Author: DeMan
In the field of derivatives decentralized exchanges (DEX), the competitive environment is extremely complex. Market leaders such as GMX, dYdX and SNX firmly occupy the top position, while second-tier platforms such as Gains Network, MUX, Level and ApolloX are also actively competing for market share. At the same time, a steady stream of new protocols is emerging, making this field increasingly dynamic.
Against this background, Vertex Protocol’s performance is particularly eye-catching, with its transaction volume, total value locked (TVL) and revenue growth rates all reaching record highs. Especially in November last year, Vertex’s performance was eye-catching: on November 6, its single-day trading volume exceeded US$400 million, and in the week from November 2 to November 7, Vertex became the only The platform with the highest trading volume among the on-chain perpetual contract platforms after dYdX. Behind this rapid growth is closely related to Vertex’s own unique features, incentive plans, and the upcoming Liquidity Guided Auction (LBA).
Even more striking is that on November 28 last year, Vertex achieved a historic breakthrough in its derivatives trading platform, with a single-day trading volume of up to US$1.63 billion.
This achievement not only makes Vertex surpass established trading platforms such as dYdX and GMX, but also firmly occupies the first position in the derivatives DEX market. This remarkable achievement not only proves Vertex's strength, but also indicates its future leadership in the DeFi derivatives market. The following will introduce the details.
Migrating from Terra to Arbitrum has expanded its application scope, and its seed round valuation has exceeded $100 million
The development of Vertex Protocol shows the adaptation and transformation of a company in the turmoil of the industry. Initially, Vertex operated as a decentralized foreign exchange platform on the Terra chain, but the collapse of Terra in May 2022 forced Vertex to seek a new development path. Making a strategic decision, Vertex migrated to the Arbitrum chain and transformed into a decentralized exchange (DEX). In this transformation process, Vertex not only migrated the platform, but also massively expanded its business scope, including the introduction of new products such as spot trading, futures trading, and lending markets to adapt to the increasingly complex and diverse DeFi market needs.
Vertex's transformation and development benefited from the expertise and market insights of its founding team. Co-founder Darius is responsible for promotion and marketing, while Alwin Peng supports Vertex's technological development with his experience in jump trading and background as a blockchain engineer. Their collaboration and expertise played a key role in Vertex's steady growth in the new environment.
Vertex received a strategic investment from Wintermute Ventures in June 2023, which was an important milestone in its development. Wintermute Ventures is the investment arm of cryptocurrency market maker Wintermute, which provides market making services for many well-known projects. When investing in Vertex, Wintermute pointed out that Vertex has a team of experienced traders and engineers, has a good track record in both traditional and decentralized financial markets, and is at the forefront of the industry in smart contracts and market innovation.
In April 2022, Vertex completed a seed round of financing of US$8.5 million, led by Hack VC and Dexterity Capital, with participation from several other institutions. This financing shows the market's interest in Vertex and its recognition of its future development potential.
Early investors received 8.5% of the token allocation, which brought Vertex's seed round valuation to $100 million. This figure reflects the market's evaluation and expectations of Vertex to a certain extent. Although such valuation and investment have brought certain market attention and expectations, as an emerging company in the rapidly changing DeFi field, Vertex's future performance and market position still need to be tested by time.
Deeply cultivating decentralized derivatives and pursuing the ultimate cost-effectiveness: a glimpse into Vertex's superior innovative capabilities
Vertex Protocol has demonstrated significant innovation capabilities in the DeFi field, and its features and service models are particularly prominent in data-driven decision-making. Related specific advantages include:
Deeply cultivating the decentralized derivatives track: Vertex mainly conducts business around the contract market, especially perpetual contract trading, which is quite distinctive among many DeFi platforms; the spot and lending markets provide more support for contract trading, which is reflected in the trading data, and most transactions are concentrated on perpetual contracts.
Hybrid Order Book-AMM Model: Vertex combines the off-chain order book with the on-chain AMM to increase transaction speed and reduce the possibility of MEV attacks; through data analysis, Vertex optimizes the transaction path to ensure that transactions are still valid even when the order book liquidity is insufficient.
Universal Cross Margin: Vertex’s Universal Cross Margin model expands the application scope of margin; compared with the traditional position-by-position and full-position models, this model allows all the user’s funds (including LP funds) to be used as margin, greatly improving the efficiency of fund use.
