Vega Protocol proposes shutting down chain and launching new token

Crypto derivatives trading platform Vega Protocol has proposed retiring its blockchain and ceasing official support for its native token VEGA.  

In an Aug. 30 blog post, Vega said the proposal was put forward in a bid to “focus on the development and promotion” of the protocol’s software and usher in the launch of a new project called “Nebula.”

Vega said Nebula would be a “full retail decentralized exchange (DEX) with committed liquidity” built on the Vega protocol. 

“Nebula will have its own NEB token, and VEGA token holders are being offered the opportunity to swap VEGA for this new token,” wrote Vega. 

The official Vega Governance proposal outlined that the specific actions contained within the proposal would suspend trading, redistribute the onchain treasury to stakers, and provide “guaranteed USDT incentives” to validators to keep the network operating for the next two months, allowing users to withdraw funds from the Vega DEX.

After that, it would be up to any current or potential validator whether they continue to run nodes or not, but as there would be no trading and no VEGA issuance for rewards from this point, it is expected that the alpha mainnet chain would stop.

The proposal noted that this would not impact the functionality of the Vega Protocol in the long term. 

At the time of publication, the proposal has received strong support from voters who have taken a stance on the proposal, with 1.7 million tokens voting “for” whilst just 200 tokens have been allocated against it. 

Votes are stacked in favor of the proposal so far. Source: Vega Governance

Notably, there is only a 2.5% participation threshold for governance proposals to be passed. Voting closes in three days on Sept. 6. 

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The proposal drew criticism from crypto pundits, including pseudonymous commentator Spreek, who claimed in a Sept. 3 X post that the new NEB token would dilute existing holders’ allocation by up to five times. 

Cointelegraph contacted Vega Protocol for comment but did not receive a response by the time of publication. 

The price of the Vega (VEGA) token has plummeted in the days following the announcement, falling over 17% in the last 24 hours alone. 

Changing hands for $0.06 at the time of publication, VEGA is down over 64% in the last month and has posted a loss of 95% in the last year. 

VEGA is down 64% in the last month. Source: CoinGecko

Vega first unveiled its white paper in 2018, outlining itself as a trading-focused blockchain designed to facilitate high volumes of derivatives trading, focusing on high scalability and quick settlement times. 

In 2019, Vega raised $5 million during its seed funding round led by Pantera Capital. In 2021, it secured an additional $43 million in a community funding round. 

Vega currently holds $424,000 in total value-locked (TVL) on its protocol, a far cry from rival decentralized trading platforms such as Hyperliquid and dYdX, which boast respective TVLs of $541 million and $395 million, per DefiLlama data.