Overview
Vela Exchange is a decentralized perpetual futures platform deployed on Arbitrum, offering leveraged trading on crypto and forex pairs. Originally launched as Dexpools, the project rebranded to Vela Exchange and built a synthetic asset trading model where a liquidity pool (VLP) acts as the counterparty to traders. Users deposit assets into VLP to earn fees from trading activity, while traders access up to 100x leverage on supported markets.
Vela positions itself in the competitive Arbitrum DeFi ecosystem alongside GMX, Gains Network, and other perps protocols. The platform differentiates through forex pair support, high leverage limits, and a focus on trader experience. The synthetic model means trades are executed against the pool using oracle prices, eliminating the need for traditional order book liquidity.
Smart Contracts
Trading Engine
Vela uses a synthetic/oracle-based trading model where positions are opened and closed against the VLP liquidity pool at oracle-determined prices. This means traders always get execution at the oracle price (minus fees and slippage protection), but the VLP bears the market risk of being counterparty to all trades. The model is similar to GMX/GLP but with different parameter choices.
Positions are managed through smart contracts that handle collateral, leverage calculations, and P&L settlement. Limit orders and stop orders are supported through keeper bots that execute when price conditions are met. The oracle integration (using Chainlink and proprietary price feeds) is critical to the trading engine's integrity.
Architecture
Deployed on Arbitrum One, Vela benefits from low gas costs and fast transactions. The smart contract architecture separates the vault (VLP), trading engine, and governance contracts. The VLP vault holds the liquidity that backs all open positions. The architecture is straightforward and follows established patterns from the GMX/perps DEX design space.
Code Quality
Vela's contracts have been audited by multiple security firms including Sherlock and others. The audit reports are publicly available. The codebase is open-source, allowing independent review. The synthetic trading model's core risk — VLP acting as counterparty — is well-documented and understood by participants.
Security
Audit History
Multiple audits have been conducted, with findings addressed. The Sherlock audit provided thorough coverage of the trading and vault contracts. The oracle implementation is critical — a compromised or manipulated oracle could enable exploitative trades against the VLP. Chainlink integration provides battle-tested oracle security for supported markets.
Insurance Fund
A portion of trading fees funds a reserve to protect VLP holders against extreme scenarios (large trader profits exceeding VLP capacity). The reserve provides a buffer but may be insufficient during severe market dislocations with large directional positions.
Liquidation Engine
Positions are liquidated when collateral falls below maintenance margin. Keeper bots monitor positions and execute liquidations, with the VLP absorbing the collateral. The liquidation mechanism is standard for the category. During extreme volatility, keeper latency could result in bad debt.
Track Record
Vela has not experienced a major exploit. The platform has operated through volatile market periods on Arbitrum without significant incidents. However, the platform's relatively small TVL and volume mean it has not been stress-tested at the scale of larger competitors.
Trading
Product Range
Vela offers perpetual futures on crypto pairs (BTC, ETH, and major altcoins) and forex pairs (EUR/USD, GBP/USD, etc.). The forex offering is a differentiator — most DEX perps platforms focus exclusively on crypto. Leverage up to 100x is available on major pairs, with lower limits on altcoins.
Execution Quality
The oracle-based model provides guaranteed execution at oracle prices for market orders, eliminating slippage on the order itself (though oracle updates can create effective slippage). Trade execution is fast on Arbitrum (sub-second confirmation). The VLP model can handle larger trades than thin order books, but VLP capacity limits maximum position sizes.
Leverage & Risk
Up to 100x leverage is aggressive and attracts risk-seeking traders. Higher leverage increases liquidation risk and VLP exposure to large trader profits. Risk parameters (maximum open interest, position limits) manage the VLP's exposure but may limit available liquidity during high-demand periods.
Adoption
Volume & Users
Vela's trading volume is modest — typically $10M-$100M daily, varying with market conditions and incentive programs. The user base consists primarily of Arbitrum-native DeFi users. Daily active traders number in the hundreds to low thousands, which is small for a perps platform.
Vela holds a small share of the Arbitrum perps market, behind GMX and Gains Network. The broader DEX perps market is dominated by Hyperliquid and dYdX, making Vela a niche player. Growth has been steady but slow — the platform needs a catalyst to break out of mid-tier status.
Tokenomics
VELA is the governance and utility token with a capped supply. Trading fees are split between VLP holders (liquidity yield), VELA stakers (revenue sharing), and the protocol treasury. The eVELA escrow mechanism provides enhanced rewards for longer-term staking commitments. The fee-sharing model is well-designed and aligns incentives across stakeholder groups.
Risk Factors
- VLP counterparty risk: If traders consistently profit, VLP holders bear losses
- Oracle dependency: Manipulated or stale oracle prices could enable exploitative trades
- Low adoption: Small volume and user base limit fee generation and token value
- Market consolidation: Perps DEX market is consolidating around Hyperliquid and dYdX
- High leverage risk: 100x leverage increases systemic risk during extreme volatility
- Arbitrum competition: Competes with GMX and Gains Network in the same ecosystem
Conclusion
Vela Exchange is a competent Arbitrum-based perps platform with a clean security record, reasonable tokenomics, and a unique forex offering. The VLP model provides a proven framework for synthetic perps trading. However, Vela operates in an increasingly competitive market where larger platforms are pulling away in volume and liquidity. The platform needs significant growth in trading volume and unique value propositions beyond forex pairs to establish long-term viability. Scores reflect a solid but unexceptional platform in a market trending toward consolidation.
Sources
- Vela Exchange documentation (docs.vela.exchange)
- Sherlock audit report
- DeFiLlama Vela Exchange data
- CoinGecko VELA token data
- Arbitrum ecosystem analytics
- Chainlink oracle integration documentation