The Vega Protocol community has made a pivotal decision to retire its Layer 1 (L1) blockchain and the associated VEGA token. This decision signifies the conclusion of the Vega chain’s operations, which were primarily geared towards enabling derivatives trading on a decentralized platform.
The unanimous governance vote instigated the automatic cessation of trading activities on the Vega blockchain, as outlined in a recent blog post by the project.
Vega Shuts Down L1 Chain Due to Lack of Traction
The protocol initiated its first on-chain markets subsequent to the launch of its alpha mainnet in 2023. Nevertheless, inadequate traction in its current state as an application-specific blockchain (app chain) prompted the community to halt the project.
The Vega team elucidated that the network failed to garner the necessary growth and interest to sustain itself as a viable platform.
Consequently, the project will now concentrate on upholding the core software instead of forging ahead with the blockchain and token in their present form.
Barney Mannerings, co-founder of Vega Protocol, expressed, “We take pride in the software we've developed, but unfortunately, the chain and token did not gain the momentum essential for long-term viability.” He reiterated that resources will now be channeled towards supporting other initiatives rooted in Vega's core technology.
One such initiative is Nebula, a decentralized exchange set to leverage the Vega software. Nebula will operate autonomously from the Vega Protocol and introduce its own token, NEB.
As an effort to support existing VEGA token holders, the Nebula team intends to offer NEB tokens to them, preserving a notion of continuity within the ecosystem.
“We believe the future of our software lies in open-source development, enabling projects like Nebula to build upon it,” Mannerings emphasized.
Validators to Keep Vega Running Until Oct. 27
The core team affirmed that validators have committed to maintaining the chain operational at least until October 27, 2024, affording users a timeframe to securely move their assets off the network.
Additionally, the team cautioned users to remain vigilant for updates pertaining to the chain’s status. They highlighted the risk of assets getting trapped on the bridge if the chain halts, making retrieval unfeasible.
Following the shutdown announcement, the VEGA token witnessed a substantial decline in value. Over the past week, its price plummeted by 30%, dwindling from $0.10 to $0.068. The token has undergone a drastic 90% depreciation since the commencement of the year.
Vega’s journey commenced with the publication of its whitepaper in 2018, outlining a high-performance, application-specific blockchain based on the Tendermint proof-of-stake consensus mechanism. Subsequently, the project secured $5 million in a seed round led by Pantera Capital in 2019, followed by a $43 million community token sale on CoinList in 2021.
Last year, Vega Protocol introduced the first perpetual futures market on its network, solidifying its position within the cryptocurrency landscape.
