The Vega Protocol community has voted to retire its Layer 1 (L1) blockchain and the associated VEGA token.
The decision marks the end of the Vega chain’s operations, which were focused on facilitating derivatives trading on a decentralized platform.
The unanimous governance vote triggered the automatic shutdown of trading activities on the Vega blockchain, the project said in a recent blog post.
Vega Shuts Down L1 Chain Due to Lack of Traction
The protocol launched its first on-chain markets after the release of its alpha mainnet in 2023.
However, the lack of substantial traction in its current form as an application-specific blockchain (app chain) led to the community’s decision to discontinue the project.
The Vega team explained that the network did not achieve the growth and interest required to sustain it as a viable platform.
Consequently, the project will now focus on maintaining the core software rather than continuing with the blockchain and token in their present state.
“We are proud of the software we have built, but unfortunately, the chain and token did not gain the momentum needed to ensure sustainability,” said Barney Mannerings, co-founder of Vega Protocol.
He further emphasized that the resources would now be allocated to supporting other initiatives based on Vega’s core technology.
One such initiative is Nebula, a decentralized exchange that will utilize the Vega software.
Nebula operates independently from the Vega Protocol and will have its own token, NEB.
As a gesture to the existing VEGA token holders, the Nebula team plans to offer NEB tokens to them, providing some continuity of value within the ecosystem.
“We believe the future of our software lies in open-source development, where projects like Nebula can build upon it,” Mannerings added.
As part of the shutdown process, the Vega chain will enter a “ramp down” phase, during which validators will maintain nodes to ensure users can withdraw their funds.
Validators to Keep Vega Running Until Oct. 27
The core team said that validators have committed to keeping the chain operational until at least October 27, 2024, allowing users a window of opportunity to safely move their assets off the network.
The team also issued a warning to users to remain vigilant for updates regarding the chain’s status.
“If the chain halts, assets may become stuck on the bridge, and we will not be able to retrieve them for you,” the team cautioned.
The VEGA token has experienced a sharp decline following the shutdown announcement. Over the past week, its price has dropped by 30%, falling from $0.10 to $0.068.
The token has also seen a more than 90% decline since the start of the year.
Vega’s journey began with its whitepaper in 2018, where the team outlined a high-performance, application-specific blockchain based on the Tendermint proof-of-stake consensus mechanism.
In 2019, the project raised $5 million in a seed round led by Pantera Capital, followed by a $43 million community token sale on CoinList in 2021.
Last year, Vega Protocol launched the first perpetual futures market on its network.
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