What You Need to Know About Vela Exchange's Launch
Is Current Bitcoin Activity Sustainable?| In-depth on zkLend
GM, this is your Daily Bolt briefing.
In this edition, we'll be giving you complete notes from Arbitrum's most recent Twitter Space, featuring Vela Exchange. Read our Note of The Day to learn more about the perps trading exchange’s imminent launch, what changes to expect post-launch and more.
We’ve also included two additional note previews for your viewing pleasure. Keep reading to stay informed on the latest narratives around Bitcoin DeFi, as well as zkLend, a lending market built on Starknet.
Stay sharp in the markets.⬇️
1/ Empire - Should Bitcoin Embrace New Use Cases?
Preview: In this episode of Empire, host Jason is joined by Lyn Alden and Jordi Alexander to discuss the ongoing Bitcoin blockspace debate, Bitcoin's long-term security, and the comparison between traditional money and technology-based cryptocurrencies. Click here to listen to the full episode (82 mins).
Read our Note (13 mins) and save 69 mins.
Here are some key takeaways:
Lyn explains how she assesses Bitcoin based on its long-term fee model, incentive structure, and network security. She recalls that she had predicted new uses for Bitcoin blockspace beyond transactions. Lyn recalls predicting additional Bitcoin blockspace uses beyond transactions and notes that criticism of Bitcoin varies with fee levels. Lyn sees the current fee spike as temporary and fueled by speculative, meme-driven assets lacking long-term sustainability.
Jason then discusses two camps: those who perceive Bitcoin's blockspace and security as exclusive, and those who see it as a permissionless platform driven by free market forces. Jason asks Jordi for his perspective.
Jordi sees himself in the middle, emphasizing the significance of Bitcoin's social construct over the technological and monetary aspects. He believes ongoing trends may not address long-term security concerns and highlights the persistent issue of block rewards halving. Jordi stresses the uncertainty surrounding future use cases and the community's tolerance towards present trends.
Jordi suggests that the current block reward model is not a long-term solution and compares it to Ethereum, where fees are burned, reducing supply. He believes that the extra fees in the Bitcoin network are only temporary rewards for miners and won't incentivize extra work in the long run.
Regarding Ethereum, Jordi believes its maximum inflation rate is approximately 2%. He says that this rate wouldn't significantly impact its adoption or appeal as an asset. To support his point, he uses gold as an example, where minor fluctuations in output have little effect on its value.
Jordi suggests that Satoshi's vision for Bitcoin as e-cash may not have considered the scale of global transactions. Despite increased adoption, transaction rates haven't risen significantly. If Bitcoin becomes a "gold-like" asset, a tail emission or similar solution may be required.
Jordi thinks that the primary factor in DeFi's success is Total Value Locked (TVL). If Bitcoin continues to grow as a dominant form of money, it will naturally have high TVL, making it more useful for DeFi applications.
2/ Blockbytes - Introduction to zkLend
Preview: In Blockbytes' Twitter Spaces, Clay from Blockbytes invites Jane from zkLend to discuss zkLend’s mainnet launch on Starknet, what it was like to build on Starknet, and future plans for zkLend. Click here to listen to the full episode (42 mins).
Read our Note (6 mins) and save 38 mins.
Here are some key takeaways:
Jane explains that the reason behind the creation of zkLend is that as co-founders, they saw a gap in scaling solutions on Ethereum and wanted to build on an ecosystem they knew would succeed, which led them to Starknet.
Jane explains that their goal is to integrate both retail and institutional users into one product.
She emphasizes the importance of providing users with a variety of options for lending and borrowing, allowing them to choose based on their risk tolerance and yield expectations.
Jane explains that zkLend has two products: Artemis (the DeFi product) and Apollo (Institutional).
She says that Artemis features over-collateralized loans and is permissionless, while Apollo targets institutional borrowers who go through a KYC process and can create their own borrowing pool.
Jane discusses the importance of ZK roll-ups for Ethereum scalability, citing Vitalik Buterin's statement that ZK roll-ups would become the end game for Ethereum scalability.
