Vega Protocol has put forth a governance proposal that would effectively shut down their existing blockchain, retire their native VEGA token, and replace it with a new token that would dilute existing holders by a factor of 5x.
The proposal, outlined in a recent blog post and now up for a governance vote, aims to suspend trading, redistribute the on-chain treasury to stakers, and incentivize validators to keep the network running for a two-month period to allow users to withdraw their funds from the decentralized exchange (DEX).
After this grace period, the future of the alpha mainnet would be uncertain, as there would be no further trading or issuance of VEGA tokens. While community members could theoretically create a new chain using the VEGA token, the Vega project itself has indicated it would not support any future VEGA-powered chains.
The rationale behind this drastic move remains unclear, though the proposal mentions the need for a protocol patch to facilitate the reduction of validators over time. Additionally, a separate proposal will address the final settlement of markets once prices at the time of suspension are determined.
