Frax x Volt: Strategic Partnership Proposal

Greetings Fraximalists.

I’m OneTrueKirk, working on Volt Protocol, a floating price stablecoin based on RAI but backed by a wide range of collateral assets. We’re a “friendly fork” and are sharing 6% of our governance token VCON with the Reflexer community in exchange for Reflexer Labs’ permission to use the RAI code.

We’ve been pursuing close cooperation with partners including Rari and Olympus. When setting out to build a new product in DeFi, I believe cooperating with existing DAOs is the best approach.

You may have seen a similar proposal I posted in the Fei Protocol forums. By cooperating with leading decentralized stablecoin issuers, we will largely avoid the need for conventional liquidity mining in which most participants farm+dump.

Instead, we’ll engage with DAOs who have long term alignment in our mission and share ownership of the Volt Protocol among those best suited to govern it, existing community-governed projects.

We’d love to work with the Fraximalists, allocating 6% of the VCON supply in exchange for support with our liquidity needs for launch and other forms of collaboration described below. We hope that Frax will become one of our long term partners in launching and growing the Volt Protocol.

  • Liquidity support. We plan to use a Fuse stablecoin swap pool as a major liquidity venue. Users can mint VOLT, deposit it into the pool, and borrow against a more liquid stablecoin. We hope to see the FRAX protocol support our launch by providing a substantial amount of FRAX liquidity into this pool. FRAX has a flexible ability to expand its supply to meet market demand in diverse venues, we would love to get this support behind our launch. The VOLT Stable Swap Pool will allow VOLT as collateral and support FEI, FRAX, RAI, DAI, and other stablecoins for lending. This will be a primary venue for future liquidity incentives, allowing us to reward partner DAOs for liquidity services.

  • VOLT as a high-yield PCV asset. VOLT can be considered a proxy for exposure to long tail DeFi assets that might be too volatile to include in FRAX’s backing. Onboarding VOLT as part of FRAX’s PCV backing reduces the protocol’s exposure to USDC while also offering an opportunity for yield.

  • Flexible leverage for FRAX lenders. In various high demand Fuse pools, users will be able to mint VOLT against their fFRAX, giving FRAX users access to more capital efficient lending opportunities.

  • Control over VOLT credit allocation through VCON. Allocating VCON to the Fraximalists means that in Volt v2 they will be able to direct a line of credit among assets of their choice, including PCV assets, preferred Fuse pools, or other opportunities for yield generation. The Fraximalists owning VCON is like a larger bank taking an income-producing stake in a smaller bank with a riskier collateral basket.

  • Bootstrapping decentralization. A large portion of the VCON supply is being distributed to partner DAOs. Our hope is to bootstrap an effective and decentralized community. We’d like to see the FXS community (as well as other partner DAOs) select one or more delegates to participate in VCON governance. In the future, we expect a “bribe” ecosystem to emerge around VCON as protocols seek to incentivize VOLT liquidity against their ecosystem assets, much like exists around Curve today.

If you’d like to learn more or get involved, please join us in our Discord.

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Thanks for this post Kirk! I’ve talked to you before about Volt and in our discussions have found it to be a great idea and at the right time as well.

We’re definitely interested in providing deep lending liquidity in Fuse with our Lending AMO and anything else we can help out. Your generous offer of 6% of the VCON allocation is very gracious. Just like with everything else we accrue on our balance sheet, like OHM and CVX, we never intend to sell a single token and instead build long term relationships with protocols.

I’ll let the other fraximalists in the community weigh in here as well but looks great to me overall!

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That certainly sounds like an idea the Frax community can rally behind.
Just in case anybody else wants to read up on Volt in a brief an concise manner, there’s this: A new money god: introducing VOLT - General Discussion - Reflexer

im looking forward to seeing this fire collab!!

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I think this would be a great collaboration, you have my vote Kirk.

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To what extent will VOLT use FRAX as collateral?

I approve your approach and I’m looking forward to see the two protocols supporting each other as cleverly described in your proposal. LFG

We can support both FRAX and, more interesting perhaps, a variety of FRAX derivatives as collateral.

VOLT is a CDP based stablecoin like RAI or DAI, so the extent to which an asset is used as collateral is determined both by market demand and governance.

Our goal is to scale to support every on chain collateral, that’s the future though and in v1 (multicollateral RAI) we will be onboarding collateral assets gradually to scale the system safely. We’ll likely have a public process to determine the order assets are onboarded with a clear framework. I estimate the demand to borrow against stablecoins directly will be low, but we’re interested in onboarding Fuse pool deposit receipts as collateral. This would allow leveraged lending of FRAX and other stablecoins in these Fuse pools to help create a fungible liquidity layer for Fuse.

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Big supporter of Kirk’s vision - I’ll be voting yes on this one

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lets get the vote up :slight_smile:

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