$VELA - VELA EXCHANGE

Current Price: $5.30

Market Cap: $34,621,319

Total Supply: 10m - 50m

Vela Exchange is an decentralized trading platform (DEX) and a permissionless, self-custody-driven perpetual exchange built with innovative blockchain architecture to ensure fast transactions, secure trading, and extensibility into additional synthetic options and derivatives. The rewards structure of Vela Exchange is carefully balanced to manage token and reward supply while maintaining high incentives for liquidity provisioning and trading.

What makes $Vela unique?

Vela makes trading efficient, fast, and secure. The exchange offers advanced order types and an intuitive UI/UX experience, allowing users to make the most of their trading activities. Vela also offers institutional-grade APIs and a robust risk management system, enabling traders to manage their portfolios and control their risk. Additionally, Vela has a deep pool of liquidity, which ensures traders get the best possible prices when trading digital assets.

Vela also provides its users with a variety of educational resources, such as market insights, trading tips, and more. This helps traders stay informed and make more informed trading decisions. Additionally, Vela has a customer support team that is available to answer any questions or concerns users may have. Finally, the exchange offers users a secure platform, with the latest encryption technology and advanced authentication protocols to ensure the safety of users' funds.

Things to note about Vela Exchange:

  1. It is still in BETA Phase

  2. Has a huge VELA community and a highly responsive team

  3. Has a unique UX/UI design platform.

  4. VELA is the utility token of Vela Exchange.

  5. eVELA (escrowed VELA) is non-transferable and can be unlocked by staking into a vesting contract, which unlocks the same amount of VELA tokens on a linear vesting period of one year.

  6. The team has a buyback model for VELA. The buyback will be based on a percentage of fees generated from both spot (30%) and perpetual trading (20%). VELA tokens bought back will be reserved for eVELA rewards that will be distributed to VELA and VLP stakers, eliminating the need for inflationary tokenomics to incentivize liquidity. 

  7. VLP is the token that users receive for providing liquidity to the protocol. Users can deposit stablecoins such as USDC, USDT, or DAI, and receive VLP tokens that represent their stake in the pool. VLP holders will earn 50% of the fees generated by the perpetual exchange. Users can also stake VLP to earn an additional 10% of the total fees generated by the perpetual exchange in the form of eVELA. This is not unlike GMX’s GLP liquidity model, except that on Vela Exchange, only stablecoins are accepted as liquidity.

  8. Fees on the perpetual exchange will be a flat 8 bps closing and opening a position. As mentioned previously, VELA/eVELA stakers can earn fee discounts, depending on the amount of VELA/eVELA tokens staked. Discounts start from 2% and can increase up to 50%. 

  9. With heavy investment backing from the likes of Jade Protocol, Vela Exchange is one of the protocols at the forefront of trading in DeFi. it allows perpetual swapping and also grants its users a leverage option of 30x while they are trading any of their supported tokens.

  10. In terms of backers, the team has raised ~$2.1 million from various funding rounds and has strategic partnerships with Big Brain Holdings, Jade Protocol, Magnus Capital, Orange Dao, and Quantstamp. 

Vela Exchange will have three main products: 

  1. Perpetual Exchange — Fully on-chain order book perpetual exchange where users create positions against synthetic assets with up to 30x leverage. Users deposit stablecoins such as USDC as collateral. 

  2. Spot Exchange — Fully on-chain order book exchange where users can trade assets depending on available spot markets

  3. OTC P2P Platform — Decentralized P2P OTC trading platform where users can trade assets publicly or privately to avoid slippage or frontrunning. This was the original product when Vela Exchange was known as Dexpools. 

Tokenomics

VELA will have a total supply of 50 million tokens.

Community Incentives: 30% of the total supply will be set aside for community incentives and will be limited to 5% usage per year. These funds will be used for incentives like rewards for liquidity providers, market makers, beta testers, and other incentives. 

Growth Fund: 19% of the supply will be reserved for future grants, DEX liquidity, market maker allocation for CEXs, and the liquidity provision incentive program.

Marketing: 5% of the supply will be used for marketing rewards such as airdrops, KOL partnerships, and other partnership efforts. These funds are limited to a 2% usage per year. 

Core Team: 16% of the supply goes to the core team, which will be on a 6 month cliff with linear vesting for 36 months. 

DXP Allocation: $DXP supply minted until Jan 26th 2023. All of which will be claimable 1:1 for VELA.

Investors: 5% of the supply allocations will be subject to new cliff and vesting periods.

Advisors — 2% of the supply are allocated to advisors and are on a 6 month cliff with linear vesting for 18 months.

Conclusion

Vela Exchange is one of the latest protocols to step into the growing DEX category. Its competitors, protocols like GMX, GNS, Injective’s Helix, and Kujira’s FIN that use order book- or synthetic based trade execution models, are gaining traction in a space that is currently dominated by automated market maker (AMM)-based holders like Uniswap, Sushiswap, and Balancer.We see this happening due to the similarity in trading experience that order book based DEXs provide to that of CEXs. This also points to a shift in priorities for investors, who have begun to look for protocols that not only provide great UX and CEX-like functionality, but also provide investors with a sustainable yield from the distribution of protocol revenue.

A major issue for DEXs is the ability to attract liquidity. Failing to do so results in slow execution, high spreads on order book DEXs, and high slippage on AMM DEXs. AMMs like Uniswap make use of inflationary tokenomics to incentivize liquidity provision, while order book based DEXs typically do the same by offering incentives to users who provide liquidity (GMX’s GLP, or dYdX’s market maker rewards). Vela Exchange, being an order book DEX, makes use of GMX’s GLP-incentivized liquidity model as well as offers incentives for market makers, thus ensuring that the protocol can get off the ground running in terms of attracting liquidity. However, unlike dYdX in its current state, VELA is non-inflationary and can be sustained by protocol revenue in the long term. 

Haven moved to arbitrum network, traders are betting on Vela taking a share of Arbitrum’s growing DEX activity and potentially mounting a challenge to the dominance of the derivatives exchange GMX. Perpetual-focused GMX emerged as a leader in the sector last fall, surpassing DEX giant UniSwap in daily trading fee earnings at one point. Gains Network, a DEX initially launched on Polygon and then expanded to Arbitrum, generated over $1.5 billion in trading volume on Arbitrum after nearly a month of being deployed.

Note:

This is NOT A FINANCIAL ADVISE! Do your own research (DYOR)

#crypto2023