Vertex protocol

In this edition, we’re giving you an update on Vertex Protocol. Following it’s TGE in late November, Vertex has generated quite a bit of buzz, even flipping dYdX in daily volume on a couple of occasions.
While appchains and finance-focused chains like Injective and Sei are gaining popularity, Vertex opted for an Arbitrum native approach. Learn about the protocol’s spot trading, perps, and lending market services, and insights from Vertex Co-Founders Alwin Peng and Darius Tabai.
Stay alert in the markets.

Background on Vertex

• Vertex Protocol is a vertically-integrated DEX on Arbitrum featuring spot, perpetual, and integrated money markets.
• The protocol is a fast, capital-efficient, and user-friendly DEX which aims to function similarly to CEXs.
• The protocol chose to deploy on Arbitrum over Cosmos, as they believed Arbitrum would perform better and be a safer choice, given its EVM compatibility.
• The protocol uses centralized servers and optimistic processing to optimize for speed.
• This is a tradeoff vs decentralization, as the project has compromised by not allowing users to self-custody their assets.
• On the other hand, it can handle trades centrally for much better performance

Gaining User Trust and Market Share

• Darius says that users who trust Vertex with millions of dollars are unlikely to switch to other platforms like GMX. While the winners in the space seem to be established, there is still room for growth in the overall market.
• Crypto is still relatively small compared to traditional markets like FX trading.
• To succeed, perp platforms need to plan on becoming top three or five players in the market.
• He adds that Binance currently holds about half of the market share.
• The entire perp market's daily trading volume is significantly smaller than what Binance alone handles.
• Crypto is still a small industry compared to traditional markets, leaving room for growth for both centralized and decentralized exchanges. In the next five years, significant growth can be expected in the industry.
• Darius says that the top three to five exchanges make money, while those ranked 5 to 10 do okay.