the APY is at approximately 9.2%

  2. How does Vega intend achieve decentralized market creation?

In traditional market system, Market Makers and Exchanges has the sole authority to inform who, what, when and which market should be created. Vega propose a more decentralized approach to market making by allowing anyone to create open market using customize modules. This was made possible by the Vega’s WebAssembly compiler making it relatively easy to build products with any high level programming language.

With Vega anyone can pseudonymously create any type of market. Users can set up more traditional markets, such as spot swaps, futures, options, and perpetual swaps, or design new markets altogether, as long as they specify how to value the product and calculate settlement flows . The product creator must also specify when to calculate settlement , which could be as cash flows are generated (recurring), when positions are closed , or at an expiry date.