In a surprising move, Vega Protocol, a prominent player in the crypto derivatives space, has proposed retiring its blockchain and ceasing support for its native token, VEGA. The announcement, made on August 30, marks a significant shift for the protocol, which has been a key player in decentralized trading since its inception.
The proposal, detailed in a recent blog post, aims to refocus efforts on a new venture called Nebula. According to Vega, Nebula will be a comprehensive decentralized exchange (DEX) equipped with committed liquidity and built on the Vega protocol. This new project will introduce its own token, NEB, which will replace VEGA. Token holders are being given the opportunity to swap VEGA for NEB as part of the transition.
The governance proposal outlines several critical steps: suspending trading, redistributing the on-chain treasury to stakers, and offering guaranteed USDT incentives to validators to ensure the network remains operational for the next two months. This period is intended to allow users to withdraw their funds from the existing Vega DEX. After this window, the future of the Vega alpha mainnet chain will largely depend on whether validators choose to continue running nodes, with no trading or VEGA issuance expected to persist.
As of the latest update, the proposal has garnered substantial support, with 1.7 million tokens voting in favor compared to a mere 200 against. Voting is set to close on September 6, with only a 2.5% participation threshold required for the proposal’s passage.
However, not everyone is on board. Crypto commentator Spreek criticized the move on September 3, alleging that the introduction of the NEB token could dilute the value for existing VEGA holders by up to five times. Despite reaching out for comment, Cointelegraph did not receive a response from Vega Protocol before publication.
The announcement has had a dramatic impact on VEGA’s market performance. The token’s price has plummeted over 17% in the past 24 hours alone, currently trading at $0.06. Over the last month, VEGA has seen a 64% drop, and it has lost a staggering 95% of its value over the past year.
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Vega Protocol, which first made waves with its 2018 white paper and a 2019 seed funding round led by Pantera Capital, has struggled to maintain its foothold in a competitive market. Despite raising $5 million initially and securing an additional $43 million in 2021, its total value-locked (TVL) stands at a modest $424,000. This figure pales in comparison to rivals like Hyperliquid and dYdX, which boast TVLs of $541 million and $395 million, respectively, according to DefiLlama data.
As the deadline for the governance vote approaches, the future of Vega Protocol remains uncertain. The proposed shutdown and token transition could reshape the landscape of decentralized trading platforms, marking the end of an era for Vega and the potential dawn of Nebula.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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