Please do not compare fully on-chain perp dexes where everything is verifiable to :
A perp dex with off-chain orderbook (meaning you can print whatever number you like). Your orderbook isn’t on-chain
Your trading fees are so low (0% for all makers ; 0.02% takers) that most likely most of the volume is wash trading farming the VRTX token. Your inflation schedule and trading icentives are also crazy high; which explains this volume
This is not comparable to perp dexes where everything can be verified on chain such as GMX, gTrade etc, that have organic volume with no wash trading farming tokens.
So please just be careful when stating that you’re the top leader in volume.
Hi Scuttle, this is a valid concern, but here’s the problem with what you are saying.
From my knowledge, the off chain sequencer matches orders, but every single transaction that occurred settles on-chain. This is why Dune Analytics (which everyone knows only uses what is on-chain) dashboards made by independent parties are able to report volume and cumulative volume figures which are equal to what Vertex is reporting on its own API and stats dashboard.
In fact, this matching off chain but settling on chain design is well known. Hyperliquid’s head has criticized off-chain CLOB DEXs in the past (he didn’t name names but it was clear to close watchers of the space who he was talking about) by stating that off-chain matching is non transparent, and thus subject to MEV. Note that his critique is NOT that the volume itself is a fake number. Because even he understands that everything SETTLES on chain, that all of this is verifiable and indisputable to he who is informed.
The Vertex Team has made the unique choice for matching to occur in a centralized manner, but for self custody to be maintained throughout the process. One of Vertex’s founders had made a Twitter thread a while back stating why. Matching should happen off-chain because decentralized consensus (ie. block propogation across all network nodes) is too slow (constrained by the speed of light, as all things are) for trading to be competitive with TradFi trading speeds. Unless DeFi can match TradFi speeds, it will always be secondary to TradFi. Speed is what matters in the age of information. Information moves at light speed, so trading must move that fast too. There is no other way. The best we can do is to ensure that settlement is on chain so users never lose self-custody.
I don’t think this source is correct. It would be better if you post proof verifiable on-chain such as this dune dashboard rather than a static snapshot with no references to how the information was computed and present. According to this popular dunedashboard for gasguzzlers: https://dune.com/hildobby/Gas?Blockchain_e6dda0=Arbitrum+One&Timeframe_eab55c=1+Month, Vertex is not in the top 4 as claimed on your image. I request the information get properly verified and amended before proceeding with voting.
I am not sure why our model cannot be compared with ‘fully on-chain dexs’. Every project has it’s own design choices. In any case to address your concerns:
We print all matched trades on-chain so our volume IS verifiable. Please feel free to check on Dune analytics.
You seem bothered that our fees are low? I am assuming from your message that you are a fan of pool DEXS. It’s been noted by other very prominent proposals that to be competitive with CEXs fees need to be cheaper. We can achieve that with our architecture. This has been modelled by DYDX who are currently the market leaders in the derivatives space and on average charge similar fee levels. Pool DEXs need millions of token grants to achieve anything near our fee schedule because their architecture cannot operate with low fees due to adverse selection amongst other problems.
Commonly new DEXs use their token to bootstrap growth. We are using our programme to align long term interests with community members using our own tokens. Many proposals here are suggesting using huge numbers of ARB tokens to achieve a similar effect. That removes responsibility for building out a project from a team and a community and onto the blockchain they are building on.
Our proposal is about finding a scalable way to achieve long term low fees for users in a way that benefits both the Vertex and Arbitrum community in the long term.
Unfortunately, your plan to use the grant funds to backstop fee discounts does not comply with the program’s rules.
The granted ARB must be distributed to incentivize Arbitrum Contracts. The ARB can not be held as a backstop as this could lead to it being sold or used in Arbitrum governance both of which are against program rules.
If I am misunderstanding the situation, please clarify this. Otherwise please make the appropriate changes to your proposal in order to become eligible for a snapshot vote.
On the topic of GMX and GNS, it’s crucial to remember their initial phases, which had their share of incentivization and token farming strategies. after these incentives subsided, the organic volume persisted, showing the strength and viability of this model. About the low trading fees – honestly, that’s one of the coolest things about using Arbitrum’s layer 2. It’s not a bug, it’s a feature! Because of Arbitrum, we can have those low fees and fast transactions. It just shows how powerful and efficient this platform is. Imagine a future where everyone’s trading on Arbitrum, getting great speeds and barely paying any fees. That’s where we’re headed, and it’s pretty exciting if you ask me.
Last but not least, please, be careful when telling strangers on the internet to “be careful.” Wishing you all the best in your crypto endeavors!
P.S: Just a quick note – comparing Vertex to GNS isn’t really apples to apples. GNS has a bunch of safety nets in place, like limiting how much you can put in, jacking up fees when things get too one-sided, setting a max win rate, and slowing down how fast you can take out your cash. Plus, they have this thing where they only mint new GNS tokens at a set rate and make sure no one gets left holding the short end of the stick if the vault’s not fully backed. Makes you wonder, though, if these rules are more about watching out for the traders or putting a lid on their potential profits.
