We are designing and building Vega from the ground up - ask us anything

@caocao Let me try to reply. Security and risk modelling of a complex system like Vega is a big topic so I am not sure to what extent I can answer here in a short amount of time. There is:

  • financial risk about trading derivatives: this is finally rather similar to the risks faced by a centralised exchange and the margin calculations and risk models employed can be standard industry ones. There are some interesting question marks about truly decentralized calibration of risk models.
  • network risk from proof of stake: we are in the same situation as other proof-of-stake networks from security point of view; there are attacks that can be attempted but the general consensus is that proof-of-stake is secure as long as majority of participants is honest. Since cheating would mean that the value of staking token will drop you can assume that staking token holders will be incentivised to be honest. Moreover there are safeguards being built into the protocol e.g. it will not be possible to withdraw assets from Vega unless you can prove exactly how is it that your account holds the assets (e.g. initial deposit, gains from trade against X, gains against Y, settlement cashflow from Z). So even a takeover won’t automatically enable an attack.
  • not sure what you mean by consistency so I am probably not answering correctly but let me try. The consensus layer (Tendermint) ensures that every node sees the same transactions. Vega engine then executes deterministic* code on each node so each node so each honest node is guaranteed to be in identical state. Hence we have consistency.

There is a section in the white paper that goes into more detail.

  • if there is any code that is non-deterministic then its result creates a transaction to go through consensus again.
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@ricardo grrreat question :tiger:

The name Vega comes from the ‘Greeks’ — a set of standard financial risk sensitivities that are often referred to by the Greek letters used to represent them in formulae. Vega, however is a made up letter and not part of the Greek alphabet at all (the symbol for the letter Rho is usually used when it’s written down). It represents sensitivity to volatility. Fitting, we think, for a project that regularly dares to use the words ‘margined’, ‘derivatives’, and ‘cryptocurrency’ in the same sentence!

The only downside of the name, which I love, is that this is hardly the only thing called Vega, so I’m not sure how that’ll effect search/SEO
 check out this page https://en.wikipedia.org/wiki/Vega_(disambiguation)

Regarding Vega’s protocol getting live on a Mainnet, that’s difficult to pin down at the moment, there’s a lot to do and it depends on both us having built and reallty battle tested the software but also there being a set of validators there and ready to launch it, something that will come from the community.

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Hi @chardonnay, that’s a really important question, a little bit of the “why” behind what we’re doing.

So, compared to the traditional industry, Vega, as a decentralised, peer-to-peer protocol has three superpowers that give it an advantage even in the highly competitive and, from some standpoints at least, efficient world of capital markets.

Firstly, by doing away with centralised exchanges and other middlemen the protocol ensures that operational costs are kept fair and as low as possible and importantly transparent.

Secondly, Vega empowers entrepreneurs to design, create and launch new markets or even entirely new financial products that may specifically suit a local market they know well, or fulfil a business need that investment banks are not interested in supporting in the nascent days.

Thirdly, Vega is designed to facilitate a world first global connection of liquidity for derivatives on a single peer to peer network. Participants of Vega may connect instantly across geographic boundaries via the Vega order books.

Given Vega will be a distributed network operating a public order book, I am particularly curious about the consequences this will have on market stop orders. A big issue behind the price instability of Bitcoin at the moment, is the lack of liquidity in the spot market compared with clusters of highly leveraged positions at similar price levels on Bitmex and other large derivatives markets. Larger traders and “whales” take advantage of this through aggressive stop hunting and price manipulation, which ultimately undermines the market as a whole.

I’m curious if you have given any consideration to what the consequences might be of the market knowing where all of the market stop orders are, and whether you think this will be problematic for the stability of the network, or conversely lead to more stable prices and less manipulation due to leveling out playing field.

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That’s a really great question @fred, I think it will be pretty interesting to see how stop orders impact markets with Vega. Maybe it will cause people not to use stops in as much or to add them later under certain conditions, or maybe markets will just be a bit crazy for a while!

We’ve also had some crazy ideas about making stops unpredictable, i.e. a level is provided buy the actual level at which is executes is a randomised point from a [normal?] distribution around that level that’s updated every block. So you’d know roughly where stops were but not exactly where or when they kick in until they do
 how aboutmaking them peg-priced stops where the price is randomised about a moving point
 lots of interesting things we can play with here! :smirk_cat:

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@barney Hi Barney, as this message dates back to 2019, and now that the KYC topic very hot (ex: Binance France banning all anonymous cryptocurrencies), could you update us on that KYC topic ?

As a user, would I need to do some KYC to use VEGA ? If not, It would probably be illegal at some point for some countries like France.

Thank you

Nothing much new to add.

The project is based in Gibraltar and is not illegal there. But depending on the kind of laws that get created — and bearing in mind that the Vega network is decentralised, the project team’s control, and run by validators in many countries, and the front end is only on IPFS — it is possible that using Vega/running a node/being a liquidity provider may be or may become illegal in some countries.

As in the disclaimers, it’s users’ responsibilities to check they are complying with local laws and regs before interacting with the Vega network.

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I see, thank you for the feedback.

Sorry one more question about this. As a French individual, I think it’s OK for me to trade on a DEX as long as I fulfill my tax obligations.

But how can I know that I’m not trading with a terrorist counterpart or someone doing money laundering ? i.e. how do I know I respect AML-FT when using the VEGA solution ?

Thank you.

No feedback on this ? This is a bit worrying


How do you do that on other decentralised finance protoocols, or when receiving staking rewards or running nodes?

Vega is open source software released for free and run by anyone who wants to. The network is not operated by the team, and even the front end is accessed via IPFS rather than a traditionally hosted website. It is decentralised and pseudonymous by nature and does not have centralised controls like “KYC” as there is nobody in a position to operate them.

Future versions may have integrations with protocols that allow asserting KYC status or enforcing KYC-type rules on your trades, but those require protocols and infrastructure in addition to Vega to be available and see traction, which has not happened yet in DeFi.

Hi, it’s nice to get a feedback on this, thank you ! I understand the positioning better now, regarding this topic.
I like the idea of “KYC integrations” for those who are concerned with compliance.

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