I have been watching Vela for a few months. I really like the team and have been LPing with them.
I personally think they are the best in terms of UX among the on-chain perps.
However, I’m not super excited about the proposed developments, especially if the bear market stays longer.
Much of the proposed work sounds like UX and web2 improvements for the existing core web3 functionalities, which should work well in attracting more users in bull markets but won’t be able to improve the fundamentals in this bear market.
- Fiat onboarding is a much larger problem that won’t be solved by 300k ARB. Seasoned Defi users won’t pay 2% credit card fee to onboard fiat while Defi noobs won’t know/use an on-chain perp dex.
- All the social and gamefi stuff is useful for attracting normies when everyone is talking about their crypto doubled over night. Really not sure how effective this will be these days with the widely spreading negative sentiment about crypto.
I would urge the team also consider to build new core web3 functionalities, and use the ARB grant to support them. Examples:
- Unified VLP vault to support trading on multiple chains. There is really no reason for the OI limit on base being 1/10 of that on arbitrum, except for initial deployment risks. Winning trade on a chain without sufficient VLP can get an IOU token, which can then be bridged to another chain to redeem USDC. A major competitor already does some version of this. This functionality would enable quick deployment on new chains and attract liquidity more broadly. Also imagine enabling USDC vault on etherium with 15% apr despite the chain is not suitable for trading.
- List innovative pairs that are not listed on any competitors’ platforms. Of course these pairs should not introduce significant new risk to VLP. Examples are ETH/BTC and Alt/ETH pairs. Pro-traders can already mimic the performance of these pairs but if offered direct access, it would help with their capital efficiency.
- Bootstrap the VLP apr by generating yield with USDC in the vault. The USDC really only does one thing now that is to assure the traders that if they make a winner trade, the platform can pay them for the profit. However, since traders lose on average, these USDC have extremely low utilization. Spot trading in GMX v1 is making their LP’s assets doing some work and generating extra fees. Another competitor put x% of their LP’s assets in GLP to bootstrap their apr. Of course there is no risk free yield in the world of defi, but carefully deploying something along the line can make the platform much more attractive to LP providers.