Pantera Capital-backed Vega Protocol shuts down layer-1 chain

Vega Protocol is winding down its blockchain operations following an overwhelming governance vote that favored reallocating resources towards core software development. The decision, made public on September 12, signifies the community’s support for retiring the chain that facilitated decentralized trading, along with its native VEGA token.

As part of the shutdown process, validators will temporarily maintain the network to allow users to withdraw their funds before the full cessation of operations by late October. Trading on the Vega network has already stopped, entering a “ramp down” phase. In response to the announcement, the price of VEGA plummeted by 14%, falling to approximately $0.06203.

“Our understanding from the validators is that the Vega chain will remain operational until at least Oct. 27 to allow users plenty of time to withdraw their assets.”
Vega Protocol

The Vega Protocol team has announced that a final governance vote is currently underway to establish settlement prices for suspended markets and to allocate around $28,000 from unused insurance funds to validators. This allocation aims to ensure the network can operate smoothly during the agreed ramp-down period. The vote, which is set to conclude on September 13, will finalize market settlements based on the last recorded prices before trading was halted.

The team cautioned that any assets remaining on-chain after the shutdown could become inaccessible, as the protocol requires the approval of two-thirds of validators to authorize withdrawals from the network’s bridge.

Vega Protocol launched its network in 2023, aligning with the vision laid out in its 2018 whitepaper, which described a specialized blockchain utilizing the Tendermint proof-of-stake consensus mechanism. The project raised $5 million in a seed round led by Pantera Capital in 2019 and later secured $43 million during a community token sale on CoinList in 2021.