Vega Protocol, a cryptocurrency derivatives trading platform, has proposed to scrap its blockchain and discontinue official support for its native token, VEGA.
In an August 30 blog post, Vega said the proposal was made to “focus development and promotion” of the protocol software and to announce the launch of a new project called “Nebula.”
Vega said Nebula will be a “fully retail decentralized exchange (DEX) with guaranteed liquidity” built on the Vega protocol.
“Nebula will have its own NEB token, and VEGA token holders will be given the opportunity to exchange VEGA for this new token,” Vega wrote.
The official proposal from Vega Governance outlines the specific actions included in the proposal, which include halting transactions, redistributing the on-chain treasury to stakers, and providing “guaranteed USDT incentives” to validators to run the network for the next two months, allowing users to withdraw funds from Vega DEX.
“After that, it will be up to the current or potential validators to continue running nodes, but from this point on, the alpha mainnet chain is expected to halt as there will be no transactions and no VEGA issuance for rewards.”
The proposal notes that this will not affect the functionality of the Vega protocol in the long term.
The proposal received strong support from voters who had indicated they were in favor at the time of publication, with 1.7 million tokens voting in favor versus just 200 against.
So far, the votes for this proposal have piled up. Source: Vega Governance
In particular, there is only a 2.5% participation threshold for a governance proposal to pass. Voting closes three days later on September 6.
relevant: Researchers say cryptocurrency liquidations could be much more severe than data shows
The proposal has been criticized by cryptocurrency experts, including anonymous commentator Spreek, who claimed in a September 3 post that the new NEB tokens would dilute existing holders’ allocations by up to five times.
Cointelegraph reached out to Vega Protocol for comment, but did not receive a response by the time of publication.
The price of the VEGA token has been plummeting in the days following the announcement, falling more than 17% in the last 24 hours alone.
VEGA, which is trading at $0.06 at the time of publication, is down more than 64% in the past month and has lost 95% in the past year.
VEGA is down 64% in the past month. Source: CoinGecko
Vega first released its whitepaper in 2018, which described it as a trade-centric blockchain designed to facilitate high-volume derivatives trading, with a focus on high scalability and fast settlement times.
In 2019, Vega raised $5 million in a seed funding round led by Pantera Capital. In 2021, it secured an additional $43 million in a community funding round.
Vega currently has $424,000 in total value locked (TVL) on its protocol, which is a far cry from competing decentralized trading platforms like Hyperliquid and dYdX, which boast $541 million and $395 million in TVL respectively, according to DefiLlama data.
magazine: Bitcoin ’24 Bitcoin Supporters Are ‘All’ For Trump But It’s Getting Dangerous