Vega Protocol Update: Evaluating Value Accrual

Earlier this month, we published a deep dive on Vega Protocol, one of the most ambitious attempts to build an on-chain exchange. Since then, we’ve received a lot of questions about how Vega looks against competitors in the market, whether the token economics makes sense, and the potential value creation for the VEGA token. We like to give the people what they want, so without further ado, let’s get right into it!

Stacking up the Competition

In our initial post, we discussed the architectural differences between Vega and dYdX. But we also higlighted that Vega’s scope as a full-stack exchange is much larger than dYdX (a perpetuals exchange). For the sake of argument, let’s compare a range of decentralized trading venues to Vega.

Since we’re looking at products with varying degrees of traction and support for different types of markets, it’s important to understand what we’re looking at here:

• Uniswap is the leading on-chain spot market, with an average daily turnover well over $1B over the last year. As the trading hub for the most liquid blockchain ecosystem – Ethereum – Uniswap commands a fairly steep valuation on a fully diluted basis (FDV).
• Osmosis is a Cosmos Zone, meaning it’s an independent chain, seeking to become the de facto liquidity and trading layer for the Cosmos ecosystem. Despite having far less traction than Uniswap, it commands a similar FDV because it’s a standalone L1 blockchain rather than a decentralized application (dApp).
• L1 tokens, specifically ones on Proof of Stake blockchains, have an additional source of