Interest Rate Swap Protocol Voltz Onboards Lido and Rocket Pool

Blockworks exclusive: Lido (stETH) and Rocket Pool (rETH) will join Voltz’s growing trading pool

article-image

Blockworks exclusive art by axel rangel

share

key takeaways

  • Aave- and Compound-based stablecoin rates launched on Voltz earlier last month
  • Traders can de-risk their portfolio by “locking in” a fixed interest rate

With Ethereum’s anticipated transition from proof-of-work to proof-of-stake expected to occur in a few months, Voltz protocol is offering traders a new way to speculate returns with interest rate swaps (IRS).

The company announced today that staked ether from Lido (stETH) and Rocket Pool (rETH) will join its growing trading pool that currently comprises Aave- and Compound-based stablecoin rates. Each pool will have a liquidity provider margin cap of $1.5 million, and the amount will gradually increase over time. 

In traditional finance (TradFi), an IRS involves two counterparties that agree to exchange future interest payments with each other. Traders acknowledge that they prefer each other’s interest rates and enter a contract to switch future interest payments. 

An IRS can be used to speculate, manage credit risks and hedge against losses — it is a necessary tool for many everyday financial services. Voltz aims to offer IRS services for DeFi trading, which is known to be volatile in nature. 

“What interest rate swaps unlock at the most macro level is it provides an ability to transition from something that’s variable, to something that’s stable,” Simon Jones, CEO of Voltz, told Blockworks.

Voltz is an automated market maker (AMM) designed to simulate IRS on the blockchain, making it synthetic and adaptable to new pools and assets — this will likely allow for a wide range of financial products and trading strategies to be built on the protocol.

“When The Merge occurs, the rates of return a validator node generates are going to change, and that is going to translate into a change in the value of [ether],” Jones said. “What we’re doing by launching these pools is enabling people to take specific views and to start trading those market views in a synthetic way.”

Presently, IRS operations are limited. Other than Voltz, only a few other protocols are in the IRS space, including: Element Fi, Strips, Pendle, Tempus and Swivel, all of which are still very new to DeFi (decentralized finance).

For Jones, the relatively untapped market of IRS protocols serves as a great opportunity for his team to design a product that is “actually providing fundamental value.”

“One of the big design decisions we made was to make the protocol as composable as possible. Everything is on-chain, which enables us to be a super low-level primitive that a lot of products are built on top,” Jones said. “If you believe a portion of rates trading will go through smart contract-based markets in the future, the long-term opportunity for Voltz is to displace all of the trading activity in interest rate swaps that takes place even in traditional finance.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

kamino cover.jpg

Research

Kamino has solidified its position as the leading money market on Solana and is emerging as a DeFi bluechip. Although DeFi competition is fierce, Kamino has kept iterating on its product to provide the best-in-class UX, paired with a robust risk management framework and battle-tested infrastructure. Given the rollout of Kamino Lend V2, the protocol may scale aggressively over the coming months, penetrating previously untapped markets in Solana DeFi.

article-image

Also in the tokenized fund space, Franklin Templeton launches on Base and Securitize hits $1 billion in tokenized RWA onchain

article-image

It turns out that bitcoin never actually hit an all-time high in March. Thanks a lot, inflation.

article-image

Spire, Citrea and Nillion also announced raises this week

article-image

The latest recipient of an SEC Wells notice is a Web3 gaming company

article-image

Thursday’s selloff was led by tech stocks, triggered by disappointing outlooks from giants Meta and Microsoft

article-image

Historically, positive returns have been a bit more of a toss-up during the year’s 11th month