DeFi’s contribution to self-custody and transparency has been weakened by its inability to match CeFi’s utility-laden features, vertical integration, and familiarity. Customers favour centralized exchanges over decentralized exchanges due to the latter’s greater selection of products, capital efficiency, and lack of features, as well as their fragmented liquidity and scary or uncomfortable user interfaces.
The opacity with which CeFi businesses moved assets and fiddled with client funds has recently come to the limelight. CeFis have been plagued by several fiascos ranging from secretive centralized organizations to exorbitant charges to owners and customers who have different incentives to arbitrary asset custody to uncertain risk management. These fiascos have necessitated the need for defis.
As a result of their improved user experience (UX), CEXs continue to hold the keys to crypto. As centralized solutions with more effort are ultimately easier to navigate, many people choose these dangerous, expensive, and opaque options. This is where Vertex comes in.
By building a VERTically integrated EXchange (VERT-EX) with an order book, an enhanced risk engine to enable cross-margined trading of spot and derivatives, and a money market to enable leverage and yield products, Vertex Protocol wants to overcome these issues. By providing integrated solutions like on-ramps, quick bridging, Web2-style sign-up integrations with self-custody, and diverse user interfaces to serve various traders with different needs, the user experience would be improved.
Features
To make decentralized trading useful and accessible to all, Vertex offers the following services:
Cross-margined spot and derivatives trading
An extremely fast order book
Lending and borrowing for yield or leverage via an integrated money market
Robust risk engine to ensure capital efficiency and risk management
UI/UX which accommodates both Web3 and Web2 preferences
Easy crypto to fiat convertibility
Fast and efficient native bridging solutions
Industry-leading fees
Complete and total self-custody of funds
To achieve this, the team has deliberately offered cumulative design and engineered services. These include:
Blockchain Selection
Blockchain TVL is primarily Ethereum-based. Vertex provides the throughput and low gas costs needed for a DEX designed to service all DeFi users along with the security and liquidity of Ethereum by utilizing Arbitrum, an Ethereum L2 rollup.
Smart Contracts
To offer the best liquidity and trading opportunities, Vertex’s contracts effectively link the spot, perp, and money markets.
Frontend Optimization
Vertex Lite and Vertex Pro are two UIs among many that will be available to traders to suit their various degrees of experience and goals.
Vertex SDK
A top-notch software development kit to facilitate community builders’ integrations and composability with other dApps
Tokenomics
Future tokenomics that are carefully constructed to promote strong alignment of incentives and governance rights
Integrated UI
To help customers swiftly move their assets in and out of the dApp, Vertex provides smooth bridging and on/off ramp experiences.
Connection Optionality
Vertex can provide a familiar onboarding experience to web3 and web2 natives by enabling a variety of social login alternatives in addition to the usual wallet connections. Always non-custodial, both.
Users
Vertex protocol has incorporated features that will solve the problem experienced by the three sets of identified users.
Retail users
Credit card deposits can be made, and the cryptocurrency is immediately available for trading after being placed into Vertex as a result of the integration of efficient on and off-ramps. Withdrawals have also been made easy, reversing the process so that fiat can reach the target bank account in a matter of days. Without switching between multiple protocols, the Vertex UI will incorporate this procedure.
By enabling assets from a source blockchain to immediately finalize their appearance on the destination chain, integrated bridging further lowers friction and ensures that assets are quickly available for trading after being bridged.
Vertex incorporates single sign-up options (SSO), which are commonly used in Web2 to combat the intimidating UX of wallets. To register for an account and generate a wallet, users can utilize their email or social media accounts. The self-custodial philosophy of DeFi is upheld, and inexperienced users are given access to Web2’s convenience while the user’s private key remains protected.
Automated Traders
The majority of transactions are automated for institutional traders, which results in huge volumes and active engagement in the provision of liquidity. Vertex will recreate and enhance aspects of the experiences provided by CEXs to provide a scalable platform through enhancing developer tooling, designing smart contracts, and selecting the appropriate blockchain environment. This will be made possible through the following:
The Vertex SDK
This will make it simple for anyone to develop software that interacts with the exchange. This toolkit facilitates the creation of sophisticated trading algorithms that will aid in ensuring deep liquidity.
The Vertex Risk Engine
It combines a money market, spot, and perpetual market to increase capital efficiency. It is designed to protect the ecosystem from over- or irresponsible risk-taking while enabling traders to optimize their capital usage and take advantage of cross-margining. Vertex will be built on Arbitrium on the optimistic rollup for Ethereum with the highest TVL and the most potential for increased throughput and decreased fees. The sequencer does not set up transactions to take advantage of MEV, so it is unable to gain value from network users.
DeFi Natives
The early adopters in the industry are DeFi natives.
In exchange for token-based incentives and participation in the governance of decentralized entities, they frequently support ecosystem development and innovation. For that, many of these advantages will be provided via the Vertex token. This is covered in more length in the parts that follow, but it will serve as a key instrument for the platform’s expansion and decentralization.
