Vertex: A Demonstration of LBA Excellence

December 12, 2023

In conclusion

GM fellow Vertex Enjoyooors! We’re back with another update on one of our favourite perp DEXs in the market. 

Today, we’re recapping what went down with their recent Liquidity Bootstrapping Auction (LBA) that ran from November 13th - 20th and what else is in the works moving forward from here.

In case you missed our previous article on the Vertex LBA, let us give you a quick TLDR. 

The auction itself was designed to create the initial liquidity pool for $VRTX and do so in a manner that avoided price volatility and relied on supply and demand as well as free market mechanics to achieve a fair launch price for the $VRTX token.

Now the LBA is complete, liquidity has been locked and vested, the $VRTX and $USDC.e pools have been merged into one, added to the Vertex AMM and the $VRTX token has been born with an official launch price of $0.3133 USD.

A third of the LP liquidity will be unlocked on the 19th of January 2024 and the rest unlocked on the 20th of April 2024. 

The LBA Stats

At launch-end, a total of 13.7 million $VRTX and 4.29 million in $USDC.e was supplied and locked by participants. 

Only 6 hours after the launch of the $VRTX token, 25 million $VRTX had already been staked. As of 28th November, the number of staked $VRTX tokens had climbed to 37 million and a total of $300,887 $USDC.e had been distributed to stakers.

At the time of writing the staking stats are as follows:

  • 39.5 million staked $VRTX
  • 42.1 million in $voVRTX generated
  • $300,887 in $USDC.e distributed as weekly rewards
  • Average staking rewards sit at 98.96%

Staking the $VRTX token generates a “user score” in voVRTX, a non-transferable sub-type of the $VRTX token that exists as an incentive layer to control a multiplier effect on incentives for $VRTX stakers. Basically, the longer you stay staked, the more this multiplier effect compounds, and the more voVRTX you earn as a reward.

Vertex, in the same way as all other exchanges, generates its revenue from trading fees. Currently, 50% of this revenue is allocated to the Protocol Treasury. Another percentage is distributed to users that show a long-term commitment to the protocol (based on their voVRTX score) and this is paid weekly in $USDC.e. The percentage of revenue distributed to both the treasury and to users will be determined on an epoch-by-epoch basis, based on the needs of the protocol.

For a full breakdown of staking rewards, how to stake/unstake, and everything else staking related check out the docs here.

The Vertex Incentive Program 

Next up is the Vertex Trade & Earn incentives program that is designed to reward users for their activity on the protocol and is paid in $VRTX tokens. 

The allocation of $VRTX tokens to be given as rewards is split between the Initial Token Phase and the Ongoing Incentives Phase. Of the 1 billion total $VRTX tokens available, 10% are allocated to the Initial Token Phase and 34% to the Ongoing Incentives Phase. This Initial Token Phase ended on November 8th 2023.

The Ongoing Incentives Phase is well underway and $VRTX rewards can be claimed 3 days after each epoch concludes (1 epoch is 28 days). Restrictions on token rewards are no longer in effect, meaning no cap on the value of rewards and no vesting periods apply. 

The Trade & Earn program has been doing fantastic! 

There’s been $22.12 billion in total trading volume so far with $5.23 billion in the last week alone. Total platform users are also steadily increasing, currently sitting at around 15,820. These users have generated nearly $5 million in total protocol fees and over $1 million in fees over the last 7 days. 

The STIP

If you thought that would be it for rewards, well, you’d be wrong! The Vertex protocol’s proposal to Arbitrums Short-Term Incentives Program (STIP) was passed with 160 million votes in favor. The result of this is that Vertex has been allocated 3 million $ARB tokens to be used as incentive rewards to be distributed to users of the platform. 

This means not only will you stack rewards in $VRTX for trading on Vertex but you’ll also be rewarded in $ARB at the same time!

These $ARB rewards will be distributed each week until January 31st 2024 and can be earned by either trading on the platform or by providing liquidity to the Elixir Fusion Pools. 

For all the details on the Vertex $ARB trading incentives program, check this blog post here. For a deeper dive into all things Trade & Earn, jump into the docs here.

Due to $VRTX being so new to the market, it’d be rude not to cover some of the basic tokenomic aspects of the token itself. As mentioned earlier, there will be a capped total supply of 1 billion $VRTX tokens, where 90.85% of these will be distributed over the next 5+ year period. 

Below we can see the token supply allocation.

And in the next picture, we can see the token distribution schedule.

If you are interested in looking into the supply and emission schedule then Vertex have provided this spreadsheet here that covers exactly that. For a full overview of the $VRTX tokenomics refer to the Vertex docs here.

Concluding thoughts 

The DEX space is a highly competitive one and Vertex is looking to not only pose a threat to existing DEXs but the CEXs as well. It offers you all the best of both worlds.

This means the lightning-fast speeds, high liquidity, and low fees found on centralized exchanges with the self-custody of assets you get by using a DEX. No longer do users have to make the trade-off between high performance and security of their assets.

Vertex has aimed its initial efforts at attracting professional traders to the platform in order to build liquidity and volume. They will then begin to take aim at the retail market, and with such a well-designed product one can imagine the onboarding for retail being seamless. 

I mean they offer perpetuals, spot markets, and money markets all in one place – they’re bound to takeover. 

Be sure to check out the interview Jedi did with Vertex’s Darius here for all the alpha on what we can expect from this ambitious, giga-brain team going forward.

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