Derivatives trading platform Vega Protocol to retire its chain and launch a retail DEX

In a major shift in the derivatives trading landscape, Vega Protocol has announced it will retire its alpha mainnet chain and native VEGA token to focus on developing and promoting its open-source software.

According to a post by Vega, the protocol is launching Nebula, a full retail DEX with a new token, NEB, to revitalise the project and expand its market reach.

Transitioning to Nebula

Vega Protocol’s alpha phase, which has been instrumental in refining Vega’s capabilities and gathering community feedback, is set to conclude within the next few months if the proposal to retire the Vega chain passes in the ongoing governance vote.

At press time, almost 100% of voters had voted for the retirement of the Vega Chain with the 2.5% 2.5% participation threshold already met.

With the proposal currently expected to pass, although only 2.75% of members have voted, the focus has shifted towards the new initiative, Nebula, which is designed to leverage the Vega protocol to create a retail-focused DEX.

The governance vote on this proposal is open until September 6, and the outcome will determine the future direction of the protocol.

If approved, the alpha mainnet markets will be suspended, and validators will be incentivized to keep the network operational for a short period to allow users to withdraw their funds.

The remaining on-chain treasury funds will be redistributed to stakers, and the VEGA token will be retired in favour of NEB.

According to Vega, Nebula will be built on the Vega protocol, integrating committed liquidity and offering a new NEB token.

This token swap proposal provides VEGA holders an opportunity to exchange their tokens for NEB, with potential dilution effects of up to 5:1.

The transition aims to address the gaps identified in the alpha phase, which revealed the need for a more adaptable and user-centric approach.

Vega Protocol’s alpha mainnet fails to attract users

During the alpha phase, Vega Protocol has made significant strides in developing its decentralized trading infrastructure.

Achievements include facilitating over $1 billion in notional traded volume and collaborating with numerous trading firms and ecosystem projects.

Key updates during this period involved introducing perpetual contracts, expanding Oracle bridge capabilities, and improving the user experience with features like TradingView charts and cross-chain deposits.

However, the alpha phase also highlighted several challenges. The protocol struggled to attract significant developer interest and market creators, largely due to the limitations of the VEGA token and single-chain model.

The feedback collected from the community pointed to a need for a more versatile and scalable approach, leading to the decision to retire the current chain and token in favour of a new system.

As Vega Protocol transitions to Nebula, the project is set to embrace a new phase of development. Nebula’s launch will introduce a multi-chain and multi-token environment, aimed at addressing the limitations of the current model.

This approach is expected to foster broader adoption and encourage the creation of diverse applications within the Vega ecosystem.

Impact on the price of VEGA token

In the wake of the expected transition to Nebula, the VEGA token has experienced a dramatic decline in value.

Following the proposal, VEGA’s price plummeted by over 20% within 24 hours, reflecting investor concerns and market uncertainty surrounding the upcoming changes.

The token has continued to drop over the past few days and at press time it traded at $0.06268, down 65.11% over the past seven days, and down 95% over the past year.

One week VEGA price chart screenshot| Source: CoinMarketCap

This sharp decline underscores the market’s reaction to the proposal and the anticipated dilution associated with the token swap. With the VEGA token set to be retired, current holders face increased volatility and selling pressure.

The proposed swap to NEB aims to address some of these concerns by offering VEGA holders a chance to exchange their tokens, but the significant price drop illustrates the broader impact of the protocol’s strategic shift on investor sentiment.

The post Derivatives trading platform Vega Protocol to retire its chain and launch a retail DEX appeared first on Invezz