P.S #2 : Don’t forget, Vertex isn’t just a perpetual DEX. It’s also a thriving spot market and a money market, making it a comprehensive all-in-one DEX solution!
Since Vertex openly admits to incentivising trading activity, it is not possible to deduce how much of the activity on the protocol is genuine demand for the service Vertex offers and how much is just there to farm the VRTX token.
There have been numerous protocols before Vertex that engaged in this practice and faded into irrelevancy once the value of the token that is being farmed had evaporated.
Whether this will be the case with Vertex is yet to be seen.
What we can say with certainty is that the metrics presented here are to one extent or another inflated and therefore one can not make a one-to-one comparison with other protocols that are currently not engaging in incentivised trading activity.
Therefore I want to declare my opposition to this proposal, as I deem a demand for 4.5 Million ARB to be way too excessive for a protocol that has not yet demonstrated ample staying power.
I would suggest the team revises the grant size request to no more than 1,000,000 ARB.
Vertex have put forward a very compelling proposal but still have to prove staying power. Product market fit is not yet proven and with the greatest respect, they are being airdropped farmed so any metrics are likely inflated and hard to grasp a real sense of staying power due to that fact.
Requesting 4.5m ARB brings much scrutiny to a protocol that is still young and yet to prove itself.
Please amend your request to the DAO to secure wider approval.
Hey midgetwhale, careful out there, wouldn’t want you to get harpooned in these deep crypto waters! Jokes aside. Your concern is entirely valid. Yet, It’s crucial to recognize that if arbitrum aims to push the decentralized ecosystem forward, it should channel its support towards emerging protocols like vertex, rather than those already comfortably established. Established protocols have less need for such backing. And while volume is an indicator, it’s not the sole determiner of value. Vertex’s real potential lies in its innovative approach to defi, factors that represent future growth, and potential industry transformation. This protocols doesn’t rely just on current metrics!
It’s intriguing reading the comments here (and on other proposals) and seeing the tribalism. Oftentimes, folks who are critical of a protocol are maxis of a competing protocol in the same vertical, and oh it’s so tiring to see this child’s play
I have used most dexes on Arbitrum (Gains, GMX, Cap, Vertex, etc), and I think they all serve their own purpose to their own userbase. Nothing wrong with that, and as an Arbitrum maxi, I want to support all of them.
Specific to Vertex, it’s got the strongest tech and unique value proposition in the ecosystem as it allows for true price discovery via orderbooks and enables multiple types of collateral, cross margining, etc. There simply isn’t a more versatile dapp than Vertex on Arbitrum at the moment.
Again, I am not a Vertex maxi and there are times when I would rather trade on Gains or GMX than Vertex when I want to go degen long or short, but people criticizing Vertex for its trading rewards while supporting other protocols’ proposals to dole out trading rewards are hypocritical at best.
TLDR - Vertex brings something unique to the Arbitrum ecosystem, and their proposal should be supported by anyone who supports Arbitrum. And yes, other good projects with good proposals should be supported too!
read my post above friend. seems from your posts in the forum that you are supportive of Gains’ proposal which will allocate ARB for trading rewards, while being critical of Vertex having its own trading program?
Why are you supportive of a 7M ARB proposal for Gains and asking Vertex to decrease theirs to 1M ARB?
Genuinely curious about your reasoning and would be great to have some intellectual honesty for the broader ecosystem.
As stated above, I am neither a Vertex or Gains maxi. I use both protocols and just like defi and Arbitrum. Just calling a spade a spade seeing the double standard in your reasoning
I’ve read all your replies and just wanted to briefly respond to this statement.
This is incorrect because I do not criticize Vertex for its trading rewards, I criticize using statistics achieved thanks to the presence of trading rewards to make the case that Vertex deserves such a large grant.
There’s a big difference.
Gains and GMX their stats are not artificially inflated by current trading rewards.
We’ve seen time and time again new protocols popping up trying to create hype and a name for themselves by using this ponzi like scheme of dilluting their tokens to prop up their stats.
They draw attention away from other projects that do not have these ponzinomics in place and now I feel they are unjustly drawing grant money away as well.
Supporting an arbitrum grant like Gains Network proposes to level the playing field with projects like Vertex (and HMX, Kwenta, Level Finance and I think Vela) is not hypocritical.
There’s a prevailing narrative that’s got me scratching my head as if the biggest projects need the biggest support, which to me is counterintuitive. By doing so, we’re not only stifling innovation but also propagating a wrong narrative. Imagine our local government pouring funds not into startups but into established business giants. New projects grapple with challenges like gaining visibility, building trust, and securing initial user adoption. For them, early support is way more important when to comes to get mass adoption with utmost haste.