Vela Exchange: Revolutionizing the Future of Decentralized Finance

The decentralized finance (DeFi) world is rapidly evolving, and the Vela Exchange team (website) is at the forefront of this change. This decentralized exchange is designed to bring the future of DeFi trading to the masses with its advanced perpetual trading capabilities, community-focused incentives, and scalable infrastructure.

In this article, we will dive into the exciting world of Vela Exchange and explore the advantages it offers over centralized exchanges. We'll take a look at the current trading functionality available on the platform, how to get started, the types of assets you can trade, and the unique features that make Vela Exchange stand out from the rest.

Getting Started with Vela Exchange

Getting started with Vela Exchange is easy. First, you must connect a supported wallet to your Vela Exchange account via the user interface. The platform supports Wallet Connect, Metamask, Coinbase Wallet, Fortmatic, and Portis. Additionally, traders can add an email or phone number to receive notifications and alerts, although these are not required. The account information is hosted on secure, encrypted servers maintained by enterprise providers with high uptime and availability.

The Advantages of Trading on Vela Exchange

Vela Exchange provides traders with many advantages over centralized exchanges. The platform offers fair and equitable access to platform rewards and self-custody of assets and eliminates the need for a centralized clearing house. Unlike legacy decentralized applications and exchanges that still suffer from high execution costs, low performance, and other trade inefficiencies, Vela Exchange was built to overcome these issues, including front-running, slippage, asset limitations, and a lack of risk management features.

Current Trading Functionality on Vela Exchange

Vela Exchange currently supports perpetual futures trading, with spot, OTC, and other marketplaces coming soon. Traders can trade various assets, including crypto, forex, and market capitalization. These assets are fully synthetic, and prices are derived from multiple sources. The platform offers three types of assets, each with a different funding rate and open interest limit based on volatility. The leverage range for crypto pairs (BTC/USD, ETH/USD, and DOGE/USD) is 1x to 30x, while the leverage range for forex pairs (EUR/USD, GBP/USD, and USD/JPY) is 1x to 100x.

Opening a Position on Vela Exchange

To open a position on Vela Exchange, traders must first select the direction of the leverage position they would like to open, either “Long” or “Short.” The collateral amount and leverage level are then defined, determining the position size. For example, if you select 10x leverage with $500 collateral, your position size will be $5,000 worth of the chosen asset.

Vela Exchange also offers a variety of order types for traders, including market and limit orders, as well as the option to set the collateral amount as a percentage of the total free collateral. This is an excellent feature for traders who like to risk a fixed percentage of their account size on each trade.

Infrastructure Overview

The VELA team has established a robust infrastructure to provide a seamless trading experience. This infrastructure is split between on-chain and off-chain components. The servers cache specific on-chain data, such as historical trading data, to ensure fast and responsive performance, while profile data, language settings, and notifications are stored off-chain for quick access. In addition, the on-chain infrastructure holds all open positions, collateral, and VLP/VELA staking functionality, making it the backbone of the VELA trading experience.

One of the critical features of the VELA Exchange is its position management triggers, which are hosted on servers for performance and pushed on-chain when conditions are met. In addition, the data portal, which is accessible to approved parties, exposes APIs and pulls in data from oracles and data providers, making it easily extendible to most data sources.

Admin Platform Privileges

The VELA team has taken security and reliability very seriously. The administrators can access several vital functions, including owner, minter, and pauser. To provide execution of triggered positions, liquidations, and delay transactions, the VELA Exchange has permissive role access to burn or mint USD on the exchange.

However, this USD is a non-transferable and non-tradeable token. In the case of any updates, contract changes, or infrastructure emergencies, the administrators can halt essential contract functions on the platform. It is important to note that withdrawal privileges are NOT an admin function, and the VELA team cannot move customer funds.

Token Economy

The VELA Exchange is supported by a robust token infrastructure that facilitates community member rewards and other utilities. The main token in the VELA ecosystem is $VELA, which is the heart and soul of the platform. $VELA can be traded on both Arbitrum and Uniswap V3. Another meaningful token in the VELA ecosystem is $VLP, a liquidity provider token. This token provides holders and stakers with rewards and incentives for providing liquidity to the platform.

Front-Running Protection and Position Management

Vela Exchange takes the security of its traders' positions very seriously. To protect against front-running, the platform has a timer function that starts any time a new position is opened or increases the size of an existing position. The default timer is set to one hour, and profitable positions cannot be closed until the timer expires or the asset price changes by at least +2% for longs or -2% for shorts. In addition, positions at or near the liquidation price will be automatically closed to prevent further losses. A margin call occurs when the remaining balance in your account is insufficient to support the open positions. You must deposit more funds or reduce your position size to avoid liquidation.

Additionally, there may be fees associated with opening and holding positions and financing costs if you hold leveraged positions overnight. Therefore, it's essential to understand these concepts and the risks involved with trading before making any investment decisions. It's also advisable to seek professional advice if you are new to margin trading or have limited knowledge of financial markets.

Positions at a loss are automatically closed if the price changes by -30%. The platform also has a “Margin Call” feature that automatically closes all positions if the equity falls below the maintenance margin requirement. This prevents the account from becoming negative and incurring further losses.

To Conclude

Vela Exchange has created a strong foundation to support its community members and provide the best possible user experience. With servers optimized for performance, off-chain storage for notifications and profile data, and an on-chain infrastructure for open positions and collateral, Vela is dedicated to providing a seamless trading experience. The platform is backed by a robust token economy that rewards its users with VELA and VLP tokens. With permissive role access for administrators, Vela can execute triggered positions, manage liquidations, and halt essential contract functions during updates or emergencies.

It is important to note that withdrawal privileges are not an admin function, and customer funds are protected. With its strong infrastructure and commitment to security, Vela Exchange is poised to become a leading player in the digital asset trading landscape.