Arbitrum Twitter Spaces - Arbitrum x Vela Exchange
In this Arbitrum Twitter Spaces, which took place on May 30th, 2023, Arbitrum contributor Churro is joined by Dan and Travis Skweres to discuss Vela Exchange’s upcoming launch, new features, and more. Read our notes below to learn more.
Background
Churro (Host) - Contributor at Arbitrum
Dan (Guest) - Co-Founder of Vela Exchange
Travis Skweres (Guest) - Co-Founder of Vela Exchange
Arbitrum – a layer-2 solution designed to improve the capabilities of Ethereum smart contracts
Vela Exchange - a decentralized exchange with advanced perpetuals trading capabilities, community-focused incentives, and scalable infrastructure
Vela Exchange Launch
Dan mentions that Vela Exchange is in the final stage of testing and product development. He mentions that most of the teased features are nearly ready for production testing. He also reveals that community members will be involved in testing the application, indicating they are very close to launching
Dan mentions that their primary focus is on the official launch of Vela Exchange, and other plans and updates will be shared after the launch is complete.
Travis Skweres mentions that their main concern is getting the official launch of Vela Exchange ready, explaining that it's the sole focus at the moment. He describes the forthcoming improvements in comparison to the beta version, including enhanced features such as one-click trading, an improved UI, and the ability to chart different strategies. He also mentions the introduction of more assets for the official launch of Vela Exchanges.
Travis mentions that the new features include chart trading, and reveals plans to release marketing videos to provide a sneak peek of the new UI. He believes that users will appreciate the improvements made from the beta version of Vela Exchange.
Lesson Learned from Beta Version of Vela Exchange
Travis Skweres mentions that the beta test was larger and more successful than they expected with unexpected daily volume numbers and user sign-ups. They recorded approximately $5.6 billion in traded volume and over 55,000 user sign-ups during the beta version of Vela Exchange.
Travis Skweres considers the beta test of Vela Exchange as the best audit they could have hoped for. He highlights that the volume and diverse trader base allowed for a comprehensive analysis of contracts, bug detection, server scaling, and resiliency, and helped optimize their own nodes on Arbitrum for maximum RPC speed.
Travis Skweres mentions that the two-month beta of Vela Exchange offered valuable insights for improvement. The community feedback and suggestions significantly influenced the official launch's features and improvements.
Dan reveals the large interest in the early access of Vela Exchange, with over 30,000 sign-ups in just about a week and a half.
Dan mentions that the early access offers users the first look at Vela Exchange, priority in feedback discussions with the team, and the first pick of the incentives programs and Hyper VLP 2.0.
Dan explains the access format: those who participated in Hyper VLP or were a $VLP minter ($VLP is Vela Exchange’s liquidity provider token) from the beta will have first-class access, while selections from early access applicants will be made shortly.
One-Click Trading on Vela Exchange
Travis Skweres explains the issues faced by DeFi enthusiasts, such as the requirement to confirm transactions on the blockchain every time a trade is opened or closed. He indicates that Vela Exchange's goal is to make the trading experience as fast and seamless as a Centralized Exchange.
Travis Skweres mentions that Vela Exchange has developed an in-memory account for one-click trading (1CT), which is created for each user at sign-up. Users can connect their existing wallets like MetaMask and will be able to set up the optional one-click trading account.
He explains the functionality of the one-click trading feature. Users will need to fund this wallet that will be connected to Vela Exchange with the gas tokens and $USDC, which will be auto-deposited into Vela Exchange for trading. Once 1CT is selected, trades happen automatically without the need for constant confirmations, which Travis Skweres believes will greatly enhance the user experience.
Despite internal debates about whether users will continue using their existing wallets with 1CT or fully adopt 1CT, Travis Skweres is excited to see how well this innovation performs since it's a unique offering among most DEXs.
Travis Skweres mentions that Vela Exchange does not have access to user funds, adhering to its core principle of self-custody. Users can export their private key by setting a password on their 1CT, and there will be security measures in place to ensure ownership.
He explains the safety mechanism, where the private key is sharded or stored in multiple places, like the user's browser and a third-party off provider's server. When a function is called, the sharded key is reassembled to sign the contract, and then it's destroyed. This process confirms that Vela Exchange doesn't have access to users' private keys and the wallet remains self-custody.
