Vega Secures $5 Million to Advance Decentralized Derivatives Trading

Vega, a company pioneering a decentralized protocol for the creation and exchange of derivatives, has successfully raised $5 million in a new funding round.

This investment was jointly led by Arrington Capital and Cumberland DRW, with significant contributions from prominent firms including Coinbase Ventures, ParaFi Capital, Signum Capital, CMT Digital, CMS Holdings, Three Commas, and several other investors. According to Crunchbase data, this latest funding increases Vega’s total capital raised to over $10 million.

Empowering Market Creation Through Decentralization

Founded in 2018 by Barney Mannerings, the Vega project was initiated with the goal of democratizing derivatives market creation and launch.

The company posits that eliminating centralized authorities and implementing decentralized governance will facilitate immediate settlement, mitigate conflicts of interest, lower transaction costs, and support the high transaction volumes required for robust derivatives trading.

Essentially, Vega aims to fulfill the potential of blockchain technology within financial systems by removing intermediary operators whose primary function is to profit from the transfer of funds between parties.

“Our objective is to equip individuals with the necessary tools to manage risks specific to their geographic location, profession, or unique circumstances by enabling anyone to create and launch a derivatives market,” explained Mannerings.

“While derivatives trading has long been a cornerstone of traditional finance, DeFi has previously lacked the capital efficiency and throughput needed for viable decentralized derivatives trading – a challenge we are now addressing.”

Development and Future Plans

Currently, Vega remains in its development phase.

The startup launched its “testnet” – a testing environment for its network – in the second quarter of 2020, and has undergone multiple iterations since then.

The newly acquired capital will be allocated to enhancing resources for “shipping and testing high-quality code,” among other priorities.

This summer, Vega is preparing to release a “mainnet-ready” version of its protocol code.

Following this release, Mannerings anticipates the launch of the first Vega network validators, integrating with the Ethereum mainnet to enable the trading of genuine crypto assets.

Access and Community Growth

The company’s wallet software, necessary for accessing the testnet, is currently available for free and is open-sourced, allowing anyone to download and create a wallet for testnet usage.

Vega has distributed approximately 500 IDs for its hosted wallet, providing users with access to the testnet without requiring them to run the wallet independently. Additional IDs have been generated, but the total number remains untracked.

Investor Perspective

Anjan Vinod, an investment analyst at ParaFi Capital, highlighted his firm’s dual role as both a DeFi investor and user, leading to their close monitoring of evolving blockchain-based financial tools.

“The derivatives market, valued at trillions of dollars, represents a significant gap in the core DeFi infrastructure,” Vinod stated via email.

“By utilizing a proof of stake protocol, integrated liquidity incentives, and permissionless market creation, Vega is introducing a novel and fundamentally different approach to decentralized derivatives. This disrupts the traditional intermediaries that control market creation, settlement, collateral management, and pricing within the derivatives market.”