Volt uses Fuse (an Ethereum-based, open interest protocol that supports isolated rate markets). The target price for Volt is updated each month according to the changes in the inflation rate.
Venture capital money has been flooding into the blockchain sector since 2022. NEAR Protocol recently announced that it has raised $350m in new funding. Nova Labs also raised $200 million last month.
Although smaller raises are less visible, they are equally important. Volt Protocol is a new project that aims to spark the stablecoin market with a $2,000,000 seed round. It was co-led jointly by Framework Ventures and Nascent. This team includes DeFi builders and investors.
Volt Protocol was founded in April and is described as “a decentralized, inflation resistant stablecoin.” Instead of being tied to a fiat currency, its protocol tracks the Consumer Price Index (CPI). This sets it apart from other stablecoins like USDC or Tether, which track the price of the dollar and lose purchasing power when inflation rises.
Framework Ventures cofounder Michael Anderson said in a press release that Volt is well-positioned to make an impact on DeFi in an uncertain monetary policy environment and geopolitical events. He also suggested new, more accessible ways of wealth preservation.
Volt was built on Ethereum. It uses Fuse, an Ethereum open-interest protocol that supports isolated interest rates markets. Fuse was designed by Rari Capital. Because each market is isolated, any changes made to one market won’t impact the rest of the Fuse ecosystem. Volt Protocol claims that its mainnet will likely launch in the late April or early mai.
Volt claims it uses Chainlink to transmit CPI data from a Chainlink Oracle to a Volt Smart Contract. This is an automated program that executes when certain criteria are met. The current annual inflation rate then gets stored. The target price for Volt changes each month according to the annual inflation rate.
Volt claims to be backed in part by collateralized debt positions, stablecoins and fixedcoins. The PSM allows users to swap collateral types at an agreed rate. Anyone who wants to purchase or sell VOLT can do so via the PSM (or on a decentralized exchange).
Kirk Hutchison, founder of Volt Protocol, explains how converting Volt’s value from a fiat currency to an inflation index will allow DeFi investors to keep their wealth intact over time while not having to worry about volatility or fluctuating interest rates.
Hutchison stated that one of his primary goals was to create the most stable, scalable cryptocurrency. He also spoke out about new mechanism types in an interview with Decrypt.
Hutchison believes that Ethereum and Bitcoin are great assets. However, he feels that the top two cryptocurrency market capitalizations are not suitable for money, as they are fundamentally volatile.
This has been a common charge since the inception of digital currencies such as Bitcoin. Price jumps and crashes have prevented them from being used everyday for goods and services. Stablecoins are available.
Stablecoins are cryptocurrencies that are ostensibly backed with a real-world asset such as gold, oil or a fiat currency like dollars or pounds. This removes volatility. Terra’s UST and DAI are two examples of stablecoins that do not have such assets. Instead, they use algorithms and digital currencies to maintain their pegs. Volt Protocol is now part of the growing number of stablecoins that do not have a physical asset backing them, but Hutchison insists Volt does not simply exist as another algorithmic stablecoin.
Volt is not algorithmic, in the sense that some stablecoins rely on a hard-coded mathematical mechanism to control their stability without human input. He says he thinks they are great. It can also go wrong easily.
