VMP-46 - Vega/USDT (Spot market)

🗳️ Governance Proposals Market Proposals
1

Create market VEGA/USDT

This proposal creates a spot market for the Vega token. This would allow users or applications to buy or sell vega token on the vega chain. This would be particularly helpful for users trading on future market and on need of more collateral to open new positions on vega.

This proposal is inspired from the USDT.ETH/USDT.ARB submitted on chain already.

Also, to push with the adoption of the new arbitrum bridge, this proposal is using the new arbitrum USDT which have been enabled on chain recently.

The enactment and closing date haven’t been set yet and will be just before submission, likely with a 1/2 days voting period.

Full Proposal JSON:

{
  "proposalSubmission": {
    "rationale": {
      "title": "VMP-46 - Create Vega / USDT market",
      "description": "Create a new spot market for Vega / USDT (https://community.vega.xyz/t/vmp-46-vega-usdt-spot-market/4499)"
    },
    "terms": {
      "closingTimestamp": "**TODO**",
      "enactmentTimestamp": "**TODO**",
      "newSpotMarket": {
        "changes": {
          "instrument": {
            "name": "Vega / Tether USD (Spot)",
            "code": "VEGA/USDT",
            "spot": {
              "baseAsset": "d1984e3d365faa05bcafbe41f50f90e3663ee7c0da22bb1e24b164e9532691b2",
              "quoteAsset": "2a1f29de786c49d7d4234410bf2e7196a6d173730288ffe44b1f7e282efb92b1"
            }
          },
          "tickSize": "10",
          "priceDecimalPlaces": "5",
          "sizeDecimalPlaces": "1",
          "metadata": [
            "base:VEGA",
            "quote:USDT",
            "class:fx/crypto",
            "spot",
            "sector:defi",
            "enactment:2024-06-20T12:00:00Z"
          ],
          "priceMonitoringParameters": {
            "triggers": [
              {
                "horizon": "9900",
                "probability": "0.9999999",
                "auctionExtension": "60"
              },
              {
                "horizon": "9900",
                "probability": "0.9999999",
                "auctionExtension": "60"
              },
              {
                "horizon": "9900",
                "probability": "0.9999999",
                "auctionExtension": "60"
              },
              {
                "horizon": "9900",
                "probability": "0.9999999",
                "auctionExtension": "60"
              },
              {
                "horizon": "9900",
                "probability": "0.9999999",
                "auctionExtension": "60"
              },
              {
                "horizon": "36900",
                "probability": "0.9999999",
                "auctionExtension": "300"
              },
              {
                "horizon": "36900",
                "probability": "0.9999999",
                "auctionExtension": "300"
              },
              {
                "horizon": "36900",
                "probability": "0.9999999",
                "auctionExtension": "300"
              },
              {
                "horizon": "36900",
                "probability": "0.9999999",
                "auctionExtension": "300"
              },
              {
                "horizon": "36900",
                "probability": "0.9999999",
                "auctionExtension": "300"
              }
            ]
          },
          "targetStakeParameters": {
            "timeWindow": "3600",
            "scalingFactor": 0.05
          },
          "logNormal": {
            "riskAversionParameter": 1e-06,
            "tau": 3.995e-06,
            "params": {
              "mu": 0,
              "r": 0,
              "sigma": 1
            }
          },
          "slaParams": {
            "priceRange": "0.03",
            "commitmentMinTimeFraction": "0.75",
            "performanceHysteresisEpochs": "1",
            "slaCompetitionFactor": "0.8"
          },
          "liquidityFeeSettings": {
            "method": "METHOD_MARGINAL_COST"
          }
        }
      }
    }
  }
}
2

Sounds good.

The quote asset is the Arb USDT which makes sense.

3

Exciting!

Worth noting the base asset is Ethereum Vega and the quote asset is Arbitrum USDt. This aligns with the general proposal to move markets towards Arbitrum USDt as the settlement asset which is discussed elsewhere.

Now we just need to be able to stake the Vega directly without having to go through the staking bridge :blush:

2 Likes
4

Submitted now and ready for voting VEGA Governance

5

I will support this market with 5k of liquidity on each side (100bps spread) when funds become available if this proposal is approved by the community:

https://community.vega.xyz/t/vgt2-funding-request-to-seed-innovative-markets-on-vega-and-immediately-commence-much-needed-marketing-activity

1 Like
6

I’ve been asked questions about the above commitment privately, so I’d like to add more detail on this thread.

The VEGA/USDT spot market will likely experience net selling as rewards are paid in VEGA and it’ll be convenient for traders to sell their rewards on Vega instead of withdrawing them first.

From the market makers point of view, this means I’ll be buying VEGA with USDT(Arb) and I’ll need to withdraw this VEGA, sell it on the market for USDT(Eth) and swap that USDT for USDT(Arb) again, before depositing back to Vega to replenish inventory.

I will therefore quote 5k across a range of 5% from the mid price on each side of the market, to ensure it’s possible to rebalance inventory in the market without incurring losses. While this liquidity is thinner than outside of Vega, it is vastly better than the liquidity currently quoted in the book. For a mid price of 0.33 it means the lowest bid will be 0.31 and the highest offer will be 0.35.

I have most of the code already written to do this, I’ll just need a few days to piece things together and get it working.

1 Like