It is evident a lot of new cryptocurrency-related funding projects are coming to market as we speak. While not all of these ventures will work out in the end, they show there is plenty of room for exploration of new ideas. For its part, Vega aims to become a decentralized system to manage capital. The main focus is on the Ethereum blockchain, of course, as that seems to be the go-to solution for financial projects of this magnitude.
A Public Capital Allocator for Ethereum?
No one can deny there are a lot of innovative projects in the world of blockchain and cryptocurrency. Most of these ideas direly need funding, yet it can be rather difficult to obtain that capital. Not everyone wants to host their own ICO either, even though it seems that has become the go-to method for raising capital in 2017. Decentralizing the concept of managing capital is not easy, but there are efforts currently underway to change that.
The big question is whether or not any of these concepts can be successful in this regard. Answering that question is anything but easy right now. Most of the projects focusing on providing “public capital” services will first issue its own ICO token, rather than come up with a working product first and foremost. Vega is not all that different, even though it has a GitHub repo and a few demo videos on YouTube to show how they aim to handle things. It is an ambitious plan, to be sure.
According to a Reddit post, the team aims to become a distributed general partnership capable of managing outside capital. That is quite the mouthful of big words strung together, and it doesn’t necessarily mean they will be successful in their venture, to say the least. There will be some form of a decision-making engine based on meritocracy and track record. It is interesting to see them forgo the option of using the wisdom of the crowd, although that decision was seemingly made deliberately.
Under the hood, the project aims to use a blockchain to ensure the incentive system is not gamed. Anything that wishes to take itself seriously while focusing on decentralization will need a blockchain that is public, rather than a private solution. Vega is certainly on track with its decision to utilize Ethereum. Unfortunately, there is a second reason as to why this blockchain was chosen, considering they aim to issue their own digital token which represents equity and control of the network itself. Just about every blockchain project in the financial sector wants to create a new token rather than use existing cryptocurrencies, and that trend will not stop anytime soon.
A lot of people will immediately draw similarities between Vega and The DAO. As we all know, the latter project eventually failed miserably, mainly due to its code getting hacked several times in a row. While a portion of those funds were eventually recouped, it highlighted the insecure aspect of The DAO’s smart contracts and business structure. Whether or not this new project will fare any better in this regard remains to be seen.
In the end, it is commendable to see a fully decentralized venture in the world of capital management. Vega’s decision to use Ethereum also makes sense, although it is not necessarily because their blockchain solution is better. The issuance of yet another token will not necessarily instill confidence right away, as there simply are too many projects with ICOs already. Despite all of that, Vega may yet succeed in the end. It will all depend on whether or not it can succeed where The DAO failed. For now, that question remains unanswered.