User Feedback that Led to Vela Exchange’s Features
Dan mentions that the Vela Exchange’s on-chart trading was developed to be more usable based on data from the beta version of Vela Exchange and suggestions from both large and small traders. He mentions that the chart is where traders can conduct analysis, save notes, and trade.
Dan further elaborates that the new features allow users to save all their information on the chart per asset, see information related to each individual trade, and set limit orders or other orders directly on the chart. The chart has also been enhanced to be customizable, adjusting its size and figuring out where it lives on the screen.
Dan explains that Hyper VLP 2.0 was a program started in beta to reward early $VLP minters who provided liquidity to Vela Exchange’s vaults for leverage trading. The enhanced version is open to more users who were not part of the beta or were not able to get Hyper VLP allocations.
On the topic of security and performance, Travis Skweres mentions that the volume of traders and functions during the beta version of Vela Exchange allowed them to identify areas of improvement. Enhancements include running their own Arbitrum nodes, horizontally scaling their APIs and servers, and restructuring beta contract triggers and positions for easier querying. These improvements will result in increased speed and responsiveness of the Vela Exchange’s UI.
Vela Exchange’s New Assets and Asset Classes
Churro asks Travis Skweres about the introduction of new assets available to trade on the Vela exchange after launch. Travis responds that they plan to start with around 25 assets, including not just crypto but potentially equities and metals as well. He mentions that new asset classes will be added to the exchange.
Advice for New Users on Vela Exchange
Dan suggests that new users of Vela Exchange should start small, try basic functionalities, and take advantage of the extensive knowledge base articles available on the platform. For more experienced traders, he recommends exploring advanced functionalities, managing risk, and utilizing the active community and the Vela team for any queries.
Vela Exchange’s Community Incentive
Churro asks about what they are most proud of in building Vela Exchange. Dan expresses his pride in their team and community, mentioning how they've incorporated community members into their team.
Churro asks about any incentives or community events planned for the official launch of the exchange. Dan mentions several incentives including a Crew3 Zealy campaign, an official launch NFT, and a beta airdrop that coincides with the launch.
Why Vela Exchange Chose Arbitrum
Churro asks about the benefits Arbitrum brings to Vela Exchange’s trading experience.
Dan highlights performance, scalability, and the supportive engineering and developer community as reasons for choosing Arbitrum. He believes that Arbitrum could potentially outperform Ethereum given its pace of innovation.
Vision for Vela Exchange
Dan's vision is for Vela Exchange to be a central hub for trading, catering to both centralized exchanges (CEXs) and decentralized exchanges (DEXs). He highlights the importance of being adaptive to constant innovation in the DeFi space.
Travis agrees with Dan, mentioning that the future of trading will be self-custody driven or decentralized. He envisions Vela Exchange as a secure platform where users can control their money and trade freely.
Q&A
Q: Is there an estimation or a date for the Vela Exchange airdrop claim?
Dan mentions that the airdrop would coincide with the official launch of the Vela Exchange.
He also mentions that the launch date would be announced later in the week, which would give a good idea of when the airdrop would take place.
Q: What criteria did Vela Exchange use to determine eligibility for the airdrop?
Dan mentions that the primary criterion for airdrop eligibility was trading activity on the Vela Exchange.
Q: Is Vela Exchange planning to hold trading competitions in the future?
Dan confirms that Vela Exchange is planning to host a significant trading competition during the official launch of the Vela Exchange and potentially future competitions tied to major events.
He is excited about trading competitions in general, especially around news releases and new asset introductions.
Dan also mentions the consideration of a league system for traders, allowing them to track progress over time with potential associated rewards.
Q: What actions are necessary for legacy Hyper VLP users to adapt to the upcoming changes? Also, is the 30-day grace period counted from the launch day or the announcement day?
Dan explains that the 30-day grace period commences from the launch day, not the announcement day. This period starts right after early access, which is considered separate from the public launch. As participants in the Hyper VLP beta, users will have early access.
Moreover, they can utilize all allocations from the beta phase. For instance, if a user minted a thousand VLP during the beta phase, they can do the same for Hyper VLP 2.0, provided they use the same wallet.