Vega Protocol integrates Optimistic Oracle for Points Futures Markets
Tldr; UMA’s Optimistic Oracle now secures Vega Protocol’s Points Markets. EigenLayer points derivatives are tradeable on Vega DEX, with the OO set to settle all markets. The integration highlights the OO’s flexibility and ability to support novel DeFi experimentation.
Key takeaways:
The Vega Protocol community has launched permissionless markets for EigenLayer points, with UMA’s Optimistic Oracle integrated for market resolution.
Vega’s Points Markets are a unique offering for the DeFi space and a perfect application for the OO.
This update highlights the OO’s flexibility and usefulness across the fast-evolving DeFi ecosystem.
In a few short years, the crypto ecosystem has become much more complex. Since the last market cycle, primitives like restaking, modularity, and points have emerged with the promise of changing DeFi.
UMA has been at the forefront of this rapid evolution, launching Across Protocol to accelerate cross-chain interoperability, pioneering MEV capture with Oval, and integrating the OO into a series of cherished DeFi projects.
Today we’re proud to add a new integration partner to the list as the Vega Protocol community launches Points Markets secured by the Optimistic Oracle. Points Markets sit at the frontier of DeFi experimentation, allowing Vega traders to gain exposure to EigenLayer points derivatives.
This integration illustrates how the OO can enable DeFi’s most unique use cases. The OO has proven its usefulness in a wide variety of applications and Vega’s Points Markets further highlight its potential. We detail how the product works below.
Introducing Vega’s Points Markets
Vega is a permissionless DEX that specializes in futures and perpetuals trading. Anyone can propose new derivatives markets on Vega, creating an open environment where new innovations can flourish and anyone can access them.
Points Markets are the latest markets to launch on the Vega DEX. Proposed by the Vega community, Points Markets let Vega users trade derivatives for EigenLayer points. These markets could be of interest to EigenLayer users who want to hedge their points or traders who want to get exposure to the EigenLayer ecosystem without restaking their $ETH.
Why trade on Points Markets?
Many crypto projects have embraced points in favor of airdrops to incentivize adoption in recent months. Points offer several advantages for projects: they encourage sticky adoption, they don’t require complex eligibility criteria, and they prevent users from gaming the system with farm and dump strategies.
EigenLayer is currently in the midst of the biggest points distribution program in crypto history. EigenLayer is pioneering Ethereum restaking, letting users deposit staked $ETH to earn points. The points will later convert into an airdrop.
But for all the merits of points, they have some drawbacks. Their utility is restricted to one product and their value unclear until the point of an airdrop. Points Markets aims to solve this problem.
Points Markets make EigenLayer points liquid and tradeable. This allows EigenLayer users to hedge against their positions, while other users can get long or short exposure to EigenLayer. It unlocks price discovery for points, something that the market has lacked to date.
How UMA secures Points Markets
Vega prides itself on its permissionless nature. The DEX is open, allowing anyone to propose and create markets, provide liquidity, and trade. The Vega community defined the parameters for Points Markets.
Points Markets must be resolved differently from other futures markets due to their potential scope for ambiguity. Users typically earn points for interacting with a product and these points are believed to have value when they can be redeemed for tokens. But users do not know how many tokens they’ll receive when they earn points.
In other words, the correlation between points and tokens is often unclear and the distribution variable. The value of points only becomes clear when an airdrop is confirmed and the price per point can be calculated, at which point any related market must be settled.
UMA’s OO can help here by removing the ambiguity. When an airdrop is confirmed, the OO can agree to stop trading and determine the price per point to settle the market. Vega refers to this termination event as an “Airdrop Event,” taking inspiration from Credit Events in Credit Default Swaps.
When an Airdrop Event takes place, any user can post a bond to assert a claim about an airdrop and the price per point. If no one disputes the claim within a challenge window, the data is verified onchain and the market is settled. In the event of a dispute, someone posts a bond to claim that the proposer’s assertion is invalid, and $UMA tokenholders vote to resolve the bond.
The OO is useful to Points Markets as it can settle each market and ascertain the value of points in a way that a price oracle cannot. This application illustrates how flexible the OO is, offering the ability to serve any kind of information to smart contracts.
Securing the future of DeFi
Points Markets are a unique application that showcase crypto’s rapid growth, DeFi’s limitless potential, and the power of Vega’s permissionless DEX at once. They also highlight how the OO can solve ambiguity in the real world and push it onchain. Points Markets differ from other futures markets and the OO is a clear fit for their resolution process.
This integration is the latest to show the OO’s growing strength in the DeFi ecosystem. DeFi and crypto as a whole has evolved fast in recent years and the OO’s flexibility makes it a powerful tool to secure a wide variety of cutting-edge applications. To learn more about Points Markets, head to Vega Console. To learn more about the OO or find out how to integrate the solution into your project, fill out our partnerships form or reach out at integrations@uma.xyz.
Words by @dreamsofdefi