More attractive transaction fee structure: Vertex’s transaction fee structure is more favorable to users, with maker fees of zero and taker fees between 0.01% and 0.04%; according to trading data, this fee structure has attracted a large number of users, especially high-frequency traders.
More favorable funding rates than competitors: Vertex has a clear advantage over other mainstream derivatives DEXs in terms of fees and funding efficiency. Vertex's low fee structure makes it competitive in the market compared to GMX (0.1% opening and closing fees), dYdX (0.02% to 0.05% trading fees, which decrease with trading volume), and Kwenta (0.02% to 0.06% trading fees). In summary, Vertex Protocol has established its unique position in the DeFi market through its data-driven trading products, innovative liquidity provision model, funding efficiency improvement strategy, and competitive fee structure. These characteristics reflect Vertex's sensitivity to market trends and deep understanding of user needs.
Although Vertex faces fierce market competition and an ever-changing technological environment, its data and market performance to date show its potential and development space in the DeFi field. How Vertex can use these advantages to consolidate and expand its market position over time will be the key to determining its long-term success.
Analyzing VRTX’s token economic model: 90.85% of VRTX will be distributed over 5 years
Vertex Protocol officially issued its official token VRTX on November 20, 2023. This move has injected new impetus into its development in the DeFi derivatives market.
The total supply of VRTX is set at 1 billion, and its allocation strategy reflects considerations for different stakeholders:
Continuous incentives: 34% of the tokens are used for continuous incentives to encourage user participation and contribution.
Founding Team: 20% is allocated to the founding team to support their long-term investment and development.
Initial Token Phase: 10% is used for the first phase of the “Trade & Earn” program.
Treasury: 11.7% belongs to the project's treasury.
Ecosystem: 9% is used for ecosystem construction and expansion.
Early investors: 8.8% is allocated to early investors, and it is expected to be distributed within 2 to 3 years after the project launch.
Future Contributors: 5% is reserved for individuals or teams who will contribute to the project in the future.
Liquidity Bootstrap Auction (LBA): 1% is used for liquidity bootstrap.
Advisors: 0.5% for the advisory team.
The VRTX token distribution strategy shows Vertex's long-term planning and market expansion goals. According to official documents, 90.85% of VRTX will be distributed over 5 years. This slow token release plan is designed to ensure the stability and sustainability of the project. Currently, token distribution accounts for only 16% of the total, of which only 10% is in real circulation.
The main purpose of the VRTX token is to promote the activity and collaborative development of the Vertex community. Its main functions include staking and incentives. Among them, users can contribute to the security of the Vertex ecosystem by staking VRTX. Vertex introduced the "VE" model, which generates voVRTX scores based on the length of staking time to incentivize users to hold and participate for a long time; and provide rewards for different levels of contributors to the protocol to encourage continued participation and support.
The advantages and disadvantages are equally obvious. The future of Vertex is unpredictable, but the long-term trend can be continuously watched.
Despite the fierce competition in the DeFi derivatives market, "transaction mining" still shows practicality as a cold start method. But for Vertex, how to maintain popularity and cultivate a loyal user base after the rewards end remains an unknown. At the same time, more than 97% of derivatives trading volume is still conducted on centralized exchanges (CEX), and derivatives DEX only accounts for 2.72% of the total trading volume. Once derivatives DEX achieves a breakthrough, it may bring about major changes in the market. This makes many investors optimistic about the field of derivatives DEX and believe that they may play a core role in the next bull market.
From a market perspective, Vertex Protocol’s VRTX token issuance and its potential market influence demonstrate the ambition of an enterprise seeking innovation and breakthroughs in the DeFi field. Although derivatives DEX currently account for a small proportion of the entire cryptocurrency market, with the development of technology and the improvement of user awareness, the DeFi derivatives market has the potential to achieve significant growth. Vertex is trying to occupy a position in this rapidly developing market through its token economic model and ecosystem construction.
Ultimately, whether Vertex can successfully maintain its market popularity and maintain its influence in the DeFi derivatives market in the long term will depend on whether it can continue to attract and meet the needs of users, and how it adapts to future market changes and challenges. As the DeFi field continues to evolve, the future performance of Vertex and its VRTX tokens still deserves the attention and expectations of the market and investors.