Crypto News Flash has had the opportunity to talk to the founder of the Vega protocol, Barney Mannerings. In the following interview he spoke about the current state of the project, the goals for 2020, the current challenges for the DeFi market and the cooperation with Ripple’s Xpring.
For all readers reading about the Vega protocol for the first time, could you please tell us in a few sentences what the Vega protocol is and how it works?
Vega is a fundamental level of infrastructure for programmable markets and financial products on the blockchain. It allows users to create, customize, and deploy markets safely with minimal effort.
With the Vega Protocol you want to create a peer-to-peer market that guarantees open access and transparent rules for decentralized trading. Which markets do you want to establish? What will be your core market?
At this stage, we just want to establish the fact that Vega Protocol is the best place to deploy peer-to-peer markets with liquidity, good prices, and low fees. As a team, we are less focused on specific markets. When we talk to our market making friends, their interest is incredibly variable. The fact is, we can create markets around virtually anything. When asked: “What markets are most likely to be successful? Where do we see the most demand?” The answer is a moving target.
From a pragmatic point of view, we think derivatives for cryptocurrencies will get the bulk of initial attention. But that is up to the market makers building on our protocol.
Maybe you can share more insights about the protocol’s tech: the validator, the staking model, the market-making incentives, and the APIs that will be available to traders.
We are designing trading derivatives to be optimal for trading in terms of speed, fairness, and security, while also incentivizing liquidity. Vega ensures fair trading by combating front-running and market manipulation better than any other blockchain. Vega Protocol offers a unique approach to market creation and liquidity incentivization.
The protocol has built in rewards for people providing liquidity. Effectively, if you’re a liquidity provider committed to a market, it’s like you’re an equity investor in that market. You have a claim, within the protocol itself, on a percentage of the fees that that market generates. Even if you’re not trading, because you’re supplying base liquidity – as market maker of last resort – you’ll always get paid when trading happens on that market. So, liquidity is incentivized, and you’re encouraged to go out and get more people trading to increase your rewards as the market maker.
What is the current state of development? Are there already first release dates?
Currently, Vega is running a private testnet internally.
A few months ago you collected more than 5 million US dollars in a private funding. A lot of people surely became aware of your project because Xpring, the incubation arm of Ripple, was involved. Could you please tell us more about the cooperation with Xpring. How will Xpring support you?
Xpring has been incredibly supportive with investors, but hands-off in terms of our internal processes. We are working with them and other blockchains to understand the potential use cases of Vega. Ripple’s protocols are used to transfer large amounts of money around, so there are definite potential opportunities to apply derivatives there. Over the medium-term, we expect to have several integrations with multiple blockchains and assets from those blockchains tradeable on Vega. We’re excited to see the opportunities there are to use derivatives in the Ripple world and beyond.
Do you intend to actively use one of Ripples’ technologies beyond the trading of XRP?
It’s certainly possible. We have engaged in exploratory conversations, but we have not made any formal commitments as of yet.
How do you see the role of your company in the DeFi movement? What are your long-term goals for the Vega protocol? What sets your project apart from other DeFi projects?
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When I think about DeFi, I think there’s a huge amount of promise. Before, DeFi was a parallel financial system being built around Bitcoin and cryptocurrencies. The DeFi ecosystem, as it stands now, has a lot of protocols that are poor and constrained versions of what we really need.
I see Vega’s role as helping free the DeFi movement from technological constraints so people can build more professional financial tools. We are building infrastructure that allows users to create really professional-quality trading and markets that can, could, and should be used by traders and companies to solve the same problems that they’re solving of the traditional financial system today, and to solve new problems, as well. I see our role as providing that infrastructure so that some of the next generation of DeFi products can be built on Vega, and be ready to compete with the traditional financial system.
We envision many blockchain markets and financial tools that are highly liquid, easy-to-trade with, offering good prices and presenting lowest fees.
What are the biggest challenges you see for the DeFi movement in general to get a broad acceptance in the population and what challenges do you see especially for you?
The biggest challenges for DeFi, at the moment, is the poor quality and speed of the protocols available. Solving this problem could lead to broader acceptance.
What are your goals and visions coming into 2020?
This is the year we prove that Vega works. We will continue to develop, build and involve our community throughout 2020, and soon we will give DeFi the infrastructure it needs for mainstream adoption.