Voltz, a noncustodial automated market maker for interest rate swaps (IRS), has announced a $6 million seed round led by one of the leading VCs in the decentralized finance (DeFi) industry, Framework Ventures. The raise also saw participation from Fabric Ventures, Coinbase Ventures, Amber Group, Wintermute, Robot Ventures, Entrepreneur First, and in addition to an impressive roster of angels including Stani of Aave, Kain of Synthetix and Alan Howard.
As it currently stands, attempts to use automated market makers (AMMs) as mechanisms to bring fixed rates to DeFi have been largely unsuccessful due to silos between variable and fixed-rate assets. Additionally, lend and borrow rates for DeFi protocols can be highly volatile ranging from 2% to over 40%. To address these limitations, Voltz has created the first-ever synthetic interest rate swap AMM that’s highly capital efficient, removes silos between fixed and variable rates, and allows users to trade with >10x leverage.
Uniquely, Voltz leverages a concentrated liquidity virtual AMM (vAMM) for price discovery — unlike traditional AMMs, where assets are moved into a liquidity pool, a vAMM utilizes the AMM for price discovery only while the management of the underlying assets is completed outside the AMM via the Margin Engine. The Margin Engine effectively defines the leverage available to traders and liquidity providers and manages the collateralization of the protocol. The combined impact of these modules results in 3,000x greater capital efficiency than alternative interest rate swap models while also providing liquidity providers and traders with significant control over their positions.
“In creating Voltz, we took a research-focused approach to address the limitations of existing AMM structures and discovered a macro opportunity for the use of interest rate swaps through a new AMM design that utilizes concentrated liquidity,” said Simon Jones, CEO of Voltz Labs.
“As DeFi continues to displace traditional finance markets, Voltz has the unique opportunity to supersede the trillions of dollars of trading volume that’s exchanged each year in traditional finance IRS markets.”
The funds raised will continue to support the growth of the Voltz Labs team, particularly in the areas of engineering and community management in addition to progressing product development. Users can expect Voltz to launch on testnet in Q1 2022.
“Voltz’s unique model will transform trading strategies that can be developed while also being highly capital efficient — two components that will be extremely beneficial for the entire ecosystem,” said Vance Spencer, co-founder of Framework Ventures.
About Voltz
Voltz is a noncustodial automated market maker for interest rate swaps (IRS). The protocol uses a concentrated liquidity virtual AMM (vAMM) for price discovery only, with the management of the underlying assets performed by the margin engine. The combined impact of these modules means counterparties can create and trade fixed and variable rates through a mechanism that is up to 3,000x more capital efficient than alternative interest rate swap models. To learn more visit: voltz.xyz
About Framework Ventures
Framework is a team of technologists, researchers and investors who buy assets of, who build for, and who participate in open crypto networks. At its core, Framework is a technology company, building products and services to support the open blockchain networks that they invest in. Through its registered investment advisor, Framework Ventures Management LLC (“Framework Ventures”), the firm has backed dozens of notable companies in the decentralized finance and Web3 space, including Synthetix and Chainlink. To learn more visit: framework.venture.