In addition, many of these users have evolved into a kind of intermediary group between casual retail and professional traders, acting as a platform for experimentation and growth-bolstering for new protocols. New DeFi protocols have benefited greatly from the strong engagement of these communities, and Vertex will work to tap into their strength as other companies have in the past.
Governance
Vertex Protocol aims to transfer authority to the community once it is launched, decentralizing governance and bringing extra benefits.
First ideas about a prospective token architecture are in place, although plans for distribution and timing are still pending.
These plans are subject to change based on feedback from the community and key stakeholders, and they will try to represent the platform’s requirements as we work to kickstart liquidity and growth and provide utility to users and community members.
While the initiative aims to return real decentralization to the community, governance will be an ongoing effort that begins with the mainnet launch but will be urgent and comprehensive.
Tokenomics
By releasing a governance coin called VRTX, Vertex Protocol intends to decentralize governance and offer more benefits.
The primary purpose of VRTX will be to enable efficient decentralized involvement in Vertex while also generating xVRTX, a liquid staking token, and voVRTX, the protocol’s untransferable voting token. These are key for compensating stakeholders at various levels of governance and engagement as well as varying levels of commitment to the protocol.
xVRTX
Users who stake VRTX with a minimum 2-week unlock duration will receive the liquid and transferable staking token xVRTX in return.
Each xVRTX unit symbolizes one vote in governance as well as a portion of a pooled group of assets that will increase over time as a result of income and token emissions. They serve as compensation for people who are prepared to bond their VRTX for a longer period in order to support the Protocol and take part in governance. Following that, xVRTX can be reinvested or utilized to support the insurance fund, both of which will be compensated in accordance with Protocol requirements.
voVRTX
Inside the Vertex ecosystem, voVRTX may be viewed as a user score that gives them more voting privileges and access to specific prizes. It will be used for several things, such as but not restricted to: The holding of xVRTX for voVRTX Boosting or Insurance Staking Making use of VRTX to pay for Trading fees and accumulated crypto fee bundles
The Protocol will be able to allow an equitable transfer of power according to the commitment shown by holdings or by participation in Protocol operations by establishing a unit of account for governance and incentives. Some of the methods voVRTX can be collected are:
Boosting
Boosting is intended to: Promote long-term VRTX staking; Enhance user involvement in governance; and Reward individuals with a long-term outlook over those looking to control governance with short-term wealth.
How Boosting works
The score will go up if more xVRTX is pledged.
Users can access their xVRTX whenever they want, however, if any of their xVRTX are unpledged, their voVRTX will be reset to zero (more xVRTX can be added at any time).
The maximum score per pledged xVRTX is 100 voVRTX, with each xVRTX earning 0.02277 voVRTX per hour. Hence, it will take six months to achieve the highest score.
Insurance Staking
In exchange for a quicker path to a higher voVRTX score, insurance staking gives the possibility to function as a backup to the insurance fund for those prepared to assume more risk. This is riskier xVRTX staked-to-back insurance will be:
Eligible for a 2.5x voVRTX increase right away (as if staked in boosting for 6 months).
Permitted to participate in Liquidations as a liquidator and receive a share of the proceeds from Protocol Liquidations.
In turn, xVRTX tokens will have a minimum lockup period of 3 weeks and up to 50% of holdings may be disposed of if the insurance fund is depleted.
Fee-based Vortex
As a sign of ecosystem engagement, trading fees used for the Protocol will also be replaced by voVRTX. They will be registered using two different methods: paying trading costs with VRTX and buying a selection of cryptocurrency fees using VRTX.
The following steps must be taken to use VRTX to pay trading costs (at a concession) and increase your voting power:
The taker pays the necessary trading charge in VRTX after a trade is completed.
The VRTX is burned, and the user is given 50 voVRTX. The voVRTX, which has a three-month expiration, is essentially created from the expended VRTX.
Using VRTX to buy crypto baskets and gain voting rights entails the following:
These steps must be taken to use VRTX to purchase crypto baskets and increase voting power:
Coins are available for purchase through auctions on the Protocol. From Protocol income, these coins are produced.
All payments must be made using VRTX.
Members place bids for these crypto baskets. In addition to receiving their voVRTX payments and coins after the auction is over, the winners also receive their VRTX payments. In essence, for three months, the used VRTX is transformed into voVRTX.
At the time of this writing, there is no known distribution and allocation for these tokens.
Conclusion
Vertex has positioned itself as the protocol that will offer solutions to some current DeFi problems as well as a possible flywheel for DeFi adoption.
Additionally, it aims to offer the best-decentralized trading platform by focusing on the numerous small details that together make up a user’s experience: registration, deposits and withdrawals, the range of products, leverage and borrowing, a variety of interface options, and governance tools, all in one location.
To draw institutional traders and builders to the ecosystem, Vertex also intends to make other protocols compatible with Vertex. The Protocol will then be able to introduce a large range of items, significantly outpacing the product suites provided by CEXs.
Finally, Vertex wants to create a decentralized governance system and incentive structures that encourage participation and long-term orientation. This will promote ecosystem growth by allowing those who stand to benefit the most from the platform to drive the platform’s development.
